Idaho recovers Medicaid overcharges

BOISE – Idaho has recovered more than $28 million from prescription drugmakers who overcharged the state’s Medicaid program.

The recovery, after six years of litigation, came as the state settled with 33 drug companies and also won price disclosure concessions that Idaho Attorney General Lawrence Wasden says will prevent such practices in the future.

“In negotiating these settlements, we tried to look forward as well as backward,” Wasden said. “We recovered a significant amount of money to compensate the state for past practices. But equally as important, the state will receive pricing data from these companies going forward. That element of the settlements will help protect the taxpayers from future pricing abuses.” That data would otherwise have been confidential.

Until July 1, 2011, prescription drug prices paid by Idaho’s Medicaid program relied on drugmakers’ reports of the “average wholesale price,” or AWP. Wasden said one company “indicated that AWP stands for ‘ain’t what’s paid.’ ”

While other states also have sued drug manufacturers over the issue, Wasden took a different approach, first calling all of them in for a meeting. As a result, three settlements were reached without the state having to sue.

The litigation led to reforms in how drug pricing for Medicaid is calculated, which state Health and Welfare Director Dick Armstrong said are now “saving over $10 million a year for the citizens of Idaho.”

Because the federal government pays 70 percent of the costs of Medicaid in Idaho, which provides health coverage for the state’s poorest and disabled residents, the feds will get $13.56 million of the recovery, in the form of credits against future federal Medicaid payments to Idaho.

The state’s share of the settlements, $7.2 million, was deposited in the state’s general fund for appropriation by the Legislature. The rest covers investigation and litigation costs.