Abbott Laboratories and several other drug companies have agreed to pay $125 million to settle a class action lawsuit involving the companies’ inflation of average wholesale prices on some medicines. The lawsuit, filed in 2002 by consumers and insurance companies, alleged that drug costs were higher than they should have been because the drug manufacturers had falsely reported prices. The published average wholesale price is used to set the price that federal programs such as Medicare pay for a drug. It is also the method used to set the price for insurance companies and other third parties. As we have reported, the published Average Wholesale Price (AWP) is used to set the price that Medicare and consumers making Medicare Part B co-payments pay for a specific drug. Insurance companies and other third-party payers also pay on the same basis. A tremendous number of drug companies have cheated federal and state governments by supplying false prices, which are used in setting the reimbursement to providers such as doctors or pharmacists.
Under the terms of the settlement, 82.5% of the settlement fund is designated for third-party payers’ claims, with the remaining 17.5% being designated for consumer claims. Among the defendants included in this settlement are Abbott Laboratories; Amgen Inc.; Aventis Pharmaceuticals Inc.; Hoechst Marion Roussel; Baxter Healthcare Corp.; Baxter International Inc.; Bayer Corporation, Dey Inc.; Fujisawa Healthcare Inc.; Fujisawa USA Inc.; Immunex Corp.; Pharmacia Corp.; Pharmacia & Upjohn LLC; Sicor Inc.; Gensia Inc.; Gensia Sicor Pharmaceuticals Inc.; Watson Pharmaceuticals Inc., and ZLB Behring L.L.C. The drugs covered in the settlement include Aranesp, Epogen, Neupogen, Neulasta, Anzemet, Ferrlecit, and Infed. The class includes those making payments to Medicare Part B between January 1, 1991, and January 1, 2005, or those who made payments outside of Medicare Part B from January 1, 1991, through March 1st.
The court is expected to set a trial date for the remaining claims against AstraZeneca Pharma India Ltd. and Bristol-Meyers Squibb Co. on behalf of insurance companies and consumers outside of Massachusetts. Those two companies were ordered in November of last year to pay almost $14 million to insurance companies and consumers in Massachusetts as part of an earlier settlement in this case. Pharmaceutical companies have been guilty of fraudulently reporting the Wholesale Acquisition Cost (WAC) and AWP prices to state Medicaid agencies over the years.
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