In a most significant development, one of the pharmaceutical drug industry’s primary reporting services will cease publishing Average Wholesale Prices after September 26, 2011. Since 2005, many lawsuits have been filed by state and federal governments against certain drug companies, as well as one of the pharmaceutical drug industry’s price publishing sources, First DataBank. The lawsuits were based on the fraudulent reporting of inflated Average Wholesale Prices (AWPs) for pharmaceutical drugs. AWPs are reported prices relied upon by state Medicaid agencies and used to set the amount that states reimburse doctors and pharmacies for prescription drugs dispensed to Medicaid beneficiaries.
Forty-five states use AWP when setting Medicaid reimbursement amounts, with 37 of these states obtaining AWPs from the price publishing service, First DataBank. The numerous lawsuits against the drug companies and First DataBank are exceedingly similar. As a result of the drug companies and First DataBank reporting false and inflated AWPs, state Medicaid agencies have been paying excessive amounts for prescription drugs. To date, at least 28 states, as well as the federal government, have filed lawsuits against drug manufacturers, wholesalers, and/or reporting services like First DataBank, in order to recoup the financial losses suffered as a result of the fraudulent conduct. Over the years, reported AWPs have been subjected to significant manipulation and our respective state Medicaid agencies have been adversely affected by these fraudulent drug pricing practices. Since the filing of these lawsuits, First DataBank has decided to cease publishing AWPs after September 26, 2011, which was the direct result of the litigation filed by our firm against the drug companies and First DataBank.
This is a very big change to the Medicaid drug pricing system. To address the uncertainty surrounding drug reimbursement decisions, the Department of Health and Human Services has recommended that the Centers for Medicare and Medicaid Services develop a national benchmark to set Medicaid reimbursement. This national benchmark would reflect actual pharmacy acquisition costs and would eliminate the states’ reliance on the inflated published prices that cause Medicaid and its beneficiaries to pay too much for certain drugs. This fraudulent conduct has cost the states and federal government billions of dollars.
After decades of states relying on AWP as a key measure for determining Medicaid reimbursements, states are now presented with the opportunity for change in the Medicaid reimbursement process. This is a big transformation to the Medicaid drug pricing system. Hopefully, it’s the beginning of more accurate and reliable drug pricing information for the states.
Beginning in 2005, our firm has represented the Attorney Generals of Alabama, Alaska, Hawaii, Kansas, Louisiana, Mississippi, South Carolina, and Utah in litigation, which not only brought about a positive change in our country’s Medicaid programs, but also recovered billions of dollars in overpayments by these states as a result of the fraudulent AWP reporting scheme. Thus far, those efforts have been totally successful in all states, with the sole exception of Alabama. Unfortunately, in my home state, our Supreme Court saw fit to rule for the powerful drug industry. That decision came after we had obtained hundreds of millions of dollars for the Alabama Medicaid Agency.
To date, we have settled cases in Alabama against a number of drug manufacturers, totaling $130 million, and still have cases involving generic drug manufacturers pending in the Alabama Supreme Court awaiting a ruling. In all of the other states, we have successfully tried and settled cases against the drug manufacturers without a single set-back.
Source: Department of Health & Human Services
Contact us today for a free legal consultation with an experienced attorney.
Fields marked *may be required for submission.
If you would like to subscribe to the Jere Beasley Report digital edition, simply visit our Subscriptions page and provide the necessary information or call us at 800-898-2034.
Attorney Advertising - Prior results do not guarantee a similar outcome.