Our firm continues to wind down the Average Wholesale Price (AWP) litigation in the eight states that we are representing across the nation. We have completed the litigation in Alabama, Hawaii, South Carolina, and, as of last week, the State of Louisiana. We are still pursuing cases in the States of Mississippi (three cases remaining), Kansas (four cases remaining), Alaska (one case remaining), and Utah (22 cases remaining). To date, we have collected for these eight states just under $1 billion. With the cases remaining, our firm should most definitely collect more than a billion dollars for the states we have represented in this important litigation. I will mention the work done in Mississippi below, and Louisiana later in the Report.
We recently obtained a $12.4 million verdict in the State of Mississippi against Watson Laboratories/Watson Pharmaceuticals, Inc. This verdict only represented the compensatory phase of the case. A punitive damage hearing had been scheduled for December 20 for the Court to assess any punitive damages to be awarded against these defendants. Sadly, Judge Thomas L. Zebert, who presided over the AWP litigation and heard the trial, died after a brief illness in November. A new judge has been assigned to the case. The punitive phase hearing will be rescheduled. Based on the evidence presented during the trial in the liability phase of the Watson case, we fully expect a punitive award.
Our lawyers previously obtained a $31 million judgment against Sandoz in Mississippi. That case is currently on appeal to the Mississippi Supreme Court. Based on the strong evidence presented during the trial of that case, we believe this case will be affirmed on appeal.
These average wholesale price cases have had a tremendous positive impact on Medicaid Agencies throughout the country. As a result of the AWP litigation, the federal government and the State Medicaid programs have recognized the reality of the gross abuse of price reporting by the pharmaceutical manufacturers in the marketplace. The effect of this fraudulent price reporting was in millions of dollars being literally taken from the Medicaid agencies. Hopefully, the excessive costs to the Medicaid programs have been rectified by this litigation.
In fact, as a result of the AWP litigation, the price measure known as “AWP” will no longer be used by the federal government and most states to reimburse pharmacists in the Medicaid and Medicare programs. A new pricing measure, Actual Acquisition Costs, known as “AAC,” will most likely be the replacement for “AWP.” But it should be noted that not even this price term is immune from potential abusive practices. Only the future will tell if the pharmaceutical industry can resist price reporting abuses with the “AAC.” The most needy in our society rely on Medicare and Medicaid programs. Hopefully, the AWP litigation has taught the pharmaceutical industry a badly needed lesson. They must now resist the temptation to cheat the government and all the taxpayers.
We will publish updates on the success of the remaining cases in the States of Mississippi, Kansas, Alaska and Utah. Dee Miles, who heads up our Consumer Fraud Section, has led this very important litigation. Other lawyers in the Section who have worked hard and effectively in the AWP litigation are Roman Shaul, Clay Barnett, Chad Stewart and Alison Hawthorne. It has been an honor to have been selected to represent the attorneys general in the states.
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