For Immediate Release
Media Contact: Bob Cooper
(208) 334-4112

Date: July 15, 2008

Wasden Obtains $1.7 Million in Drug Pricing Settlement

(Boise) – Drug manufacturers Bristol-Myers Squibb Company and Apothecon, Inc., will pay Idaho more than $1.7 million dollars in a legal settlement resolving Idaho’s certain claims relating to the marketing and selling of prescription drugs and the companies’ reporting of “average wholesale price,” Attorney General Lawrence Wasden said.

Wasden’s office filed an Assurance of Voluntary Compliance, in which the companies admitted no liability or wrongdoing, in Fourth District Court in Ada County. The court has approved the agreement.

“I applaud Bristol-Myers Squibb and Apothecon for stepping forward to resolve this dispute voluntarily,” Attorney General Wasden said. “Where published prices are false or misleading, the taxpayers are significantly harmed by excessive Medicaid reimbursements. I hope that others in the industry will follow Bristol-Myers Squibb’s lead in order to eliminate unfair costs to Idaho taxpayers.”

Under the agreement, Bristol-Myers Squibb and Apothecon will provide certain pricing information to Idaho Medicaid and pay Idaho $1,738,719 for restitution and compensatory damages. The State of Idaho will receive $500,573 plus attorneys fees and costs. Because Idaho Medicaid is heavily funded by the federal government, the federal government will receive the remainder of the settlement payment.

In addition to the average wholesale price claims, the Assurance of Voluntary Compliance resolves a number of other claims relating to off-label promotion, alleged anti-kickback violations, and other alleged price misrepresentations.

Bristol-Myers Squibb is a global pharmaceutical company, with headquarters in New York City. Apothecon is a wholly-owned subsidiary of Bristol-Myers Squibb.

“AVERAGE WHOLESALE PRICE”

Idaho Medicaid provides health care services to low-income Idahoans. Patients on Medicaid obtain prescription drugs from pharmacies and hospitals. Idaho Medicaid is required by law to pay for the drugs by reimbursing pharmacies and hospitals at the “estimated acquisition cost” of the drug. Idaho Medicaid primarily uses “average wholesale prices,” as reported by drug manufacturers, as a basis for determining this amount.

If the manufacturer reports an inflated or false average wholesale price for a drug, taxpayers can pay too much for that drug through Medicaid reimbursements. For example, in 2003, Apothecon published an average wholesale price of $2.25 for a package of cytoxan, 25 mg. The Attorney General believes that a true average wholesale price was $ 1.41. Thus, a pharmacy that dispensed cytoxan to a Medicaid patient in 2003 would have paid $1.41 for a package of the drug. Medicaid, however, would have reimbursed the pharmacy using Apothecon’s published average wholesale price of $2.25 as a basis for its reimbursement decision.

“Investigation by my office has revealed that the reported average wholesale price often is not related to the actual wholesale price paid for the drug and that reporting of inflated wholesale prices by drug manufacturers is prevalent in the industry,” Attorney General Wasden said.

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