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

Date: January 13, 2011

Idaho to Collect $750,000 in Drug Pricing Settlement

(Boise) – Prescription drug manufacturers Warrick Pharmaceuticals Corporation and Schering-Plough Corp. (now known as Merck & Co., Inc.) have agreed to pay the State of Idaho $750,000 in a legal settlement resolving Idaho’s claims relating to the “average wholesale prices” reported by the companies, Attorney General Lawrence Wasden said.

Idaho Medicaid provides health care services, including prescription drugs, to low-income Idahoans.  By law, Idaho Medicaid must reimburse pharmacies at the “estimated acquisition cost” of the drug.  Idaho Medicaid primarily uses “average wholesale price,” 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, the pharmaceutical product Albuterol, manufactured by Warrick, had a published average wholesale price of $1.259 in 2003, but Attorney General Wasden’s investigation revealed an actual average wholesale price of $0.25 in 2003.  This results in a 405% difference between the published price and the actual price.

“Where published prices are false or misleading, the taxpayers are significantly harmed by excessive Medicaid reimbursements,” Attorney General Wasden said.  “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.  Misrepresenting the wholesale price is a violation of the Idaho Consumer Protection Act.”

The settlement with Warrick and Schering has been submitted for approval by the Fourth District Court in Ada County.  The companies admitted no liability or wrongdoing.

“This settlement provides relief to Idaho taxpayers and brings the matter to a conclusion without the need for continued litigation,” Attorney General Wasden said.  “I appreciate that the company was willing to work with my office to reach an appropriate resolution.”

$615,531 from the settlement will be deposited in the state’s general fund to be appropriated by the legislature.  $50,000 will go to the consumer protection account to reimburse the attorney general for investigative and legal costs.

Since 2005, Wasden has resolved eight average wholesale price cases with drug manufacturers, including this settlement, resulting in approximately $9.4 million recovered for Idaho taxpayers.  Three average wholesale price cases, naming approximately 21 other drug manufacturers, are still pending.


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