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

Date: July 16, 2012

Watson to Pay $1,700,000 in Drug Pricing Settlement

(Boise) – Prescription drug manufacturers Watson Pharmaceuticals, Inc. and Watson Pharma, Inc., agreed to pay $1,700,000 in a legal settlement resolving Idaho’s claims relating to the “average wholesale prices” reported by the companies, Attorney General Lawrence Wasden said.  Watson is among the top five pharmaceutical companies in the United States, and among the top four generic drug companies in the world.

Wasden filed lawsuits against several prescription drug manufacturers, including Watson, in 2007. The lawsuits seek to recover taxpayer money for excessive prices Idaho Medicaid paid for prescription drugs.  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, one unit of Watson’s pharmaceutical product, Lorazepam, had a published average wholesale price of $0.662 in 2003, but Wasden’s investigation revealed an actual average wholesale price of $0.049 in 2003. This results in a 1,239 percent difference between the published price and the actual price.

“The publishing of false drug prices harms taxpayers and the State,” Attorney General Wasden said. “My office has investigated and litigated this matter and what we uncovered is that in a very large number of instances, drug manufacturers reported false and inflated prices for their drugs.”

The settlement is intended to reimburse taxpayers for the excessive prices Idaho Medicaid paid for prescription drugs as a result of inflated average wholesale price reporting. $423,724.61 will be deposited in the state’s General Fund to be appropriated by the Idaho Legislature. $1,055,459.48 will be deposited into the Cooperative Welfare Fund to reimburse the federal share of the Medicaid overpayments.  Idaho will retain this money as an offset against a future federal Medicaid payment. $50,000 will go to the Consumer Protection Account to reimburse the Attorney General for investigative and legal costs.

The settlement with Watson has been approved by the Fourth District Court in Ada County. The companies admitted no liability or wrongdoing.

Wasden’s office has recovered more than $22 million in average wholesale price settlements with 31 drug manufacturers.  Two lawsuits Wasden filed are still pending against five other drug manufacturers.

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