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

Date: December 27, 2012

Wasden Recovers $2.9 Million in Latest Drug Pricing Settlement

(Boise) – Prescription drug manufacturers Pfizer Inc. and Pharmacia Corp. have agreed to pay Idaho $2.9 million in a legal settlement resolving the state's claims relating to the "average wholesale prices" reported by the companies, Attorney General Lawrence Wasden said today.

Wasden sued several prescription drug manufacturers, including Pfizer and Pharmacia, in 2007 to recover taxpayer money for excessive prices Idaho Medicaid paid for prescription drugs. Including today's settlements, Wasden's office has recovered more than $25 million in average wholesale price settlements with 36 drug manufacturers. Lawsuits are still pending against two other drug manufacturers.

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, plus a dispensing fee. Until July 1, 2011, Idaho Medicaid primarily used "average wholesale price," as reported by drug manufacturers, as a basis for determining this amount.

However, the reported "average wholesale price" was often an inflated number, far larger than the price actually paid to the manufacturer. For example, in 2003 Pfizer reported an average wholesale price of 26% above the actual average wholesale price of the prescription drug Zyrtec. That same year, Pharmacia's reported average wholesale price for Celebrex was 28% higher than the actual average wholesale price.

"When a manufacturer reports an inflated or false average wholesale price for a drug, taxpayers pay too much for that drug through Medicaid reimbursements," Attorney General Wasden said.

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. $733,760.39 will be deposited in the state's General Fund, which is the source of money for the state's share of Medicaid prescription drug costs. $1,825,227.98 will be deposited into the Cooperative Welfare Fund to reimburse the federal Medicaid share. 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. That account partially funds the Attorney General's consumer protection operations.

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

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