AWP Medicaid Fraud

posted on:
February 21, 2008

author:
Staff

category:
Fraud

Beasley Allen is representing the State of Alabama against a total of 72 pharmaceutical companies in the Average Wholesale Price (AWP) or Medicaid Fraud litigation, and has secured jury verdicts of more than $352.4 million against pharmaceutical company defendants, and settlements totaling $123.25 million. The companies are accused of using false prices for Medicaid reimbursement.

An examination of the pharmaceutical company price lists demonstrates the difference in the Average Wholesale Price (AWP) and Wholesale Average Cost (WAC), which are the prices provided by the manufacturers for reimbursement, and the actual price or cost of the drug. In some cases the published AWP price was more than 2500 percent higher than the actual price, and the WAC price nearly 600 percent higher.

Beasley Allen attorneys W. Daniel “Dee” Miles, III, Jere L. Beasley and Clinton C. Carter are representing the State of Alabama. Miles explains, “The inflated price provided by the drug company … is what the state uses to reimburse pharmacists and doctors. The inflated price creates a ‘spread’ for the buyer and thus, the result is the pharmacist gets paid more by the state and he will choose the company with the inflated drug price over other companies. This results in a gain in ‘market share’ for the company providing an inflated price.”

To date, four companies have gone to trial.

In February 2008, a state court jury awarded Alabama a $215 million verdict against Astra Zeneca PLC. The drug manufacturer appealed the verdict, but it was upheld by Circuit Court Judge Charles Price on June 19, 2008.

Following on the heels of the AstraZeneca verdict, in July 2008 Beasley Allen obtained a verdict in favor of the state against GlaxoSmithKline and Novartis. After brief deliberations, the jury in this case found the pharmaceutical companies liable for fraud and awarded $114 million in compensatory damages.

In a third trial, on Feb. 24, 2009, a Montgomery County jury found Sandoz Pharmaceuticals, Inc., guilty of Medicaid fraud and ordered the manufacturer to pay the State of Alabama $28.4 million in compensatory damages and $50 million in punitive damages. Documents presented in the state’s case against Sandoz indicate a long history of inflating prices on its generic drugs to increase its market share, defrauding the state’s Medicaid system.

In addition to the trial verdicts, several companies have reached settlement agreements with the State of Alabama, totaling more than $123.25 million. The first companies to settle include Amgen, Inc.; Bayer, Boehringer/Roxane, Bristol-Meyers Squibb Company, Dey, LP; Ethex Corporation and KV Pharmaceutical Company, and Takeda Pharmaceuticals North America, Inc.

The latest round of settlements, announced May 22, 2009, resolves Alabama’s AWP cases against six defendants comprised of groups of drug manufacturers, including Abbott Laboratories, Inc.; Aventis Pharmaceutical L.P., Aventis Behring L.L.C., ZLB Behring L.L.C. and Sanofi-Synthelabo, Inc.; TEVA Pharmaceuticals U.S.A., Inc., IVAX Corporation, IVAX Pharmaceuticals Inc., and Barr Laboratories, Inc.; Shering-Plough/Warrick Companies; Forest Laboratories Inc. and Forest Pharmaceuticals Inc.; and Baxter International Inc. and Baxter Healthcare Corporation.

Twenty-two other states currently have pending AWP suits and Beasley Allen has been tapped to represent seven other states in their pending AWP Litigation.

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