Federal Judge Doubles Damages in Drug Pricing Case

posted on:
December 4, 2007



Pharmaceutical companies AstraZeneca and Bristol-Myers Squibb Company have been ordered to pay double damages in a case over false mark-ups of U.S. drug prices through 2003. U.S. District Judge Patti Saris, who sits in Massachusetts District Court, found that the companies had acted willfully, and ordered AstraZeneca to pay more than $12.9 million in total damages and Bristol-Myers to pay $695,594.

Plaintiffs in the class action lawsuit contended that the drug makers boosted published average wholesale prices, which until 2003 were the basis for reimbursements from Medicare, state governments, and private insurers.

In an earlier ruling in June, Judge Saris found that the two companies and Schering Plough Corp subsidiary, Warrick Pharmaceuticals, had grossly inflated the prices of drugs, including chemotherapy agents, to the detriment of the U.S. government’s Medicare program for the elderly, insurance companies, and individuals.

In the most recent ruling, Judge Saris wrote that the companies “knew that Medicare beneficiaries, and thus their insurer, were locked by statute into paying 20% of grossly inflated phony AWPs, which bore no relation to any average of wholesale prices in the marketplace.” The judge did not double damages against Warrick.

The marked-up prices created what is referred to as a spread between a doctor or pharmacy’s real cost and the drug’s published cost. When their drugs faced competition, companies used spreads to make their drugs more attractive to doctors, who could pocket excess cash resulting from the scheme. The court has invited the plaintiffs to expand this case to a nationwide class action for the next trial.

If that happens, it would give consumers across the country the same remedies this single-state case affords. As we have previously reported, several claims in the case have already been settled. GlaxoSmithKline, which is a defendant in the case our firm filed in Alabama, settled all claims before the trial. AstraZeneca also settled claims involving Medicare beneficiaries before the trial.

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