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AstraZeneca Settles Idaho Price Inflation Lawsuit for $2.5 Million

Posted  September 1, 2011

After more than four years of litigation, AstraZeneca has agreed to pay $2.5 million to settle State of Idaho v. Alpharma USPD Inc. et al., an action brought by the Idaho attorney general alleging that the pharmaceutical company violated the Idaho Consumer Protection Act by inflating the average wholesale price of its drugs.

The Idaho attorney general brought the lawsuit against various pharmaceutical companies, alleging that the companies falsely reported the average wholesale price of their drugs.  As Idaho Medicaid sets reimbursement rates based primarily on the reported average wholesale price of various drugs, these inflated prices caused Idaho Medicaid to pay higher reimbursements than it would have had the true price of the drugs been reported.

Idaho Attorney General Lawrence Wasden stated that, “where published prices are false or misleading, the taxpayers are significantly harmed by excessive Medicaid reimbursements.”

According to Wasden, the attorney general’s investigation “revealed that the reported average wholesale price often is not related to the actual wholesale price paid for the drug.”  Indeed, the attorney general found that the average wholesale price of AstraZeneca’s heartburn drug Prilosec was inflated by 26 percent.

Wasden confirmed that the $2.5 million payment will be used to reimburse taxpayers for these overcharges.  Approximately $1.5 million will go to the state’s Cooperative Welfare Fund and will be applied as a credit against the federal government’s next payment to Idaho Medicaid, over $620,000 will be deposited in the state’s General Fund and $50,000 will go toward reimbursing the attorney general for investigative and legal costs.

The AstraZeneca settlement follows settlements by other defendants to the lawsuit, including Teva Pharmaceuticals, Barr Laboratories, Inc., and Sandoz, Inc.  The claims against the remaining defendants, including Johnson & Johnson and Merck, are slated for trial starting later this year.

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