Idaho’s lawsuit against several major pharmaceutical companies over allegations of inflated drug prices has come to an end with the state recovering more than $28 million in damages.
Attorney General Lawrence Wasden announced Tuesday that his office has completed six years of litigation against Watson Pharmaceuticals, Johnson & Johnson, Merck and 30 other pharmaceutical companies. Idaho was one of several states who sued the drug makers, alleging that they falsely reported the “average wholesale prices” of individual prescription drugs, and as a result, hiked the price that Medicaid had to pay for the drugs.
Idaho Medicaid reimburses pharmacies for the “estimated acquisition cost” of the drug, plus a dispensing fee. Until July 2011, Idaho Medicaid based that estimated cost on the average wholesale price as reported by drug manufacturers. But Wasden said the drug companies were giving phony average wholesale prices far above the actual average price. The Idaho Attorney General’s office reported that in 2003, Watson Pharmaceuticals Inc. reported an average wholesale price that was 1534 percent greater than the actual average wholesale price for a generic epilepsy drug.
“In negotiating these settlements, we tried to look forward as well as backward,” Wasden said in a prepared statement. “We recovered a significant amount of money to compensate the state for past practices. But equally as important, the state will receive pricing data from these companies going forward. That element of the settlements will help protect the taxpayers from future pricing abuses.”
Because Idaho gets about 70 percent of its Medicaid funding from the federal government, it is required to return a share of the recovered money to the federal government. As a result, about $13.5 million has been returned in the form of credits against future payments to Idaho Medicaid. Idaho’s share of the money, more than $7 million, was put into the general fund for appropriation by the Legislature. The rest of the money went to cover the costs of the investigations and litigation.