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MADISON — Attorney General J.B. Van Hollen announced today that the state has reached a $2 million settlement agreement with another of the defendants in the litigation charging thirty-six (36) pharmaceutical manufacturers with defrauding the Wisconsin Medicaid Program. The Wisconsin Department of Justice law enforcement action pending in Dane County alleges that the companies reported fictitious prices to deceive the Medicaid pharmaceutical reimbursement system to increase sales and market share.
Under the terms of the agreement announced today, Dey, Inc. will pay a total of $2 million to settle the state's claims. The payment comprises $1.7 million in restitution to the Medicaid Program and $300,000 in costs and fees for prosecution of the action.
Van Hollen explained that Wisconsin law makes it unlawful for any person to make representations that are untrue, misleading, or deceptive with intent to sell pharmaceuticals. Federal regulations place limits on the amount Wisconsin Medicaid can pay for reimbursement of prescription drugs. To comply with those limits, Wisconsin must estimate the acquisition cost that providers are paying to obtain the drugs they later dispense to Medicaid recipients, and for which they obtain reimbursement from Wisconsin Medicaid. In order to determine this estimated acquisition cost, Wisconsin relies on published average wholesale prices ("AWPs") published by a pricing compendium (First DataBank).
In the suit, Wisconsin alleged that the pharmaceutical manufacturers caused false "AWPs" to be published by First DataBank, knowing that Wisconsin would rely on that information to set its reimbursement formulas. Those fictitious and inflated "AWPs" reported by the manufacturers resulted in Wisconsin Medicaid reimbursing more for drugs than it would have if the accurate "AWPs" had been reported. Consequently, Wisconsin Medicaid paid substantially more than the actual cost of the drug.
The case has a long and complicated procedural history. The original complaint was filed in Dane County Circuit Court in 2004 and has taken many turns along the way.
In February, 2009, after a two week trial, a jury verdict against another manufacturer, Phamacia, awarded $9 million in damages. The court also assessed forfeitures, costs, and fees and ordered the company to pay a total of over $22 million. Pharmacia has appealed the order, and the litigation against other manufacturers in Dane County has been stayed pending the results of that appeal.
Additionally, Baxter Healthcare Corporation, another of the defendants, settled the claims against it with an agreement and payment of $1.05 million to Wisconsin Medicaid. Two other defendants, Amgen, Inc., and Immunex, settled with the state in December, 2008, including payment of a total of $2 million to Wisconsin Medicaid. In April, 2010, four related defendants – Boehringer Ingelheim Pharmaceuticals, Inc., Boehringer Ingelheim Roxane, Inc., Ben Venue Laboratories, Inc., and Roxane Laboratories, Inc. – paid a total of $7.75 million to settle the state's claims.
The settlement with Dey, Inc., is another step toward successful conclusion of the complex litigation.
"This most recent settlement again confirms our commitment to bring this law enforcement action to a successful and effective conclusion," stated Van Hollen. "What we are after is to protect the program integrity of Wisconsin Medicaid. Our taxpayers are genuinely concerned and more than willing to provide for our neediest citizens. What we refuse to do is to line the pockets of those who engage in deceptive and fraudulent pricing activities."
A copy of the agreement is available at: