A $125 million settlement has been announced in a major class action lawsuit involving members of the Prescription Access Litigation (PAL) coalition. The case, In re Pharmaceutical Industry Average Wholesale Price Litigation, was originally filed in 2002, and claimed that the defendant drug companies intentionally inflated reports of the Average Wholesale Prices (AWPs) on certain prescription drugs administered in doctors’ offices and paid for by Medicare Part B. The PAL member organizations that are plaintiffs in the lawsuit are:
- Citizen Action of New York
- Health Care for All
- New York Statewide Senior Action Council
- Vermont PIRG
- Wisconsin Citizen Action
- Pipefitters Local 537 Trust Funds
Until 2006, the published AWP was used to set the price that Medicare and consumers making Medicare Part B co-payments pay physicians for these drug. Private insurance companies and other third-party payors also use the AWP to determine how much to pay physicians. The lawsuit contends that
consumers and third-party payors paid more than they should because of the drug companies’ false AWP reporting.
The settlement includes branded and generic drugs used primarily in the treatment of cancer, HIV and other serious illnesses. Under the terms of the settlement 82.5 percent of the settlement fund is designated for third-party payors’ claims and the remaining 17.5 percent is designated for consumer claims.
The defendants included in today’s settlement are:
- Abbott Laboratories
- Amgen Inc.
- Aventis Pharmaceuticals Inc.
- Hoechst Marion Roussel
- Baxter Healthcare Corp.
- Baxter International Inc.
- Bayer Corporation
- Dey, Inc.
- Fujisawa Healthcare, Inc.
- Fujisawa USA, Inc.
- Immunex Corporation
- Pharmacia Corporation
- Pharmacia & Upjohn LLC
- Sicor, Inc.
- Gensia, Inc.
- Gensia Sicor Pharmaceuticals, Inc.
- Watson Pharmaceuticals, Inc.
- ZLB Behring, L.L.C.
Drugs covered in this settlement include Aranesp, Epogen, Neupogen, Neulasta, Anzemet, Ferrlecit and Infed. A full list of the drugs covered by the settlement is available here.
Medicare Part B recipients, health plans and individuals who paid for these drugs but were not on Medicare will be eligible to receive payments from this settlement once the Court finally approves it. The following types of individuals and entities will be eligible:
- Patients on Medicare Part B who paid a percentage (i.e. not a fixed copayment, but 10%, 20%, etc.) of the cost of one of the drugs in the case, taken between Jan. 1, 1991 and Jan. 1, 2005.
- Health Plans and other Third Party Payors who paid all or part of a Medicare Part B recipient’s percentage co-insurance for one of the drugs.
- Individuals not on Medicare Part B who paid all or part (a percentange) of the cost of one of the drugs taken between Jan 1, 1991 and March 1, 2008.
- Health plans and other Third Party Payors who paid all or part of the cost of one of the drugs taken by an individual not on Medicare part B between Jan 1, 1991 and March 1, 2008.
The Court will hold a “preliminary approval” hearing this Friday. If the Court grants preliminary approval to the settlement, notices will be mailed to Medicare Part B recipients and Third Party Payors, and published online and in a variety of national publications. Class members will have the opportunity to file a claim form, object to the settlement, opt out of the settlement or file an appearance with the Court. The court will eventually hold a final hearing to approve all settlement details.
This settlement is the third one announced in this AWP litigation. Iin August 2006, GlaxoSmithKline (NYSE: GSK) agreed to a nationwide $70 million settlement and in May 2007 AstraZeneca agreed to a $24 million settlement to Medicare Part B Zoladex users nationwide. After a trial in late 2006 and early 2007, the court in November 2007 ordered AstraZeneca (NYSE: AZN) and Bristol-Myers Squibb (NYSE: BMS) to pay nearly $14 million to insurance companies and consumers in Massachusetts for the companies’ roles in unfair trade practices. Those companies are appealing that ruling.
The court is expected to set a trial date for remaining claims against AstraZeneca and BMS on behalf of insurance companies and consumers outside of Massachusetts.
- To see the settlement, go here.
- For more information on the lawsuit and other documents filed with the Court, go here.
- To see the list of drugs included in the settlement, go here.
- For details on the GlaxoSmithKline settlement, go to gsksettlement.com.
- For details on the Astra Zeneca Zoladex settlement, go to astrazenecaawpsettlement.com