$2 Million Recovered for PA Agencies in Drug Price Settlement with Pharmaceutical Company

HARRISBURG – Two million dollars has been recovered for three state agencies as part of a settlement between the Attorney General’s Office and a Delaware company, Dey Pharmaceuticals, concerning allegations that the company had artificially inflated drug prices in order to increase sales and profits.

Acting Attorney General Bill Ryan said the settlement money is reimbursement for state agencies and government benefit programs that were allegedly forced to pay higher prices for drugs, including $1,381,612 for the Pennsylvania Department of Public Welfare; $453,890 for PACE (the Pharmaceutical Assistance Contract for the Elderly, run by the Pennsylvania Department of Aging); and $163,498 for PEBTF (the Pennsylvania Employees Benefit Trust Fund).

This most recent settlement is part of a continuing effort by the Attorney General’s Office to address accusations that numerous companies manipulated a drug pricing benchmark known as Average Wholesale Price (“AWP”).

In March 2004, the Office filed a lawsuit against 15 major drug companies and their subsidiaries over a scheme, where companies allegedly created a “spread” between actual wholesale prices and the AWP. That spread was used for a variety of purposes including providing financial incentives to doctors to prescribe certain drugs and for pharmacies to stock them.

To date, the Attorney General’s Office has secured court rulings or settlements totaling more than $118 million for various state agencies and programs as a result of the drug pricing lawsuits.

In December 2010, New Jersey-based Johnson & Johnson, Inc. was found liable for nearly $52 million in damages and civil penalties for falsely reporting the prices of its drugs, following a five-week trial in Commonwealth Court.

Earlier in 2010 the Attorney General’s Office received a $27.6 million award in a case involving Bristol-Myers Squibb. Both Johnson and Johnson and Bristol Myers Squibb are appealing the rulings against them.

Settlements have also been reached with a number of other pharmaceutical companies accused of similar price activity, including a $10 million agreement with Astra Zeneca, of Wayne PA; $6.95 million from Illinois-based Abbott Laboratories; 1.8 million for GlaxoSmithKline of Philadelphia; and a $13 million collective settlement with Amgen Inc., of Thousand Oaks, Calif., Baxter healthcare Corp., of Deerfield Ill., and Boehringer Ingelhelm Roxane of Ridgefield, Conn.