Average Wholesale Price Lawsuits Might Lead To Prescription Drug Pricing Changes

Main Category: Litigation / Medical Malpractice
Also Included In: Public Health
Article Date: 14 Dec 2006 - 11:00 PDT

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Lawsuits against prescription drug wholesaler McKesson and drug information provider First DataBank alleging that the companies colluded to raise the average wholesale prices of prescription drugs to increase pharmacy profits and win business might have outcomes that "change the way drugs are priced in this country" and "save consumers billions," the San Francisco Chronicle reports (Colliver, San Francisco Chronicle, 12/12). California-based First DataBank, a unit of Hearst, is the main U.S. publisher of AWPs, which are used by insurers and state Medicaid programs to determine how much they reimburse pharmacies for dispensing drugs for their members and beneficiaries. First DataBank for years said that its AWPs were based on a survey of national wholesalers. However, according to a deposition by a First DataBank manager, McKesson since 2003 has been the only company that participated in the survey. First DataBank in October agreed to settle a federal lawsuit alleging that the plaintiffs, who include unions and employers, paid an extra $7 billion from August 2001 through March 2005 for drugs covered by the suit. The company denies any wrongdoing (Kaiser Daily Health Policy Report, 10/6). A separate lawsuit filed by the plaintiffs is being fought by California-based McKesson, which also denies wrongdoing.

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Alex Sugerman-Brozan -- director of the Prescription Access Litigation Project, which filed both lawsuits on behalf of the plaintiffs in a Boston federal court -- said, "This case is going to lead payers to demand more transparency in drug pricing," adding, "It's this entire shadowy world that leads to massive overcharging." Mark Erlich -- executive secretary-treasurer for New England Regional Council of Carpenters -- a plaintiff in the case, said, "From a consumer point of view, we've been getting killed by the pharmaceutical companies for years. This is the first time something really set them back on their heels." However, E.M. Kolassa, CEO of the consulting firm Medical Marketing Economics and a witness for pharmaceutical companies in similar lawsuits, said that the elimination of AWPs would be unlikely to reduce the cost of prescription drugs. "We're going to see some disruption for a while, and the system will correct itself," Kolassa said (San Francisco Chronicle, 12/12).

"Reprinted with permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation . © 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved

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