Kathleen G. Kane - Pennsylvania Office of Attorney General - Protecting Pennsylvanians

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September 12, 2011

More than $49 million recovered for PA agencies in drug price settlement with pharmaceutical company 

HARRISBURG - More than $49 million has been recovered for three state agencies as part of a settlement between the Attorney General's office and Aventis, Bayer, Schering and Pfizer, concerning allegations that the companies artificially inflated drug prices in order to increase sales and profits.
The settlement money is reimbursement for state agencies and government benefit programs that were allegedly forced to pay higher prices for drugs, including $18,248,482 for the Pennsylvania Department of Public Welfare; $22,659,452 for PACE (the Pharmaceutical Assistance Contract for the Elderly, run by the Pennsylvania Department of Aging); and $8,242,746 for PEBTF (the Pennsylvania Employees Benefit Trust Fund).

Attorney General Linda Kelly said 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 2004, lawsuits were filed against 15 major drug companies and their subsidiaries over this scheme, where companies allegedly created a "spread" between actual wholesale prices and the AWP, and used that spread as a financial incentive for doctors and pharmacies to prescribe or stock various drugs.

To date, the Attorney General's office has secured court rulings or settlements totaling more than $167 million for various state agencies and programs as the result of these 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 & 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; $13 million collective settlement with Amgen Inc., of Thousand Oaks, Calif., Baxter Healthcare Corp., of Deerfiled, Ill., and Boehringer Ingelhelm Roxane of Ridgefield, Conn.; and $2 million for Dey Pharmaceutical of Delaware.

Kelly thanked the staffs of the PACE program of the Department of Aging, the Department of Public Welfare and the Pennsylvania Employees Benefit Trust Fund for their assistance with the litigation.

"Without the diligent effort of these employees in helping us prove our losses, these settlements would not have happened," Kelly said.

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