Federal Judge Rules Drug Companies Engaged in Drug Price Deception

In a class action lawsuit that claims drug companies unfairly adjusted prices of medication, the plaintiffs scored a major victory when Judge Saris found that defendants “unfairly and deceptively caused false AWPs to be published knowing that payers and the government did not understand the truth and the severity of the markups.”  The named defendants are AstraZeneca, Schering-Plough and Bristol-Myers Squib.

In her opinion dated June 21, 2007, Judge Saris wrote that “Unscrupulously taking advantage of the flawed AWP system … by establishing secret mega-spreads far beyond the standard industry markup was unethical and oppressive.” She also wrote that such practices, “caused real injuries to the insurers and patients” who paid inflated prices for life-sustaining drugs. Such drug pricing fraud is part of a broad category of pharmaceutical fraud.

AWP is Average Wholesale Price, the measure by which drugs were generally paid for by healthcare payors in years past. Medicare now pays for drugs on an Average Sales Price basis, which is an actual price and less likely to be manipulated.

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