A federal judge has ruled that pharmaceutical companies AstraZeneca, Schering-Plough Corp. and Bristol-Myers Squibb Co. engaged in unfair and deceptive trade practices regarding some of their drug prices.
The three companies, along with Johnson & Johnson, were defendants in a suit that alleged they inflated the average wholesale prices (AWP) that they reported and which are used by insurers as a benchmark to calculate drug reimbursements.
AstraZeneca was ordered to pay damages of $4.45 million to non-Medicare third-party payers and Bristol-Myers Squibb to pay damages of $183,000.
As the Wall Street Journal noted…
The judge asked for more information before deciding on further restitution to third-party payers for co-payments for some drugs. Plaintiffs’ attorney Steve Berman said the decision “positions the litigation very well for us. In our view, the companies are now on the hook.” Mr. Berman said the damages could be significant in the next round of the litigation. Plaintiffs will be seeking damages of $500 million from AstraZeneca, which could be doubled or tripled, per individual states’ laws.
Commentary: Everyone knows that the pharma industry is rife with questionable pricing and reimbursement practices – that’s not really news. However, these companies got caught and some even bigger judgments related to AWP are likely around the corner.
What is also interesting is that the judge on the case doesn’t just focus on “legal” and “illegal” in her judgment – but goes so far as to deem these three pharma companies are “unethical” in their pricing practices which in turn causes “real injuries to the insurers and patients” who are paying inflated prices for life-sustaining medications.
And finally, we want to point out specifically that Johnson & Johnson, which had been party to this suit, DID NOT VIOLATE THE LAW. We have been accused at Ethisphere of being too hard on Johnson & Johnson in the past (including by J&J itself) so we want to give credit where credit is due and note that this is a positive reflection on J&J.
