Court ruling favors State over pharmaceutical manufacturers

Jul 21 2004

Nevada Attorney General Brian Sandoval yesterday announced that Washoe County District Court Judge Steven R. Kosach has issued an important ruling in Nevada's Average Wholesale Price (AWP) litigation against numerous pharmaceutical manufacturers including Abbott Labs, Baxter, Bristol-Myers Squibb, Dey, GlaxoSmithKline, and Pharmacia.

Judge Kosach has rejected all but one of the arguments presented by the manufacturers asking that the lawsuit be dismissed allowing the state to proceed with its claim that a host of pharmaceutical manufacturers have defrauded the state Medicaid program and consumers through a practice of inflating the Average Wholesale Price of drugs.

Nevada Medicaid, Medicare, and many private programs throughout the state pay for prescription drugs on the basis of AWP. The state alleges that pharmaceutical manufacturers engaged in an illegal practice of inflating the reported AWP for drugs thereby causing Nevada Medicaid and other payors to overpay for prescription drugs. The allegations assert violations of the state's Medicaid, False Claims, and Deceptive Trade Practices statutes.

According to Chief Deputy Attorney General Tim Terry, “Pre-trial discovery will begin in earnest leading to a jury trial of the issues to be heard on the merits. This case is incredibly important to Nevada health care consumers—particularly those with limited incomes. Any willful practice that artificially inflates the price of prescription drugs on the market is a fraud exacted upon consumers.” The state's case is being prosecuted with the assistance of special counsel Hagens Berman in Seattle, WA.

Nevada is involved in similar litigation against other pharmaceutical manufacturers in federal court in Boston, MA. That court has also ruled that the state's case may proceed.