11 Drug Companies Agree To Pay $125 Million For Fixing Prices

The Prescription Access Litigation (PAL) coalition filed suit against 11 drug companies in 2002 for artificially inflating the average wholesale price, or AWP, of certain drugs, including ones used to treat serious illnesses such as cancer and HIV. This week, PAL announced that the companies have agreed to pay $125 million to settle—82.5% of the amount will be used to compensate third-party payor’s claims, and the remaining 17.5% will be used for consumer claims. Here’s a list of the drugs involved, and after the jump is a quick guide to see whether you’ll qualify for a claim, pending the judge’s approval of the settlement.

According to PAL:

Medicare Part B recipients, health plans and individuals who paid for these drugs but were not on Medicare will be eligible to receive payments from this settlement once the Court finally approves it. The following types of individuals and entities will be eligible:

  • Patients on Medicare Part B who paid a percentage (i.e. not a fixed copayment, but 10%, 20%, etc.) of the cost of one of the drugs in the case, taken between Jan. 1, 1991 and Jan. 1, 2005.
  • Health Plans and other Third Party Payors who paid all or part of a Medicare Part B recipient’s percentage co-insurance for one of the drugs.
  • Individuals not on Medicare Part B who paid all or part (a percentange) of the cost of one of the drugs taken between Jan 1, 1991 and March 1, 2008.
  • Health plans and other Third Party Payors who paid all or part of the cost of one of the drugs taken by an individual not on Medicare part B between Jan 1, 1991 and March 1, 2008.

“11 drug companies settlement AWP allegations for $125 Million” [Prescription Access Litigation]
(Photo: Getty)

Comments

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  1. DevPts says:

    Price fixing drugs. Say it ain’t so.

    Now we sit back and wait for the whole health care industry to get sued for price fixing.

  2. NightSteel says:

    $125 mil? And how is the multi-billion drug industry going to see this as anything other than the cost of doing business?

  3. Beerad says:

    Wait a minute, are you trying to tell me that pharmaceutical companies were engaged in some kind of hinky business with the health care industry? I am completely floored by this utterly shocking development.

  4. Jaysyn was banned for: http://consumerist.com/5032912/the-subprime-meltdown-will-be-nothing-compared-to-the-prime-meltdown#c7042646 says:

    That’s like what? One half of one percent of their net profit per quarter?

  5. mac-phisto says:

    big deal. what’s that – a day’s worth of profit from the drugs sold? laughable.

  6. nerdherd628 says:

    I am amazed that there weren’t more Pharmaceutical companies on the
    worst companies 2008 bracket. I recently started a new medication and I
    started reading up on it. Apparently it’s a widely used and successful
    drug but the company tried to hideside affects like death in elderly
    people with demensia, overeating and weight gain, and diabetes. The
    medecine is great even with those risks but the sneaky bastards try
    hide all that.

    I sincerely think they are all evil, toying with our health like that.

  7. CaptZ says:

    Just drink more tap water and you get all the drugs you need. Screw the pharmacies and the drug makers.

  8. Drugs are bad… except for the recreational type. Honestly the side effects of many drugs have kept me from ingesting them as prescribed by my doctor.

  9. QuantumRiff says:

    I nominate a total ban on the phrase “after the jump” i’ve been seeing it everywhere on blogs, and it just bothers me… I guess it makes sense on the “front page” that just lists the first paragraph or summary, but when I look at the full pages, it drives me nuts!

  10. RandoX says:

    So that’s 82.5% and 17.5%… after legal fees, of course…

    Guess who the only real winners here are.

  11. ellis-wyatt says:

    A fine this small will only encourage this behavior to continue. And it will.

  12. DeepFriar says:

    and it only took 6 years to settle?
    I’m sure most of the claimants are still alive, or not homeless

    /sarcasm-ometer going off charts

  13. smitty1123 says:

    @Beerad: I like the word Hinky. It’s very 1940s and it fun to say, like calling someone a heel or a stoolie.

  14. carblover says:

    whoo hoo i qualify! yay asthma!

  15. cashmerewhore says:

    If I took three drugs off the class B list, can I get three settlements?

  16. jtheletter says:

    As others have said this settlement amount is laughable. This is an industry that spends tens of Billions per year on just advertising. Either the fine needs to be increased to quarterly profit levels or some corporate charters need suspension. Personally I think suspending/revoking corp charters should become a more common punishment. There is no equivalent of jail time for a corporation. Jail for a person ruins their immediate life, and shortens a precious finite resource, yet companies get financial penalties that barely trip them up. If corps could be killed or “sent to jail” for 5 years at a time we’d see these sorts of abuses drop right off. I’m not advocating it for every little class action that comes along, and I understand there’s a problem of disrupting jobs, etc. It would have to be a balance. But right now most corporations just laugh off these sorts of fines, there is no big threat for them to change their ways.

  17. speedwell (propagandist and secular snarkist) says:

    Sodium chloride is on the B list. Sodium chloride, common table salt. I’m speechless.

  18. Aphex242 says:

    So that’s like 1/18th of 1/1000th percent of the profits they made on the drugs, yes?

    Damn. Jaysyn beat me to it with less funny numbers.

  19. palproject says:

    I’m part of the consumer advocacy organization that helped bring this lawsuit, Prescription Access Litigation (www.prescriptionaccess.org) and I can understand the skepticism about this settlement expressed by previous comments.

    $125 Million may not seem like much when compared to the pharmaceutical industry’s total profits, or annual sales, or what have you. But it’s a considerable amount of money for the allegations in this case — and that’s really what’s key here. This case doesn’t address every instance of illegal or deceptive behavior by drug companies.

    This case is about a very specific set of tactics that drug companies used, concerning a specific set of drugs: The case alleges that drug companies inflated the “average wholesale prices” that Medicare uses to decide how much to pay doctors for a specific group of drugs (particularly for cancer) administered in a doctor’s office.

    Medicare pays for 80% of the cost of these drugs, and then the remaining 20% is paid for by patients and their health plans, if they have supplemental insurance (which a majority of Medicare recipients do). So even of that 20% that’s not paid for by Medicare, a significant chunk of it is paid for by health plans and then the rest by individuals. That accounts for the 17.5%/82.5% split that some commenters have commented on.

    This settlement will be a very good one for consumers, for a few reasons, once it’s finally approved by the Court:
    1. Medicare patients will not have to produce receipts or other records in order to get reimbursed, unlike many other settlements.
    2. Medicare patients will get THREE TIMES the amount they were overcharged.
    3. Non-Medicare patients will have the option of either producing detailed records of how much they spent or of selecting an “Easy Refund” option to get up to $35 without having to find and supply detailed records.

    In a nutshell, this gets significant money back into the pockets of very ill patients who would otherwise get nothing back and who cannot wait any longer.

    More details on the settlement can be found on our website, at [www.prescriptionaccess.org]

  20. axiomatic says:

    Agree with the rest of you. I’m sure the drug companies are thrilled that the penalty is so small.

  21. palproject says:

    @speedwell:

    This refers to Sodium Chloride IV solutions. While it seems absurd that it’s on the list, that’s because what the defendants are alleged to have done here is absurd: i.e. jack up the price of a Sodium Chloride IV bag, overcharging Medicare, patients and health plans.

  22. julieannie says:

    Shit, I had Hodgkin’s lymphoma back in 2005/2006. My chemo regimen ABVD has every drug in there on this list. I also was on Aranesp, Neulasta, Neupogen and Ativan for blood/nausea issues. Suddenly the $1 million it cost my insurance to cover treatment makes sense.

  23. britne says:

    anyone able to find this story in a major news venue, not just the website of the group that won the suit?

    sorry, my librarian-esque authenticity detector went off.

  24. 3drage says:

    The people wronged by this will get a ticket for 5 free Viagra pills, while the attorneys will rake in the dough.

  25. Coelacanth says:

    @speedwell: Yes, along the same vein, cupric chloride. While not as common, gigantic bottles can be found all over high school chemistry labs.

    (Still, I wouldn’t recommend raiding their stockpiles, since chemical reagents for the vast majority of chemistry stockrooms are only are not “pharmaceutical grade,” and therefore ridden with potentially deadly impurities.)

    ————

    Unrelated comment:

    It’s a shame Merck and Allergan aren’t named in this settlement. None of my prescription drugs (with the exception of albuterol) are covered. Also, I remember paying just over $10 for ‘full retail price’ for an inhaler when I didn’t have adequate health insurance in college… that’s hardly breaking the bank.

  26. Bourque77 says:

    In other news, the earth is round.

  27. backbroken says:

    They fixed the prices! Cool.
    .
    .
    .

    Oh, you mean the other kind of ‘fix.’

  28. snoop-blog says:

    125 mil is pocket change. seems more like a slap in the face.

  29. 82.5% of the amount will be used to compensate third-party payor’s claims

    AKA: Attorney fees.

  30. palproject says:

    @Papa Midnight:

    No, not attorneys fees. “Third party payors” refers to health plans, labor union benefit funds and self-insured employers who paid for these drugs on behalf of their members.

    On the whole, health plans etc paid for the bulk of the cost of these drugs that were not covered by Medicare.

    Yes, there will be attorneys’ fees in the case — in class action settlements, the attorneys typically receive 25-33% of the settlement proceeds. But in class actions, unlike other lawsuits, attorneys fees have to be approved by the Court, and class members are entitled to object to the fees if they think they are too high. These cases represent years of work, thousands of hours of effort, millions of dollars spent on examining documents, deposing witnesses, working with experts, etc.

    So, yes, the attorneys will get a chunk of the proceeds, but without those years of work, there’d be no settlement at all.

  31. @QuantumRiff: Seconded!

  32. Marks2183 says:

    jtheletter, The issues with a “company” going to jail and the jobs being lost and the ridiculous low-ball settlements could all be resolved if the government would just take the right approach.
    The ACTUAL people involved need to go to jail! Sentences should be equivalent to those for people convicted of treason, including life in prison and the death penalty if bad enough.
    The company doesn’t even deserve too big of a loss, The people that made the bad thing happen deserve “individual attention”.

  33. Beerad says:

    @palproject: Thanks for the explanation! As an attorney (albeit not a class-action plaintiffs’ attorney) it’s irritating that everyone’s first thought is “of course the lawyers are just screwing everyone and the actual plantiffs won’t see a dime.”

    As also someone who has big problems with the current state of the health care industry and who is related to a cancer patient who has paid crazy out-of-pocket expenses and will likely see some reimbursement under this settlement, this lawsuit rocks! Thanks for all of PAL’s hard work, and keep up the good fight!