Navigation Links
Major Rollback of Pharmaceutical Bench Mark Prices Approved by Federal Court of Appeals, Hagens Berman Announces
Date:9/10/2009

BOSTON, Sept. 10 /PRNewswire/ -- Purchasers of pharmaceutical drugs including consumers and health plans will soon enjoy a rollback of benchmark prices of some of the most common prescription medications after a Federal Appeals Court last week affirmed the approval of a settlement with two leading drug-pricing publishers, First DataBank, Inc. and Medi-Span, a division of Wolters Kluwer Health, Inc.

(Logo: http://www.newscom.com/cgi-bin/prnh/20080317/AQM144LOGO)

The court's approval clears the way for the pricing rollback to go into effect on Sept. 26, 2009, and could save consumers and other purchasers hundreds of millions of dollars.

The settlement stems from a 2005 class-action lawsuit brought on behalf of health benefit plans and consumers against First DataBank (FDB) and McKesson Corporation, a large pharmaceutical wholesaler. According to the suit filed by Hagens Berman Sobol Shapiro, plaintiffs claimed that the majority of brand name drugs are reimbursed based on a pricing benchmark known as the "average wholesale price" or AWP, a benchmark that the suit claimed was manipulated by the defendants to boost profits.

District Judge Patti Saris of the District of Massachusetts summarized the allegations in her approval order, "[t]ypically, a drug's wholesale acquisition cost or 'WAC' was understood as the price wholesalers paid to purchase a drug from the manufacturer; the WAC was then marked up by a fixed percentage to derive the AWP. Beginning in 2001, FDB and McKesson reached a secret agreement to raise the markup between WAC and AWP from its standard 20 percent to 25 percent for more than 400 drugs. The scheme resulted in higher profits for retail pharmacies that purchased drugs on the basis of WAC but are reimbursed on the basis of AWP."

On June 6, 2007, HBSS settled claims with FDB, a subsidiary of Hearst Corporation. Under the agreement, FDB agreed to rollback pricing by five basis points, from 1.25 to 1.20. The markup over WAC was used to calculate the AWP, the reimbursement benchmark for most widely used prescription drugs, which, in turn, would reduce the price of most medications by four percent. In a later lawsuit, the other large supplier of electronic data files, Medi-Span, agreed to a similar rollback.

First DataBank and Medi-Span have indicated that in addition to the drugs included in the settlement, they also intend to independently rollback the AWP benchmark price of other drugs not covered by the settlement, which should create cost-savings on a much broader range of prescription medications.

An alphabet soup of associations representing the pharmacies and pharmacy benefit managers fought the proposed rollback before federal trial and appellate courts. The National Association of Chain Drugstores, the Pharmaceutical Management Association, the National Community of Pharmacists Association, and others claimed either that small pharmacies would be put out of business through implementation of the rollback, or that the savings to the health plans and consumers would not be large enough to justify the settlement.

The courts rejected these claims and in a ruling on Sept. 4, 2009, affirmed the approval of the settlement. The First Circuit Court of Appeals stated:

                "In principle, the rollback makes some sense:  it
                should -- to the extent that process remain above
                some hypothetical market level -- wash out any
                remaining inflation for the future; and, to the
                extent it forces prices temporarily below the market
                level, it will take back some of the windfall profits
                obtained (even if innocently through another's fraud)
                and give some compensation for past overcharges. The
                market forces that eroded excess gains in the past
                should also in the future redress unduly low
                reimbursement; and to the extent that those forces
                operate symmetrically, the gains and the losses may
                even tend to balance out."

Separately, Massachusetts Federal Judge Patti J. Saris approved the settlement with the second defendant, McKesson, for $350 million on behalf of the health benefit plans and consumers nationwide.

"The impact of this settlement is very significant for all who have paid for brand name drugs," said Steve Berman, a lead counsel and managing partner at Hagens Berman Sobol Shapiro.

"The First DataBank and Medi-Span settlement shows all payers that the markup differences between WAC and AWP are entirely artificial and thus should be adjusted to ensure the lowest payment for prescription drugs," said Thomas M. Sobol, a lead attorney and managing partner of the Cambridge office of Hagens Berman Sobol Shapiro.

For more information on this case and to sign up as a consumer or third-party payer you can visit Hagens Berman website at www.hbsslaw.com/McKesson_classaction.htm.

About Hagens Berman Sobol Shapiro

Hagens Berman Sobol Shapiro is a nationally recognized class-action and complex-litigation law firm based in Seattle with offices in Chicago, Boston, Los Angeles, Phoenix and San Francisco. Among recent successes, HBSS negotiated a $300 million settlement in the DRAM memory antitrust litigation, the largest antitrust settlement in U.S. history, recovered $340 million on behalf of Enron employees, and was part of the leadership team in the $3 billion Visa/MasterCard settlement. In pharmaceutical litigation, the firm's recent successes include a $350 million settlement with McKesson, more than $200 million with other parties in drug-pricing litigation, and a $150 million settlement regarding Lupron. HBSS represented Washington and 12 other states against the tobacco industry that resulted in the largest settlement in history. For a complete listing of HBSS cases, visit www.hbsslaw.com.

    Media Contact:
    Mark Firmani (206) 443-9357
    Firmani + Associates
    mark@firmani.com


'/>"/>
SOURCE Hagens Berman Sobol Shapiro
Copyright©2009 PR Newswire.
All rights reserved

Related medicine news :

1. Majority of 2.4 Million U.S. Children With ADHD Not Diagnosed or Consistently Treated, According to New Gold Standard Study by Cincinnati Childrens Researchers
2. Laboratory at UI plays major role in diagnosing cancer
3. Draxis Health selected by Johnson and Johnson Consumer Companies, Inc. for major contract manufacturing relationship
4. DaVita Acquires Majority Stake in HomeChoice Partners, Inc.
5. Major Pharma Clinical Case Studies From Amgen, AstraZeneca, GSK, Intermune, Cephalon Inc, Sunesis Pharmaceuticals and Dartmouth Medical School During Fall Clinical Focused Programs
6. Major grant advances UWs clinical and translational research enterprise
7. Major differences revealed in how local authorities in the UK support disabled people
8. Watson Wyatt Identifies Major Benefit Trends During Open Enrollment Season
9. Worldwide Probiotic Drink, Yakult(R), Launches in Its First Major U.S. Market
10. Ericom Provides Significant Cost-Savings for Major New York City Healthcare Organization
11. Eckert Seamans Announces Major Expansion in Philadelphia, West Chester and Harrisburg
Post Your Comments:
*Name:
*Comment:
*Email:
(Date:2/13/2016)... ... 13, 2016 , ... The producers of Enterprises TV are pleased ... increasingly modern world of instantaneous consumption proves very convenient for businesses. With new technologies ... and coal, which pollutes our air, water, and soil. It can also threaten the ...
(Date:2/13/2016)... ... February 13, 2016 , ... DDi , a Makro ... list for its expertise in eClinical Solutions. DDi has built its solution competency ... needs of global clients. DDi provides smarter technology for Clinical Development, Regulatory and ...
(Date:2/12/2016)... ... February 12, 2016 , ... ... to funding innovative lymphoma research and serving the lymphoma community through a comprehensive ... members of South Florida’s philanthropic community at its 10th anniversary Fashion Luncheon on ...
(Date:2/12/2016)... California (PRWEB) , ... February 12, 2016 , ... Coco ... their participation in Red Carpet Events LA GRAMMY’s Style Lounge Event. Coco Libre will ... way to stay hydrated before the big event. The invitation-only gifting suite, held this ...
(Date:2/12/2016)... ... February 12, 2016 , ... Fisher House Foundation Chairman and ... J. Lee, Nevada Military Support Alliance president Scott Bensing, and Peggy Kearns Director, VA ... Southern Nevada Healthcare System. This will be the first Fisher House in Nevada, ...
Breaking Medicine News(10 mins):
(Date:2/12/2016)... CRANBURY, N.J. , Feb. 12, 2016  Innophos Holdings, ... performance-critical and nutritional specialty ingredients, today announced that it will ... at 10:00 am ET to discuss its fourth quarter and ... --> The press release detailing fourth quarter and ... 2016 after market close. --> ...
(Date:2/12/2016)... , Feb. 12, 2016  SI-BONE, Inc., a medical device company ... ("iFuse"), a minimally invasive surgical (MIS) device indicated for fusion for ... Services, Inc. (NGS), the Medicare Administrative Contractor (MAC) covering the states ... Maine , Massachusetts , ... New York , Rhode Island , ...
(Date:2/12/2016)... -- On Thursday, Feb. 11, 2016, surgeons at the ... Austin Medical Center successfully completed the first robotic surgery ... Surgical System with Trumpf Medical,s advanced operating table, the ... M.D., colorectal surgeon at the Texas Institute for Robotic ... technology, which seamlessly combines the da Vinci Xi Surgical ...
Breaking Medicine Technology: