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:2/12/2016)... (PRWEB) , ... February 12, 2016 , ... Yisrayl Hawkins, ... revealing article this week that uncovers what he says are the real facts surrounding ... of the Bible from parents and Sunday school teachers, and Yisrayl says there is ...
(Date:2/12/2016)... ... 12, 2016 , ... Planet Future is a Final Cut Pro ... great for showcasing pictures, videos as well as text in an exciting cartoon environment. ... transitions and a beautiful frame overlay. Pixel Film Studios makes editing easy; simply insert ...
(Date:2/12/2016)... ... ... Dignity Health named Dr. Scott Bingham the Facility Medical Director of the new ... under Dignity Health Arizona General Hospital , which opened last year in the ... new freestanding emergency room delivers the highest quality care to Mesa and the surrounding ...
(Date:2/11/2016)... ... February 11, 2016 , ... “ HEALING MIND : Five Steps ... Mind” (published by Balboa Press) teaches readers how to become their own therapist. Providing ... author Janice McDermott, M.Ed., LCSW, offers an understanding of how to heal one’s inner ...
(Date:2/11/2016)... ... February 11, 2016 , ... ... use the action analytics leader’s population health solutions, MDinsight® and IndiGO®, for its ... the Atlanta-area healthcare system. Details of the contract were not disclosed. , As ...
Breaking Medicine News(10 mins):
(Date:2/12/2016)... SEOUL, South Korea , Feb. ... Macrogen, Inc. today announced they will form a ... for precision medicine in cancer. The goal of ... digital-sorting technology with Macrogen,s high-throughput Next Generation Sequencing ... the Clinical Laboratory Improvement Amendments (CLIA) of 1988 ...
(Date:2/12/2016)... 2016  OMS Supply, a large provider of oral ... today the recent launching of their new company website. ... features that enhance the user experience and enable practitioners ... --> --> Despite the ... that started in early 2016, they have already made ...
(Date:2/12/2016)... BUDAPEST , Ungarn, February 12, 2016 ... ein Medizintechnikunternehmen, das sich auf den ungedeckten ... gab heute positive Ergebnisse seines klinischen Forschungsprogramms ... und Asthma-Patienten beschäftigt, ergab Verbesserungen ihrer respiratorischen ... Indiso ltd , ein Medizintechnikunternehmen, das ...
Breaking Medicine Technology: