AWP manipulations aren't small: Drugs have ended up costing taxpayers five times as much as they should. In one spectacular case against Baxter International (BAX), the government was allegedly charged $928 on bags of saline solution costing just $1.71 -- a 54,000 percent markup. They might be increasingly rare, however, following dozens of mostly successful suits in which states and whistleblower have demanded that overcharges be repaid. Like the plague victim in Monty Python and the Holy Grail, AWP scams aren't dead yet, but they might as well be.
State attorneys general have spent years going after drug companies for this scam. Some, such as AstraZeneca (AZN), Merck (MRK) and Pfizer (PFE) have settled. Now governments are turning their attention to McKesson and First DataBank. In McKesson's most recent quarterly report it listed eight drug pricing scam lawsuits filed against it since 2008, and four of those were filed this year (see page 16):
- In re McKesson Governmental Entities Average Wholesale Price Litigation, filed against the Company in the United States District Court for Massachusetts.
- Board of County Commissioners of Douglas County, Kansas et al. v. McKesson Corporation, Civil Action No. 1:08-CV-11349-PBS
- San Francisco Health Plan v. McKesson Corporation, Civil Action No. 1:08-CV-10843-PBS
- State of Connecticut v. McKesson Corporation, Civil Action No. 1:08-CV-10900-PBS, settled on October 15, for $26 million.
- State of Kansas ex rel. Steve Six v. McKesson Corporation, et al., Case No. 10CV1491.
- State of Mississippi v. McKesson Corporation, et al., Cause No. 251-10-862CIV.
- State of Utah v. McKesson Corporation, et al., Case No. CV 10-4743-SC.
- State of Wisconsin ex rel. Hagens Berman Sobol Shapiro LLP, et al. v. McKesson Corporation, Case No. 10CV3411.
Don't declare "marketing the spread" between AWP and the real price of drugs dead yet, but the prospect could be within sight.
- McKesson Pays $350 Million in Settlement That Lowers Drug Prices 4 Percent
- $928 for a Bag of Salt: How Drugmakers Rip Off Taxpayers
- Hawaii Uh-Oh: Why Drug Prices Can Be 5 Times Higher Than They Should Be
- Sandoz Overcharged Medicaid by 60,000% in $13B Pricing Scam, Says Judge
- Exclusive: How Abbott Labs Allegedly Got Medicaid to Pay $3.3M for Popsicles
- AstraZeneca's $103M Drug Pricing Settlement Is Merely Tip of the Over-Charging Iceberg
- Abbott Claims DOJ Let 12 Years' of Drug Pricing Documents Get Destroyed