Judges orders Astra Zeneca & Bristol Myers Squibb to pay double damages in AWP case
Judge Patti Saris of the US District Court for the District of Massachusetts today issued an order in the massive national class action lawsuit, In re Pharmaceutical Industry Average Wholesale Price Litigation. In it, she found Astra Zeneca (NYSE:AZN) and Bristol-Myers Squibb (NYSE:BMY) liable for double damages for their illegal conduct in artificially inflating teh Average Wholesale Prices of a number of physician-administered drugs. She had previously held in June 2007 that these companies had violated Massachusetts law in doing so, but had not ruled on the amount of damages they would have to pay. Today’s order is here.
Two PAL members, Health Care for All of Massachusetts, and Pipefitters Local 537 Trust Funds, are plaintiffs in the case.
Below is the press release that PAL issued today on this important development:
FOR IMMEDIATE RELEASE
November 2, 2007
BOSTON, MA – Judge Patti B. Saris of the U.S. District Court for the District of Massachusetts issued an order today in the massive class action lawsuit, In re Pharmaceutical Industry Average Wholesale Price Litigation, awarding double damages against Astra Zeneca (NYSE:AZN) and Bristol Myers Squibb (NYSE:BMY) for illegally inflating the “Average Wholesale Prices” (AWPs) of certain physician-administered drugs. Astra Zeneca (AZ) will have to pay $12,941,869 in damages, and Bristol Myers Squibb (BMS) will have to pay $695,594.
A trial against these two companies and several others was held over several months in late 2006 and early 2007. In June 2007, the Court issued its order resulting from that trial, finding that AZ, BMS and Warrick Pharmaceuticals (a subsidiary of Schering Plough) had violated the Massachusetts Consumer Protection Act (Chapter 93A) by grossly inflating the AWPs for a number of drugs. In that June order, however, the Court did not award final damages against the defendants, requesting additional information from the parties. The order issued today is the Court’s ruling on those damages. One of the key issues the Order addresses is whether the damages should be multiplied or not.
Under the Mass. Consumer Protection Act, a Court can order the doubling or even trebling of damages against defendants for “unfair and deceptive” conduct, if the conduct was “knowing and willful.” Judge Saris found that AZ’s and BMS’s conduct in inflating the AWPs of the drugs in question was knowing and willful, because they knew that Medicare patients and their insurers would have no choice but to pay 20% co-insurance on the “grossly inflated phony AWPs.” She awarded double damages against Astra Zeneca because it “sold its drug Zoladex based on its profitability to the doctor’s office…[t]he damage to the sick and old beneficiaries was inevitable.” She awarded double damages against BMS for certain years for the drugs Taxol, Cytoxan and Rubex. These double damages apply to a class of Massachusetts health plans that provide Medicare supplemental insurance. For a separate class of non-Medicare Massachusetts health plans, she awarded single damages.
“This is a major victory for consumers and health plans in Massachusetts,” said John McDonough, Executive Director of Health Care For All, a plaintiff in the case and a member of the Prescription Access Litigation (PAL) coalition. “Drug companies have been put on notice that illegally inflating drug prices at the expense of seriously ill seniors and the disabled will cost them dearly in Massachusetts.”
Blue Cross Blue Shield of Massachusetts was also a plaintiff in the case, as was PAL coalition member Pipefitters Local Union 537 Trust Funds.
The Judge’s order applies only to health plans in Massachusetts, as the trial addressed claims under Massachusetts state law. Claims against these defendants in the 49 other states must still be heard by the Court. The lawyers representing the plaintiffs estimate that, if one extrapolates the numbers in Massachusetts to the other 49 states, total nationwide damages against these two companies could exceed $200 million.
Both Bristol Myers Squibb and Astra Zeneca previously had agreed to settle some of the claims against them, claims that the price increases harmed a nationwide class of millions of individual Medicare beneficiaries. Astra Zeneca agreed in May 2007 to settle those claims for $24 million and Bristol Myers Squibb agreed in July 2007 to settle for $13 million. Another defendant, GlaxoSmithKline, settled all the claims aginst it in August 2006 for $70 million, and thus was not part of the trial that began in fall 2006.
Today’s order is just the latest development in this massive nationwide class action suit against dozens of drug companies. The next round of trials, addressing hundreds of additional drugs, is currently scheduled to begin in spring 2008.
“The Judge’s decision in this case exposes one of the most reprehensible drug industry schemes in recent memory,” said Alex Sugerman-Brozan, director of Prescription Access Litigation, “Overcharging people on Medicare with cancer and other serious illnesses and their health plans is as appalling as it gets, and this decision should give the other companies in this lawsuit some indication of what may lay ahead for them.”
Today’s order brings the total amount of settlements and judgment in the case so far to over $120 million. The order can be found here.
About Prescription Access Litigation The Prescription Access Litigation (PAL) (www.prescriptionaccess.org) Project works to challenge illegal pharmaceutical industry tactics that increase the cost and improper usage of prescription drugs, using class action litigation and public education. PAL is a national coalition of more than 130 organizations, including consumers, seniors, heath care, labor, legal services, women’s health and human services groups in 36 states and the District of Columbia. PAL is a project of Community Catalyst, a national non-profit advocacy organization working to build the consumer and community leadership that is required to transform the American health system. PAL publishes the PAL Blog at www.prescriptionaccess.org/blog.
About Health Care For All Health Care For All (www.hcfama.org) is building a movement of empowered people and organizations in Massachusetts with the goal of creating a health care system that is responsive to the needs of all people, particularly the most vulnerable. Health Care For All is dedicated to making quality care the right of all people, and supports a health care system that is universal, comprehensive, and equitable.