AG Van Hollen: Announces settlement against Baxter Healthcare Corporation alleging average wholesale price manipulation

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Bill Cosh 608/266-1221

MADISON – Attorney General J. B. Van Hollen announced today that the state has reached an agreement with another one of the 36 pharmaceutical manufacturers charged with defrauding the Wisconsin Medicaid program. A Wisconsin Department of Justice law enforcement action pending in Dane County alleges that the companies reported fictitious prices to deceive the Medicaid pharmaceutical reimbursement system to increase market share.

Under the terms of the agreement Baxter Healthcare Corporation paid a total of $1,050,000 to settle the state’s claims against it. The payment consisted of $892,500 in restitution to the Medicaid program and $157,500 in costs and fees for prosecution of the action.

Wisconsin law makes it unlawful for any person to make representations that are untrue, misleading or deceptive with intent to sell pharmaceuticals. Each of the defendant companies allegedly reported average wholesale prices (“AWPs”) to pricing compendia for identified drugs that were grossly inflated and did not reflect the actual average wholesale prices. The Medicaid program utilized the compendia for the payment or reimbursement of pharmacists for Medicaid recipients and consequently paid substantially more than the actual cost of the drug.

“By publishing the inflated prices the pharmaceutical companies attempted to increase reimbursements to pharmacists, knowing full well that the excessive prices would be borne by taxpayers,” said Van Hollen. “Deceptive and fraudulent pricing activities such as this prevent the Medicaid program from getting its biggest bang for the buck.”

A copy of the settlement agreement and release is available at

The complaint filed in Dane County Circuit Court alleged that Baxter and 35 other manufacturers knew when they published the false AWPs that the state would grossly overpay for the prescription drugs. Many of the defendants have been sued in other states for similar activities and Wisconsin has been coordinating its litigation with other Attorneys General and the federal government.

Payment on the settlement came on the heels of a jury verdict for $9 million in damages last week against another defendant, Pharmacia, after a two week trial. Still two other defendants, Amgen and Immunex, settled with the state in December, agreeing to pay a total of $2 million.