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N.Y. Slams Drug Makers’ Calls To Toss AWP Case

07/12/2007 | Portfolio Media
By Christine Caulfield
Portfolio Media, New York

New York officials have asked a federal court to ignore a joint motion to throw out an antitrust case against a slew of drug companies accused of scamming Medicare, scoffing at arguments the case was “too large.”

In a filing Wednesday with the U.S. District Court for the District of Massachusetts, which is handling a slew of lawsuits against the pharmaceutical industry over inflated average wholesale prices (AWP), the city of New York and 43 New York counties - which share the load for funding public health insurance - said the companies had only themselves to blame for the size of the case.

The drug manufacturers, which include Wyeth Pharmaceuticals, Eli Lilly & Co., Amgen Inc. and Barr Laboratories Inc, have been hit with dozens of suits by U.S. federal and state government health officials alleging they conspired to overstate their published pharmaceutical prices in a scheme to defraud Medicare.

By fraudulently inflating their listed average wholesale prices for drugs covered by Medicare and Medicaid, the companies ensured excessive reimbursements to customers, the suit claims. To profit from the scheme, they then allegedly promoted the difference between the fake, bloated prices and their actual prices to entice more business and increase sales.

The companies had argued in their joint motion to dismiss filed late last month that the health officials had added to the case new drugs and new defendants in contravention of a court directive.

“The size of the a function of defendants false price reporting,” the plaintiffs shot back. “This is not a class action and there is no provision in New York Social Services Law, the principles of common law fraud or unjust enrichment, to suggest that when a fraud infects $20 billion in expenditures, or more than 1300 drugs, it ceases to be a fraud.”

The plaintiffs also dismissed the companies’ argument that the prices used to demonstrate the alleged fraud and identify which drugs should be included in the case were too low and would likely distort results.

“Defendants’ complaint that the prices used are ridiculous and lead to distorted results. We agree the prices are ridiculous,” they wrote, adding the prices were the “actual prices paid” for the drugs by wholesalers.

In a separate brief filed Wednesday, the plaintiffs also called on the court to ignore the individual motions to dismiss filed by nine of the defendant drug companies, arguing the offenders had violated an explicit order not to flood the court with motions.

They said Judge Patti Saris had been unequivocal in her May 16 order calling for a single, collective brief from the drug companies opposing the amended complaint, yet an errant sub-group, including Amgen and Wyeth, had “completely ignored” the instructions.

In filing their motions, the pharmaceutical giants had invoked the Supreme Court’s recent ruling in Bell Atlantic Co. v. Twombly, which raised the bar for conspiracy claims.

The plaintiffs are represented by Kirby McInerney & Squire LLP.

The case is In re: Pharmaceutical Industry Average Wholesale Price Litigation, case number 01-cv-12257, in the U.S. District Court for the District of Massachusetts.