Big Pharma Company Settles with Idaho for $1.7 Million

A relieving settlement

Watson, which is among the top five generic drug companies in the world recently agreed to pay $1.7 million to the state of Idaho to settle allegations of consumer fraud. The consumer, in this case, being the government. Lawrence Wasden, the Idaho Attorney General, filed lawsuits in 2007 against various pharmaceutical companies, Watson included. These lawsuits were meant to recover taxpayer money, claiming the pharmaceutical companies earned extra money unlawfully by reporting an inflated price for their generic drugs.

Idaho Medicaid provides health services to low-income consumers. In order to reimburse pharmacies for the “estimated acquisition cost” of a drug, which they are legally required to do, Medicaid uses the “average wholesale price” as reported by pharmaceutical companies to determine how much money to pay the pharmacies for the drugs they dispense. Watson reported an inflated cost for the average wholesale price of their products, causing Medicaid to spend too much money reimbursing pharmacies, which in turn boosted Watson’s income and wasted Idahoans’ taxes.   Kind of like a microcosm of the whole LIBOR scandal.  Basically, you just can’t trust a profit-focused company to be honest in reporting a number that directly affects their bottom line.

Of the $1.7 Million settlement, a reported $1,055,459.48 will go towards paying back the Idaho Medicaid program, and about $423,724.61 will be deposited into the state’s general fund to be appropriated by the Idaho State Legislature. $50,000 of the settlement will go into the Attorney General’s Consumer Protection Account to cover the costs of investigation and legal fees.  Who knows how much Watson made in the long run.  Considering how much money pharmaceutical companies rake in per drug, I have no doubt that a giant such as Watson made way more than $1.7 million with their dishonesty.