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BOSTON – A Massachusetts federal judge ruled yesterday that AstraZeneca, Bristol-Myers Squibb Co. and a Schering-Plough Corp. subsidiary engaged in unfair and deceptive trade practices that violated Massachusetts consumer protection laws by causing the publication of false and inflated average wholesale prices of pharmaceutical drugs reimbursed by Medicare. Published average wholesale prices (AWPs) are the reimbursement benchmark for the government and other third-party payers. In re: Pharmaceutical Industry Average Wholesale Price Litigation, M.D.L. No. 1456, No. 01-12257 (D. Mass) “The publication of false, inflated, AWPs caused real injuries to the government, insurers and patients who were paying grossly inflated co-insurance payments for critically important, often-life sustaining, drugs,” wrote by Judge Patti D. Sarkis Saris’ 183-page ruling affects two of the case’s three classes. Class 2 involves third-party payers in Massachusetts that reimburse Medicare beneficiaries for their 20% co-insurance payments. The other class, known as Class 3 in the case, includes third party payers and consumers who make co-insurance payments and non-insured consumers who pay drug prices based on average wholesale prices. The classes claims include payments made from December 1997 to December 2003. Saris’ order found damages of nearly $4.5 million for AstraZeneca for Class 3 claims and $183,454 for Bristol-Myers. The court needs more information to calculate Class 2 damages. Although the trial involved only Massachusetts payors, the decision will have applicability for all third-party payor cases in the country, said Thomas Sobol, a Boston-lawyer for Seattle-based Hagens Berman Sobol Shapiro, who represented the plaintiffs. “The decision will have major impact for all third party payers in connection with their claims that these three drug companies had artificially inflated their reimbursement rate,” Sobol said. “We think it should provide significant incentive for these companies to settle or we go forward on a nationwide effort.” John T. Montgomery, a partner at Boston-based Ropes & Gray who represented Schering-Plough and its subsidiary Warrick Pharmaceuticals Corp., said his clients are pleased that the court dismissed claims related to Schering-Plough’s branded drugs. Montgomery also noted that the court found Warrick liable for one form of one drug only for payments in 1998 and 1999 and that the plaintiffs’ total damages claims added up to less than $100,000. “Although the damages claimed are very limited on this one product, we are considering taking an appeal of the ruling at the appropriate time,” Montgomery said. Bristol-Myers intends to appeal the damages award for the claims that survived the trial, said spokeswoman Laura Hortas. “Bristol-Myers has long maintained that it is not responsible for the average wholesale pricing reimbursement benchmark used by private insurers and Medicare,” Hortas said. “The company maintains that its own pricing sales and marketing practices were fair and reasonable.” AstraZeneca is also considering its appellate options, said spokeswoman Laura King. Claims against Johnson & Johnson for the two classes were dismissed.

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