AWP Litigation -- In re Pharmaceutical Industry Average Wholesale Price Litigation
Court: United States District Court for the District of Massachusetts
Case No.: 01-CV-12257, MDL No. 1456
Leadership Position: Co-Lead Class Counsel
Drug prices have soared for years. One of the reasons for this is drug companies’ inflation of a benchmark called Average Wholesale Price or AWP. It turned out that AWP was neither an average, an average price, nor a wholesale price. Rather, it was an arbitrary number assigned by drug manufacturers which, through various manipulations, resulted in consumers and third party payors vastly overpaying for needed medications.
AWP was originally intended to represent the price at which drug wholesalers purchased drugs from pharmaceutical manufacturers. AWP also serves as the benchmark from which consumers, union health and welfare funds, insurance companies and other third-party payers (“TPPs”) pay for pharmaceuticals. However, many drug companies manipulated and deceptively reported AWP so that third party payors and consumers vastly overpaid for drugs.
Wexler Wallace, appointed Co-Lead Counsel for Plaintiffs and the Class, initiated a wave of class actions nationwide against dominant pharmaceutical manufacturers to halt the deceptive reporting of AWPs. These cases, which were consolidated in the United States District Court for the District of Massachusetts, alleged that pharmaceutical manufacturers such as Abbott, AstraZeneca, Bristol-Myers Squibb, Baxter and GlaxoSmithKline routinely inflated the AWPs they reported to trade publications, causing those who purchased and reimbursed for pharmaceuticals to vastly overpay. To view the current version of the Complaint, click here.
Discovery in these cases has included the review of millions of documents and hundreds of depositions over the past several years. In 2007, Plaintiffs tried the case under Massachusetts law against four Defendants. The nine-week trial, in which Wexler Wallace played a critical role, resulted in a 183-page opinion by the district court, largely finding in favor of Plaintiffs. The First Circuit Court of Appeals affirmed Plaintiffs’ verdict against AstraZeneca in all respects. In addition, since the trial, numerous settlements have been reached.
Other significant events in this lengthy complex case include:
- August 16, 2005 The presiding judge, the Honorable Patti B. Saris, issued a class certification order that set the stage for Wexler Wallace’s and co-counsel’s cases to proceed on a class wide basis against the defendant drug companies for their conduct with regard to physician-administered drugs (drugs that are administered in the form of an injection rather than a pill).
- November 2006 – January 26, 2007 – Plaintiffs tried their case against four of the largest Defendants with Wexler Wallace serving as one of the trial attorneys. For an article describing some of the documents used during that trial, click here.
- November 2007 – The District Court entered judgment against Bristol-Myers Squibb and AstraZeneca on behalf of two classes of Massachusetts consumers and third party payors. Plaintiffs have since settled all claims against Bristol-Myers Squibb. Plaintiffs also successfully appealed the District Court’s entry of judgment in favor of Johnson & Johnson against a class of Medicare beneficiaries.
- March 7, 2008 – Eleven major pharmaceutical companies (known as the “Track II Defendants”) agreed to a $125 million nationwide settlement, benefiting consumers and third-party payors. The final approval hearing will be in March, 2011.
- July 19, 2008 – Plaintiffs obtained final approval of their $70 million settlement with GlaxoSmithKline. In approving a settlement, Judge Saris praised Wexler Wallace and co-counsel, saying that she wanted “to express appreciation again to class counsel for taking this case.”
- December 19, 2008 – Final approval was granted for a $24 million settlement with AstraZeneca for consumer claims of Medicare Part B beneficiaries who paid a percentage co-payment for Zoladex. A single objector appealed final approval of the settlement to the First Circuit Court of Appeals. On November 19, 2009, the First Circuit Court of Appeals rejected the challenge and affirmed the District Court’s final approval of the settlement.
- August 10, 2009 – The Court granted preliminary approval to a $19 million settlement with Bristol Myers Squibb. The final approval hearing will be held in March, 2011. In light of certain claims issues that came to light around the time of the final approval hearing, the parties adjusted the allocations among class members. A hearing on final approval of these adjustments is scheduled for July 7, 2011.
- August 12, 2010 – The Court granted preliminary approval to a nationwide settlement with Astra Zeneca for classes 2 and 3 totaling $103 million. This amount is allocated as follows: $13 million for Massachusetts and $90 million for other states, all payable to consumer class members, third-party payor class members, and the claims of all independent settling health plans, less attorneys fees and the costs of administering the settlement. The court gave final approval to the settlement on Feb. 22, 2011.
- June 13, 2011 – The Court will hold a hearing on final approval of the Track II Settlement.
- July 7, 2011 – A fairness hearing will be held on the $19 million settlement with Bristol Meyers Squibb.
Information about the AWP settlements can be found at: