Retail News Breaks
AWP suit settlement appealed
May 25th, 2009
ALEXANDRIA, Va. – The National Association of Chain Drug Stores has appealed a U.S. District Court’s approval of settlements in the First DataBank Inc. and Medi-Span Inc. lawsuit.
As a result of the settlements, First DataBank and Medi-Span will reduce the average wholesale prices (AWPs) of drugs to 120% of the wholesale acquisition cost on September 26. First DataBank and Medi-Span also plan to stop publishing AWPs, which are used as a drug pricing benchmark.
“We are hopeful that the Court of Appeals will heed our concerns and rule on the side of patients,” says NACDS president and chief executive officer Steve Anderson. “Patient access to pharmacy services will be at risk if these cuts are implemented, as the AWP reductions will cut Medicaid reimbursements to pharmacies by about $68 million each year.”
First DataBank, a subsidiary of Hearst Corp., and Medi-Span, a unit of Wolters Kluwer Health, were defendants in a class action filed in 2007, in which Medi-Span was charged with negligently publishing AWP information wrongfully inflated by First DataBank, a prior Medi-Span owner.
“Not only will the District Court order approving the settlements harm consumers, the order unconstitutionally punishes every pharmacy in the United States, despite the fact that these pharmacies were not parties to the underlying lawsuit,” says Deborah White, senior vice president and chief legal officer at the Food Marketing Institute, which joined NACDS in the appeal. “Time is of the essence, and we hope that the First Circuit will quickly provide relief from the District Court’s unfounded order.”
NACDS and FMI have been trying to prevent the implementation of the reductions. The groups filed a motion in April seeking a stay in federal district court in Massachusetts after the issuance of the final judgment. The motion asks the District Court to halt the implementation of the approved AWP reductions. As of early May, there was no ruling on the motion.
The two associations previously filed a legal brief, including an economic analysis, to counter the proposed settlements. The brief and analysis detailed the ways in which the proposed settlements’ cost savings and estimated impact were based on inaccurate economic analysis and would unfairly hurt retail pharmacies without helping health plans or employers.
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