Attorney General Conway Announces $10 million Settlement With Pharmaceutical Manufacturers

Attorney General Jack Conway today announced a $10.2 million settlement with pharmaceutical manufacturers Alpharma USPD, Inc. and Purepac Pharmaceutical Co. over allegations the companies published bogus average wholesale prices (AWPs) for their drugs. This announcement is the latest in a number of settlements in AWP lawsuits filed by the Office of the Attorney General against 46 major drug companies. The Kentucky Medicaid program relies on AWPs to calculate Medicaid drug reimbursement rates. Alpharma and Purepac published significantly inflated AWPs for their drugs that bore no relationship to any prices that any of their customers actually paid for the drugs. This created an artificial "spread" between the inflated published prices and the real prices. Some of these spreads exceeded 3,200%. Alpharma and Purepac then used these spreads as a sales tool to market the drugs to their customers, thereby increasing company profits and market share in the pharmaceutical industry. These deceptive practices caused the Kentucky Medicaid program to pay substantially more for Alpharma and Purepac drugs than it actually cost Kentucky pharmacies to acquire them. "Taxpayers should not be footing the bill for these inflated drug prices," General Conway said. "My office is committed to ensuring that drug companies truthfully report their prices and do not engage in false or misleading business practices." Alpharma and Purepac were both purchased by Iceland-based global pharmaceutical company Actavis in 2005. Alpharma primarily manufactured and marketed generic solutions, injectables, creams and ointments. Purepac manufactured a wide variety of generic drugs in tablet and capsule form. Since Attorney General Conway took office in January 2008, his Office of Medicaid Fraud and Abuse Control has recovered or been awarded more than $175 million for the state and federal Medicaid programs. These cases range from lawsuits and settlements against pharmaceutical companies to cases against individual providers.