AZ to pay $2.5M in Idaho Medicaid case

In the latest settlement of a Medicaid pricing lawsuit, AstraZeneca ($AZN) agreed to pay $2.5 million to resolve Idaho's claims that it overstated average wholesale prices for various products, inflating prices paid by the state's program for low-income patients. Attorney General Lawrence Wasden said the settlement will reimburse taxpayers for Medicaid's overpayments for AstraZeneca drugs.

In Idaho, Medicaid reimbursement was derived from the average wholesale price of a drug. If wholesale prices are overstated, then Medicaid reimbursements are inflated, too. "Taxpayers are significantly harmed by excessive Medicaid reimbursements," Wasden said in a statement. "Investigation by my office has revealed that the reported average wholesale price often is not related to the actual wholesale price paid for the drug."

As an example, Wasden quoted the published wholesale price of AstraZeneca's stomach drug Prilosec of $4.134 in 2003. His office found that the actual average wholesale price at the time was $3.29, a 26% difference. Drugmakers say that published prices don't conform to the products' true costs.

AstraZeneca admitted no wrongdoing in connection with the settlement. "AstraZeneca has competed responsibly with respect to pricing and marketing of our medicines, and we firmly believe that we have acted at all times in accordance with the law," spokeswoman Laura Woodin told Bloomberg. "This agreement was the appropriate way to resolve this matter quickly and allow the company to focus on our core mission to deliver meaningful medicines to patients."

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