At 10:30, Monday, June 29, 2015, the Court will hear the case of In the matter of the Mississippi Medicaid Pharmaceutical Average Wholesale Pricing Litigation: Sandoz v. State of Mississippi
The State of Mississippi sued Sandoz over the price of generic drugs manufactured and sold wholesale by Sandoz to Mississippi pharmacies. The State contends that the Mississippi Division of Medicaid was defrauded when it used Sandoz’ published “Average Wholesale Prices” when calculating the amount it reimbursed pharmacies for drugs they dispensed to Medicaid patients. The State argued that the AWP was not merely a suggested or reference price, but instead meant the “average of wholesale prices that a wholesaler received from the sale of Sandoz drugs to pharmacies” and, thus, Sandoz committed fraud because it knew that its AWPs were greater than the prices pharmacies actually paid causing the State to overpay Mississippi pharmacies by $23 million.
According to Sandoz, the “State and the industry generally – including the federal government, state Medicaid programs, and insurers – understood that AWPs were merely suggested or reference prices that were much higher than what pharmacies paid.” The State argues that “Sandoz knew that MS Medicaid and other payors relied upon the published AWPs to reimburse pharmacies with the best estimate of the price paid.” “But in reality, what Sandoz reported as AWPs were meaningless numbers, unrelated to acquisition cost.”
The chancellor found against Sandoz and awarded $23,661,618, – the amount MS Medicaid overpaid due to Sandoz’s actions. The court also awarded the State $2,699,000 in civil penalties based on the Consumer Protection Act. The court imposed $3,750,000 in punitive damages for Sandoz’s willful and fraudulent misconduct. The court ruled against the State on whether Sandoz violated Mississippi’s Medicaid Fraud Control Act, and it denied the State’s post-trial motion for attorney’s fees, prejudgment interest, and other relief.
The State is cross-appealing.
The State’s (AG’s) brief.
The State’s reply
Watch the argument here.
If you are really interested and have a zillion free hours, here’s a presentation by the American Bar Association that presents the case for both sides.