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Merck affiliate settles Ohio pricing litigation for $952,925

Pharma Compliance Alert, December 6, 2006

Dey, L.P, an affiliate of Merck KGaA, will pay $952,925 to settle a pricing suit brought by the State of Ohio, the Napa, California company announced November 28.

Dey has also agreed to donate respiratory drugs to certain Ohio health care centers serving underserved populations for four years.

According to DEY, the suit is an unintended consequence of the Government's reliance on a Average Wholesale Price-based model for computing Medicaid reimburesment. "For more than three decades, the Federal and State governments have known about the AWP-based reimbursement model, understood its limitations, and accepted its use as a way to gain the voluntary participation of pharmacists and other healthcare providers in the public healthcare entitlement program Medicaid. The 'spread' between dispensers' acquisition costs and Medicaid reimbursements provided the mechanism whereby pharmacists and other healthcare professionals could recapture their actual dispensing costs," DEY Senior VP of Legal Affairs John Kling says in a statement.

"The problems with the AWP-based reimbursement model are a primary reason why Congress and the Administration reformed the pricing system under the Medicare Modernization Act of 2003. Many in the pharmaceutical industry, including DEY, supported those reforms."

In the last four years, Dey settled similar suits with Connecticut, Idaho, West Virginia, Missouri and Texas.

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