State Files Lawsuit Against Drug Companies

HONOLULU (KHNL) - The state filed a lawsuit against 44 drug companies in First Circuit Court Thursday.

The suit alleges the companies have been manipulating wholesale prices for years, pinching the pockets of thousands of medicaid recipients and the state.

Officials say wouldn't say exactly how much they're seeking but it could be tens of millions of dollars. They are hoping a settlement will help stem soaring drug prices.

The lawsuit claims drug companies inflated wholesale drug prices resulting in the state paying "grossly excessive prices" for Hawaii's 200,000 medicaid recipients.

"The taxpayers in hawaii have been swindled by certain drug manufacturers by falsely inflating prices," says Lillian Koller from the State Department of Human Services.

"Medicaid programs and medicare consumers who must pay a 20% being grossly over-charged while the drug companies increase market share and reap huge profits," says Mark Bennett, State Attorney General.

Similair lawsuits have been filed in 20 other states. The U.S. Department of Justice found in one case, the real wholesale cost for one drug was $1.71. But the company set its wholesale price, or AWP at $926. True wholesale prices are usually kept confidential.

The drug companies report false and inflated AWP's and prevent discovery of the true prices through various means like secret rebates, discounts, free products.

The cost of drugs in medicaid programs have soared from $45,000,000 in 1999 to $117,000,000 dollars in 2004, a 160% increase.

"We are prepared for all out litigation that may resemble all out war," says Bennett.

Some of the drugs listed in the suit are commonly used such as Lipitor, Plavix, and Fosamax.