US Rx drug price deal to settle price fixing case

The prices of thousands of prescription drugs could be forced down, following a preliminary deal worked out between prosecutors and the main publisher of average wholesale prices, First Databank, a unit of the Hearst Corp. A "fairness hearing" will be held on November 14 to confirm final settlement of a price fixing case, in which drug wholesale giant McKesson was alleged to have manipulated the AWP to overcharge federal and state agencies for Medicaid-funded drugs (Marketletter October 16, 2006).

First Databank has agreed to reduce the AWPs for a large number of drugs by 5% and to end publication of the data for two years once a final settlement is agree. Since 2003, McKesson was the only wholesaler whose prices were utilized by First Databank to produce AWP tables. Previously, it was claimed that the publisher raised from 20% to 25% the mark-ups that wholesalers were making on their drug sales. According to the Wall Street Journal, the settlement will save payers "billions of dollars in prescription drug costs." Under the terms of the deal, no admission of wrongdoing is included on the part of the defendants.