Wisconsin v. Amgen, Inc.

469 F. Supp. 2d 655, 2007 U.S. Dist. LEXIS 3399, 2007 WL 92622
CourtDistrict Court, W.D. Wisconsin
DecidedJanuary 16, 2007
Docket06-C-582-C
StatusPublished
Cited by2 cases

This text of 469 F. Supp. 2d 655 (Wisconsin v. Amgen, Inc.) is published on Counsel Stack Legal Research, covering District Court, W.D. Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wisconsin v. Amgen, Inc., 469 F. Supp. 2d 655, 2007 U.S. Dist. LEXIS 3399, 2007 WL 92622 (W.D. Wis. 2007).

Opinion

OPINION and ORDER

CRABB, District Judge.

In this civil lawsuit, the State of Wisconsin contends that defendant pharmaceutical companies have violated numerous state laws and have unjustly enriched themselves by inflating the average wholesale prices of their drugs. Originally filed in June 2004 in the Circuit Court for Dane County, Wisconsin, the case is now before this court on plaintiffs motion to remand following defendant Dey, Inc.’s third attempt at removal. Because defendant has not met its burden of showing that it may remove this case pursuant to 31 U.S.C. § 3732(b) or that the removal is timely under 28 U.S.C. § 1446(b), plaintiffs motion to remand will be granted, as will its request for costs and attorney fees.

For the sole purpose of deciding this motion, I draw the following facts from the amended complaint attached to defendants’ notice of removal and from information provided by the parties in their briefs.

ALLEGATIONS OF FACT

A. Parties

Plaintiff State of Wisconsin is a payer under Medicaid, a joint state and federal health care entitlement program.

Defendants Amgen, Inc., Abbott Laboratories, Astrazeneca Pharmaceuticals, LP, Astrazeneca, LP, Aventis Pharmaceuticals, Inc., Aventis Behring, LLC, Baxter Healthcare Corporation, Ben Venue Laboratories, Inc., Boehringer Ingelheim Pharmaceuticals, Inc., Boehringer Ingelheim Roxane, Inc., Bristol-Myers Squibb Company, Dey, Inc., Geneva Pharmaceuticals, Inc., GlaxoSmithKline, Inc., Immunex Corporation, Ivax Corporation, Ivax Pharmaceuticals, Inc., Janssen Pharmaceutical Products, LP, Johnson & Johnson, Inc., McNeil-PPC, Inc., Merck & Company, Inc., Mylan Laboratories, Inc., Mylan Pharmaceuticals, Inc., Novartis Pharmaceuticals Corporation, Ortho Biotech Products, LP, Ortho-McNeil Pharmaceutical, Inc., Pharmacia, Pfizer, Inc., Roxane Labo *659 ratories, Inc., Sandoz, Inc., Schein Pharmaceuticals, Inc., Schering-Plough Corporation, Sicor, Inc., SmithKline Beecham Corporation, TAP Pharmaceutical Products, Inc., Teva Pharmaceuticals USA, Inc., Warrick Pharmaceuticals, Inc., Watson Pharma, Inc. and ZLB Behring are pharmaceutical manufacturers.

B. Prescription Drug Market

The market for prescription drugs operates roughly as follows. Defendants manufacture drugs and sell them to hospitals, physicians and pharmacies, collectively known as “providers,” who in essence resell the drugs to patients when the drugs are administered or prescribed. Providers pay manufacturers directly for the drugs; after a patient receives a drug, the provider is reimbursed by the patient, his insurance company or a government program such as Medicare or Medicaid, collectively known as “payers.”

Insurance companies and government payers calculate the rates at which providers are reimbursed on the basis of a drug’s “average wholesale price.” Defendants set average wholesale prices for each of their drugs. These prices are compiled and published in medical compendia and are the only prices made available to providers and the public. If the price paid by a provider to the manufacturer is less than the reimbursement the provider receives from the payer, the provider retains the difference, or “spread,” as profit. Because providers have substantial influence in deciding which drugs they will prescribe or administer, drug manufacturers are eager to court them. One of the ways defendants market their drugs to providers is by generating large spreads.

C. Alleged Pricing Fraud

Defendants have attempted to maximize the spread by publishing false and inflated average wholesale prices for their drags. Defendants have succeeded in their unlawful pricing by concealing their scheme from plaintiff and other payers in a number of different ways. They sell their drugs to providers in a manner that hides the true price of their drugs, designate sales agreements with providers as trade secrets, charge different prices to different providers for the same drug and hide the true prices of their drugs by providing free drugs and phony grants to providers as a means of discounting the prices.

By publishing false and inflated average wholesale prices and keeping their actual prices secret, defendants have harmed plaintiff, its citizens and private payers in Wisconsin. Reimbursements to pharmacies and physicians for drugs covered by Medicaid are calculated by subtracting a fixed percentage from the average wholesale prices. Thus, publication of inflated prices has caused the state to overpay for the drugs it purchases through its Medicaid program.

In addition, many Wisconsin citizens participate in Medicare, a health insurance program funded by the federal government. Medicare consists primarily of two major components, Part A and Part B. Part B is an optional program that provides coverage for some healthcare services not covered by Part A. It is supported by government funds and by premiums paid by individuals who choose to participate. Part B has a limited drug benefit. The federal government pays 80% of the allowable cost of a drug and participants are responsible for the remaining 20%. Because the allowable costs under Part B are calculated on the basis of defendants’ inflated average wholesale prices, participants in Wisconsin have paid higher co-payments for their prescription drugs.

Finally, private, Wisconsin-based organizations that pay the prescription drug *660 costs of their members have overpaid for prescription drugs. Because of the complexity of the prescription drug market, these organizations contract with Pharmacy Benefit Managers to handle their prescription drug reimbursements. Pharmacy Benefit Managers assert that they have the bargaining power needed to negotiate the price of drugs with -drug manufacturers. However, plaintiff alleges that they have used their power to obtain benefits for themselves in the form of fees and rebates paid by manufacturers. In addition, Pharmacy Benefit Managers benefit from inflated average wholesale prices because they use them to set the reimbursement rates for the private payers they represent.

D. Procedural History

In June 2004, plaintiff filed suit against defendants on its own behalf and in parens patriae capacity on behalf of the citizens of Wisconsin. Defendants removed the case on July 14, 2004, contending that federal jurisdiction arose under 28 U.S.C. § 1332. The case was remanded on October 7, 2004. Defendants removed it again on July 13, 2005, contending that the United States Supreme Court’s decision in Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, 545 U.S. 308, 125 S.Ct. 2363, 162 L.Ed.2d 257 (2005), established that removal was proper under 28 U.S.C.

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Related

In re Pharmaceutical Industry Average Wholesale Price Litigation
509 F. Supp. 2d 82 (D. Massachusetts, 2007)
In Re Pharmaceutical Ind. Aver. Wholesale Price
509 F. Supp. 2d 82 (D. Massachusetts, 2007)

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Bluebook (online)
469 F. Supp. 2d 655, 2007 U.S. Dist. LEXIS 3399, 2007 WL 92622, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wisconsin-v-amgen-inc-wiwd-2007.