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In re Pharmaceutical Industry Average Wholesale Price Litigation

United States Court of Appeals for the First Circuit
588 F.3d 24 (2009)


Facts

A class of patients (plaintiffs) who purchased Zoladex through Medicare Part B and paid for a portion of the cost themselves brought a lawsuit against AstraZeneca (AZ) (defendant) for fraudulently inflating the average wholesale price (AWP) of the drug. The AWPs were used to determine how much to reimburse providers when patients obtained the drugs. AZ inflated the AWPs to permit doctors to keep the difference between the higher reimbursement rate and the amount the doctors actually paid to purchase the drug. This was done to induce doctors to purchase this specific drug. Patients either had to pay 20% of the AWP as a co-payment or 4% if they had supplemental insurance that covered a portion of the co-payment. An expert calculated the damages to the class of patients as over $31 million. AZ and the class of patients agreed to settle the lawsuit for $24 million. The parties anticipated that a large portion of the settlement would go unclaimed because many of the patients were elderly or had died and some of the patients could not be found. To address this, the parties agreed that each plaintiff could collect double the actual amount of damages suffered. The parties also agreed that any funds not claimed, up to $10 million, would be placed into a cy pres fund that would pay the funds to a mutually acceptable charitable organization. One class representative, Joyce Howe, objected to the settlement and argued that more of the settlement amount should go to the patients that made claims. The trial court agreed and adjusted the settlement to pay treble damages to the plaintiffs with the strongest claims. Howe appealed to the United States Court of Appeals for the First Circuit.

Rule of Law

Issue

Holding and Reasoning (Lynch, J.)

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