Here Come the Appeals ...

November 22, 2006
Pharmaceutical Executive
Volume 0, Issue 0

BMS is the first on what's bound to be a long list of opponents in the recent ruling on the definition of "average wholesale price."

Bristol-Myers Squibb is the first company to step forward to dispute a judicial ruling from earlier this month that defines the term "average wholesale price" as the sum of its dictionary parts. It's likely that other drug makers may follow BMS' lead in appealing the ruling that pulled the rug out from under the defense in a class-action suit brought against 42 pharma companies for over-billing Medicare.

If the ruling stands, it is unclear how much the companies stand to lose. But in some cases, the difference between a strictly defined AWP and what the industry reported is as much as 1,000 percent. GlaxoSmithKline in August was the first company to settle the case for $70 million.

Drug makers have historically reported AWP as a sticker price, an amount that is higher than the acquisition price paid by physicians and pharmacists after rebates and other negotiations. But they argue that the practice wasn't deceptive--and that government officials knew they were being quoted a sticker price rather than a strict average wholesale price. Yet earlier this month, Judge Patti Saris ruled that AWP is not a "term of art"--that is, it does not have a widely understood meaning within the industry--and therefore should be interpreted by its plain language definition.

BMS (with its subsidiaries Oncology Therapeutics Network Corp. and Apothecon) is now fighting that interpretation. In its appeal, filed on Friday, it argues that Saris relied too heavily on a friend-of-the-court brief filed by the government and did not take into account "significant legislative history." The motion cites a back-and-forth between the Senate and the House of Representatives over the Balanced Budget Act of 1997 to demonstrate that Congress had already debated the definition of AWP and determined that it is a list price--and moreover, that Congress adjusted its reimbursement rate accordingly.

It also raises other examples from as far back as 1969 to further argue that "it was undisputed that Congress understood that AWP did not represent acquisition cost."

The motion continues, "Even if the court is inclined to credit the claim of payers that they were confused about the meaning of AWP ... the question of statutory interpretation should not be confused with the question of deception."

Steve Berman, managing partner at Hagens Berman Sobol Shapiro, the law firm representing the plaintiffs, sees the legislative debate over AWP another way. "Our argument is that it wasn't a question of what was known--it was a question of what Congress intended," he said.

Hagens Berman is representing Medicare beneficiaries and third-party Medigap insurance providers that made payments for Medicare Part B or physician-administered drugs. These include Coumadin (warfarin), Imitrex (sumatriptan), Taxol (paclitaxel), and others. The trial is currently underway in Boston, and is largely considered to be a test case for other jurisdictions.