Nevada cracks down on AWP

Thursday, February 28, 2002

CARSON CITY, Nev. - Nevada filed a lawsuit recently accusing 12 major drug companies of engaging in deceptive trade practices by manipulating or misstating the average wholesale prices (AWP) that govern Medicare and Medicaid reimbursement for prescription drugs.

Other states are expected to follow suit, according to Attorney General Frankie Sue Del Papa.

Nevada claims the drug companies' practices have forced states and beneficiaries to overpay for prescriptions.

The lawsuit also accuses the drug companies of racketeering, or the practice of encouraging physicians to improperly bill Medicaid for free drug samples and using the "spread" - the difference between AWP and the price offered to providers - as a marketing tactic.

The U.S. Department of Justice made similar charges against the Lake Forest, Ill.-based TAP Pharmaceutical Products. Last year, those accusations led to the largest healthcare fraud settlement ever - $875 million - as well as the indictment of a number of physicians and company employees. HME