Impact of First DataBank AWP Settlement

June 17, 2009

On June 17, 2009, McDermott Will & Emery ("MWE") and the National Association of Chain Drug Stores co-hosted a first-ever luncheon program, entitled Impact of First DataBank AWP Settlement at MWE's Manhattan office.

Don Bell, Esq., General Counsel of the National Association of Chain Drug Stores, and T. Reed Stephens, Esq., partner in the Health Law and Trial Departments of MWE's Washington, D.C. office, discussed the background of the Prescription Access Litigation,  including the New England Carpenters v. First DataBank, Inc., McKesson Corp., et al. matter (D. Mass.); the recent court-approved settlement of the litigation; and the likely after-effects of the settlement's terms on prescription drug reimbursement by both government and private third party payers.  [First DataBank is one of a small number of companies that publish prices for FDA-approved drugs that are, in turn, used by many of these third party payers to determine what pharmacies will be paid for dispensing these drugs.]
Mr. Stephens focused his presentation on familiarizing luncheon attendees with the specifics of the Average Wholesale Price ("AWP") litigation which has been raging for many years between plaintiffs and pharmaceutical manufacturers in various state and federal venues.  Mr. Bell followed up with an overview of the important policy issues raised by the settlement and the resulting appellate challenges mounted by the retail pharmacy sector in response to the non-monetary terms of the settlement.  Both of the speakers also discussed the recent filing of a new class action lawsuit by self-insured employers against several major retail pharmacy chains alleging that the pharmacies had used inflated drug AWPs to overcharge these employers for their employees' prescription drug coverage.
Section members asked a number of probing questions regarding the possibility of pharmacies having to cope with reduced drug reimbursement from insurers as a result of First DataBank's settlement pledge to reduce by 5% the published AWP of thousands of prescription drugs beginning in September of this year.