Abstract

In September 2009, the First Circuit Court of Appeals decided Blue Cross & Blue Shield v. AstraZeneca Pharmaceuticals LP, part of the class action suit known as In re Pharmaceutical Industry Average Wholesale Price Litigation. The First Circuit upheld a Massachusetts District Court finding that AstraZeneca violated Massachusetts’ consumer protection laws by manipulating the “average wholesale price” of its physician-administered injectable cancer drug Zoladex, leading to overpayment by the government, third-party payers, and consumers. This case, which highlights the persistent tension between pharmaceutical pricing flexibility and consumer protection, has important implications for similar pending class actions.Between 1991 and 2003, Medicare, as well as many private insurance companies, pegged reimbursement for certain pharmaceutical products to a national “average wholesale price” for each drug. Although the amended 1991 Medicare Part B regulations3 that introduced the term “average wholesale price” failed to define it explicitly, there is some indication in the legislative history that AWP was intended to refer to the prices that physicians and pharmacists actually pay to the drug manufacturers.