Three of the nation's largest drug makers recently were convicted of overcharging on prescriptions paid for by patients, employers, insurers, pension funds and the government between 1991 and 2003.

A U.S. District Court judge in Massachusetts last week ruled that AstraZeneca, Bristol-Myers Squibb and Schering-Plough's subsidiary Warrick engaged in unfair and deceptive trade practices by publishing inflated average wholesale prices for certain drugs through First Databank and other publications.

"The publication of false, inflated AWPs caused real injuries to the government, insurers, and patients who were paying grossly inflated coinsurance payments for critically important, often life-sustaining, drugs," the court opinion states. "These manufacturers knew that wholesalers were not actually charging these prices to providers, that the average wholesale price was not a true average of prices charged by wholesalers, and that the average wholesale price based on the formulaic 20% to 25% markup had become an anachronism."

However, all three drugmakers have insisted that they were fully compliant with the law and intend to appeal the decision.

First Databank recently announced a settlement under which it will change its practices for reporting average wholesale prices to reduce the markup factor. By court order, it says it will stop publishing the Blue Book AWP data field for all drugs no later than two years after the effective date of the final court order, establish a centralized data repository to facilitate access to material concerning its drug price reporting practices and work with major participants in the health care industry to establish a sustainable benchmark for drug reimbursement.

The ruling and the settlement have "created opportunities for increased transparency regarding pharmacy benefit managers, other drug suppliers and distributors," observes Sean Brandle, national pharmacy practice leader at The Segal Company.

"We see a growing trend toward prescription drug pricing terms less subject to manipulation by drug wholesalers, manufacturers and distributors."

This opens the door for plan sponsors to negotiate innovative drug pricing agreements with PBMs, creating a better partnership between patients, PBMs, retailers and plan sponsors, he points out.