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Dey and Connecticut settle pricing dispute



13th August, 2005:A settlement has been reached between the state and Dey Pharmaceuticals Inc. Dey, along with six other pharmaceutical firms, had been sued for allegedly artificially inflating the average wholesale price of pharmaceuticals, Connecticut's Attorney General’s office announced.

In cases where AWP prices for drugs are inflated, healthcare providers could increase their profits by prescribing or dispensing drugs from those companies because of the greater difference between the prices they paid for the drugs and the price the state reimbursed. Additionally, the price inflation increased pharmaceutical companies' market shares.

Under the terms of the agreement, Dey has agreed to pay the state US$1.7 million and donate US$800,000 worth of pharmaceuticals to be used at free clinics. The US$1.7 million would be divided amongst state and federal medical assistance programmes, and would also cover the state's costs. The US$800,000 worth of pharmaceuticals comprises 404,296 vials of DuoNeb, Dey's proprietary albuterol sulphate and ipratropium bromide product; 709,488 vials of albuterol; and 1,574,307 vials of ipratropium bromide.

The donated pharmaceuticals will be distributed to certain community healthcare clinics which operate under the auspices of Connecticut's Department of Public Health, as well as the AmeriCares Free Clinics in Norwalk, Danbury and Bridgeport. The drugs will be available to the clinics over three years, the Attorney General's office noted.
Commenting on the settlement, Dey noted the net amount of cash paid to Connecticut after legal fees and money remitted to the federal government is US$900,000. As part of the settlement, Connecticut acknowledged that the settlement did not constitute an admission of fault or liability by Dey or its affiliates.

The company had consistently participated legally and ethically within national and state reimbursement systems. And it believed the systems to be seriously flawed, the Dey release noted.

The lawsuits against the other six defendants: Schering-Plough, GlaxoSmithKline, Aventis, Roxane Laboratories, Warrick Pharmaceuticals and Pharmacia. The Attorney General's office said.

The California based Dey, Inc. develops, manufactures and markets prescription drug products for the treatment of respiratory diseases and related allergies. The company manufactures sterile, unit dose inhalation solution products, manufactured using aseptic form-fill-seal technology. Products of the company is marketed to large institutional purchasers, wholesalers, group purchasing organizations, chain pharmacies, health maintenance organizations and home health care organizations. During the year, the company transferred the assets and certain liabilities of its hypothyroid product business at book value to a newly-formed entity, EM Pharma, Inc. In June 1998, the company has changed its name from Dey Laboratories, Inc. The shares of the company is 100% owned by Lipha Americas, Inc. before April 1999. After offering to public Lipha America will hold 84% of the company's shares. The company incurred $170,000 towards year 2000 expenses till March 1999.


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