PAR PharmaceuticalAs part of a recent settlement agreement, Par Pharmaceutical Cos. will pay $1.7 million to resolve the state of Idaho's charges that the company inflated their numbers -- once by more than 3,000 percent -- when reporting the wholesale prices of its drugs to the state.

The issue is a critical one because it involves a state government program, Idaho Medicaid, which provides health-care services, including prescription drugs, to low-income residents. Under state law, Idaho Medicaid is required to reimburse pharmacies at the "estimated acquisition cost" of the drug. Idaho Medicaid uses the "average wholesale price," as reported by drug manufacturers, to determine this amount, Idaho Attorney General Lawrence Wasden said in a statement.Taxpayers can end up paying too much for drugs through Medicaid reimbursements if the manufacturer reports an inflated or false average wholesale price for a drug, Wasden added.

An example from the Attorney General Office's investigation of Par: Fluoxetine, a generic version of Prozac, had a published average wholesale price of $2.731 in 2003, according to Par. However, the average wholesale price was actually 8.1 cents that year. This is a 3,292% difference between the published price and the actual price.

"Where published prices are false or misleading, the taxpayers are significantly harmed by excessive Medicaid reimbursements," Wasden said in the statement. "Investigation by my office has revealed that the reported average wholesale price often is not related to the actual wholesale price paid for the drug."

Misrepresenting the wholesale price is a violation of the Idaho state law, he added.

Consumer Ally couldn't reach Par for a comment on the settlement. In signing the settlement, the company admitted no liability or wrongdoing.

The $1.7 million payment will be used to reimburse the state for the excessive prices Idaho Medicaid paid for prescription drugs as a result of inflated average wholesale price reporting, Wasden said.

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