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State could net $40 million from drug firm settlements

By Ken Kobayashi

LAST UPDATED: 10:46 p.m. HST, Oct 06, 2010

Hawaii is expected to reap up to $40 million from the $82 million in out-of-court settlements that 44 drug companies have agreed to pay for allegedly gouging the state on Medicaid payments. 

Attorney General Mark Bennett announced the amount of the settlements after Circuit Judge Gary Chang lifted a confidentiality order that had prohibited the release of the terms.

 The state sued 44 companies, including the nation's largest pharmaceutical drug manufacturers, in 2006. 

 The lawsuit accused the companies of inflating drug prices, which led to the state overpaying for the prescriptions of tens of thousands of Medicaid patients here.

 The last company to settle was Merck Sharp & Dohme Corp., which reached an agreement last month just before the case was going to the jury for deliberations.  Merck will pay $28 million, the most paid by the companies, according to Bennett.

 Of the $82 million, about $12 million will be paid in fees to the law firms here and the mainland retained to handle the case and $1.5 million for the costs of the litigation. The federal government will receive roughly half of t he remainder, leaving the state will a recovery of about $30 million to $40 million, which will go to the state general fund, according to Bennett.

Other states filed similar lawsuits against the companies, netting hundreds of millions of dollars.

Chang issued the confidentiality order last year at the request of the drug companies, saying disclosure of settlement terms might jeopardize negotiations.

After the last settlement was reached, Chang said last week he would grant the request by Bennett to lift the order. 

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