Commonwealth v. TAP Pharmaceutical Products, Inc.
94 A.3d 350
Pa.2014Background
- Commonwealth, on behalf of DPW and PACE, sued Bristol-Myers Squibb (and others) over alleged deceptive use of AWP-based drug reimbursements from 1991–2004.
- AWP served as a reimbursement benchmark; rebates and AMP data were available but not consistently credited in damages calculations.
- Defense argued rebates reduce net prices and could offset damages; Commonwealth sought restoration damages and an injunction under UTPCPL.
- Trial evidence showed Commonwealth knew AWPs were not transaction prices, yet agencies continued using AWP-based formulas with rebates occurring in practice.
- Commonwealth defense claimed rebates were irrelevant to damages; BMS argued rebates offset damages and lowered net costs to programs.
- Commonwealth Court upheld substantial restoration and injunction against BMS, but the Pennsylvania Supreme Court later remanded for reconsideration focused on rebates.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Rebates must offset damages? | Commonwealth argues rebates do not offset damages and are irrelevant to overpayments. | BMS argues rebates offset damages and reduce net payments; rebates should be credited. | Remand focused on rebate issue; court questions failure to credit rebates in damages. |
| Did failure to account for rebates invalidate UTPCPL relief? | Commonwealth asserts UTPCPL relief justified by deception; rebates don't defeat liability. | rebates undermine net overpayment calculations; damages overstated without rebate credit. | Court remands to consider rebate impact on remedies and whether judgment stands. |
| Appropriateness of damages methodology without rebates? | Commonwealth economist ignored rebates; damages independent of rebates claimed. | Rebates materially reduce net costs; damages should reflect net expenditures. | Court criticizes methodology for excluding rebates and remands for full consideration. |
| Scope of injunction and restoration given rebate evidence? | Injunction/policy against AWP reporting remains appropriate regardless of rebates. | Relief may be improper if rebates negate the asserted overpayments. | Remand to evaluate whether injunction/restoration remains proper after rebate accounting. |
Key Cases Cited
- In re Pharm. Indus. Average Wholesale Price Litig., 582 F.3d 156 (1st Cir. 2009) (rebates and pricing data context; appellate discussion of AWP/AMP dynamics)
- AstraZeneca LP v. State, 41 So.3d 15 (Ala. 2009) (state pricing claims and AWP disclosures; reasonableness of reliance)
- State v. Abbott Labs., 829 N.W.2d 753 (Wis. Ct. App. 2013) (marketing the spread and pricing practices evidence)
- Louisiana v. DHHS, 905 F.2d 877 (5th Cir. 1990) (AWP data often inflated; AWPs not equated with acquisition costs)
- Schmidt v. Boardman, 11 A.3d 924 (Pa. 2011) (equal-division remand context; effect on judgments)