In re Pharmaceutical Industry Average Wholesale Price Litigation
United States Court of Appeals for the First Circuit
588 F.3d 24 (2009)
A class of Medicare patients who paid co-payments on Zoladex sued AstraZeneca (AZ) for fraudulently inflating the drug's average wholesale price, which was used to set reimbursement rates and let doctors keep the spread as an inducement to prescribe the drug. AZ and the class settled for $24 million against an expert's $31 million damages estimate, anticipating that many elderly or deceased patients' claims would go unclaimed; the parties agreed each claimant could recover double actual damages, with up to $10 million in unclaimed funds going to a mutually acceptable charity through a cy pres fund. Class representative Joyce Howe objected that more settlement money should go to claimants, and the trial court agreed, adjusting the settlement to pay claimants with the strongest claims treble damages instead; Howe appealed the resulting allocation.
Whether a cy pres fund that distributes settlement money from a class action lawsuit to charity is appropriate when the parties to the class action agree that funds are likely to be unclaimed by some members of the class.