AstraZeneca PLC must pay Alabama $215 million after a state court ruled the company inflated prices for drugs it sold to the state's Medicaid system.

AstraZeneca immediately said it will appeal the decision.

The state court jury deliberated for 45 minutes before deciding to award Alabama $40 million in compensatory damages and $175 million in punitive damages.

AstraZeneca, which has its U.S. headquarters in Fairfax, called the lawsuit "legally and factually unfounded" in a statement Thursday and said there were important legal errors during the course of the trial, which started Feb. 11.

"AstraZeneca has fully complied with the law, government guidelines and contracts that govern Medicaid pricing," the company said in its statement. "We currently provide medicines to Medicaid programs at the lowest price that we offer to our best business clients, as federal law requires."

AstraZeneca said "important information" about the way Alabama's pharmacy system operates was withheld from the jury.

The jury's verdict was tainted because the court allowed jurors to hear about "earlier, unrelated settlementsand proceedings," the company said.

While AstraZeneca will file a motion requesting the trial judge throw out both the verdict and the jury's award -- and pursue an appeal if it is not successful -- the company is also questioning the amount of the jury's award.
In an interview Thursday, Tony Jewell, an AstraZeneca spokesman, said the award violates an Alabama law that caps punitive damages at three times the amount of actual damages. In this case, he said, the jury found that the state's actual damages amounted to $28 million. If those damages were tripled, the amount would be $84 million.

AstraZeneca is one of Delaware's biggest employers, with about 5,000 workers in the state. The company earned $5.63 billion in 2007, a year in which it bought MedImmune Inc., a Gaithersburg, Md.-based biotech company, for $15.6 billion.

AstraZeneca is not alone in finding itself on the receiving end of lawsuits from states and the federal government charging drug makers aren't giving them the lowest possible price.

"It is absolutely true that states and payers are getting more sensitive in pricing on pharmaceutical products," said Ken Kaitin, director of the Tufts Center for the Study of Drug Development at Tufts University outside Boston.

States are becoming more aggressive in suing drug companies to make sure they get a lower price than commercial customers like hospitals and insurance companies. Drug companies are required to do that if they want to participate in Medicaid, a joint state and federal program that provides health care to the poor, or Medicare, the federal health program for the elderly.

A federal court judge in Boston last year ordered AstraZeneca to pay $12.9 million and Bristol-Myers Squibb Co. to pay $696,000 for overcharging Medicare.

The Alabama attorney general has sued more than 70 drug companies regarding prices at which they sold drugs to the state's Medicaid system.

"It's obvious the pharmaceutical industry has been taking advantage of federal and state governments, and this jury backs up what we've been saying -- they've been cheating," said Jere Beasley, a lawyer for the state of Alabama. "It was time for the jury to straighten them out."