April 18 (Bloomberg) -- GlaxoSmithKline Plc and Novartis AG must face trial together in a lawsuit in which Alabama accuses them of inflating drug prices, costing the state Medicaid program $130 million in overcharges, the Alabama Supreme Court ruled.

Glaxo, the world's second-largest drugmaker, and Novartis asked for separate trials. The companies will be the second and third of 70 drugmakers sued by Alabama to face trial in state court in Montgomery. On Feb. 22, a jury ordered AstraZeneca Plc to pay $215 million after deliberating for 45 minutes.

"Although this court recognizes that the facts and evidentiary record in these cases may be complex, we cannot conclude that the trial court exceeded its discretion when it consolidated these cases for trial," state Supreme Court Chief Justice Sue Bell Cobb wrote in today's opinion.
The trial is set for June 16.

Alabama claims in its 2005 lawsuit the companies overstated the average wholesale price of drugs, used to calculate Medicaid reimbursements to pharmacies. Seven justices joined Cobb in her opinion. Associate Justice Glenn Murdock dissented.

Murdock said the companies should have separate trials because of the "factual complexity of the claims and defenses of the parties" and the likelihood of jurors' becoming confused.

"We can live with the Supreme Court's ruling," Glaxo spokeswoman Mary Anne Rhyne said in an interview. "We look forward to presenting the jury with evidence that GSK did not mislead the state."

Novartis spokeswoman Brandi Robinson declined to comment.

Outcome 'Hoped For'
"It's exactly what we hoped for," Jere Beasley, an attorney representing the state, said in an interview. "That will speed things up and will allow all the cases to be disposed of in a reasonably short period of time."

Beasley said he couldn't estimate how much in punitive damages might be imposed if the state wins. The award against London-based AstraZeneca's AstraZeneca Pharmaceuticals LP, based in Wilmington, Delaware, comprised $40 million in compensatory damages and $175 million in punitive damages.

In November, U.S. District Judge Patti Saris in Boston ordered AstraZeneca to pay $12.9 million in damages in a similar case over pricing for cancer drugs. AstraZeneca appealed the ruling.

Glaxo's drugs include the diabetes pill Avandia, the antidepressant Paxil and the ulcer medicine Zantac. Novartis's include the blood-pressure medicine Diovan, the cholesterol- lowering pill Lescol and Ritalin for hyperactivity.

Share Prices
Novartis's American depositary receipts, each representing one ordinary share, rose $1.53, or 3.3 percent, to $47.79 in New York Stock Exchange composite trading. Glaxo's American depositary receipts, each representing two ordinary shares, rose 66 cents, or 1.5 percent, to $43.32.
Glaxo, based in London, is the world's biggest drugmaker after New York-based Pfizer Inc. In the U.S., Glaxo is based in Philadelphia and Research Triangle Park, North Carolina.

Novartis, based in Basel, Switzerland, is Europe's largest drugmaker after Glaxo and Paris-based Sanofi-Aventis SA. Norvartis's U.S. unit is based in Hanover, New Jersey.
The case is Alabama Medicaid Pharmaceutical Average Wholesale Price Litigation, 1070312, Supreme Court of Alabama, and cv2005-219, Circuit Court of Montgomery, Alabama (Montgomery).