Ala. attorney: 2 drug companies cheated Medicaid

posted on:
June 17, 2008

Bob Johnson


(AP) MONTGOMERY, Ala. – An attorney seeking as much as $400 million in damages from two large pharmaceutical companies told jurors Tuesday the firms defrauded Alabama’s Medicaid program with high prices for drugs for more than a decade.

Attorneys for Novartis Pharmaceuticals and SmithKline Beecham Corp. said the drugs were properly priced through a method understood by the state agency.

The trial, expected to last about two weeks, is the second to be held on more than 70 lawsuits filed by the state accusing pharmaceutical companies of overcharging Medicaid for prescription drugs. The first ended with a jury awarding the state $215 million against AstraZeneca Pharmaceuticals LP.

Similar lawsuits against pharmaceutical companies are pending in other states, including Mississippi, South Carolina, Utah, Hawaii and Alaska.

Jere Beasley, a Montgomery lawyer representing the state, told jurors Tuesday that Novartis and SmithKline Beecham committed fraud by causing the Medicaid program to pay too much for prescription drugs from 1991 to 2005.

“These two companies each cheated the state over and over and over again,” Beasley told jurors.

He noted the financial crunch Alabama’s Medicaid agency has faced in recent years.

“You’re going to have the opportunity to bring about change and hopefully you can stop this sort of thing,” Beasley said.

He indicated to jurors Monday he would seek a judgment of some $200 million against each of the two companies.

Attorneys for the two firms said Tuesday they reported fair, correct prices to Medicaid and did not commit fraud.

“These lawyers would have you believe Novartis has been intentionally reporting prices that we knew were false,” said Novartis attorney Harlan Prater. He said Novartis used a common system used for decades to determine prices and that the state understood the system.

An attorney for SmithKline Beecham, Chilton Varner, told jurors the company never overcharged the state Medicaid program. She said the state Medicaid system has not changed the way it pays for drugs, despite the charges made in the lawsuits.

“The reason is there is no fraud here. If it ain’t broke, don’t fix it,” said Varner.

Beasley said one way the companies cheated the state was by not including discounts in the price of drugs it was reporting to pharmacists. But Varner and Prater said discounts normally are not included in the list price and are usually negotiated later.

Novartis produces a number of drugs, including the high blood pressure medications Diovan and Tekturna. SmithKline makes the asthma medication Advair and other prescription drugs.

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