The state of Alabama will receive almost $7 million from a settlement with two drug manufacturers, who were defendants in a lawsuit the state filed against more than 70 pharmaceutical manufacturers.
The lawsuit, filed by Attorney General Troy King in 2005, alleges the drug companies fraudulently inflated their reported prices for prescription drugs, which caused the Alabama Medicaid Agency to overpay pharmacists and doctors.
King said Wednesday the state has settled the lawsuit against Takeda Pharmaceuticals North America Inc. and against Dey, LP. Under the agreement, Dey will pay the state $4.75 million and Takeda will pay $2 million.
King said the money from the settlement would go into the state’s General Fund budget. The General Fund provides money for most non-education state services, including Medicaid.
The state’s claims against Takeda involved the diabetes drug Actos. Its claim against Dey involved a number of drugs prescribed primarily for pulmonary diseases and asthma, such as albuterol sulfate and ipratropium bromide.
“These settlements are a significant step towards protecting Alabama’s poorest citizens and the scarce resources they depend on to provide for prescription drugs,” King said.
In a news release, officials at Dey said as part of the settlement the state acknowledged that the settlement did not constitute an admission or evidence of unlawful conduct by the company.
The release from Dey said $750,000 of its portion of the settlement would go to pay outside attorney fees and other expenses. King said $530,000 of the money paid by Takeda would go to attorney fees.
But the attorney general said the amount for attorney payment was in addition to what the state needed to be reimbursed for what it had overspent on the medications.
“We negotiated the attorney fees on top of what was needed to make the state whole,” King said.
The state contracted with the law firm Hand Arendal of Mobile to handle the lawsuit. The Mobile firm later contracted with the Montgomery law firm of Beasley Allen to help pursue the litigation.
King said his office will continue to pursue its lawsuit against 71 other pharmaceutical companies. He said attorneys for the state are talking to some of the remaining companies about possible settlements.
A trial is scheduled in Montgomery County Circuit Court in February for the state’s claims against four of the remaining companies, AstraZeneca Pharmaceuticals LP, AstraZeneca LP, Novartis Pharmaceuticals Corporation, and SmithKline Beecham Corp.