Alabama’s Winning Streak Continues: Jury Hits Novartis with $78.4 Million Verdict

posted on:
February 25, 2009

author:
DAVID BARIO

category:
Fraud

A couple weeks ago we told you that the attorney general of Alabama was three for three in trials against pharmaceutical companies accused of overcharging the state Medicaid program for prescription drugs. As of Tuesday morning, that record improved to four for four. A state court jury in Tuscaloosa hit the Novartis subsidiary Sandoz with $28.4 million in compensatory and $50 million in punitives.

Sandoz was the first generic drug company to face the dread Alabama home field advantage. Alabama’s lead trial counsel—Jere Beasley of the plaintiffs firm Beasley, Allen, Crow, Methvin, Portis & Miles—told us that the generic industry regarded the trial as a test case, so he’s expecting to step up settlement talks in the wake of the verdict. (Of the 70 drug companies sued by the state in 2005, seven have settled. Beasley told us he’s in active negotiations with another 15. Another three defendants have June trial dates.)

Sandoz has announced that it intends to appeal the verdict. (The other drug company jury verdicts are also on appeal.) The company was defended by Tabor Novak, Jr., of Ball, Ball, Matthews & Novak and Wayne Cross and Michael Gallagher of White & Case. Novak told us he was “very disappointed in the verdict,” and referred us to Sandoz’s statement, which said, in part, “We continue to believe the state of Alabama’s claims are without merit. Sandoz reported accurate and truthful information in accordance with industry standards and all applicable laws.”

Beasley did a bit of crowing to us, but with the trial record he’s amassed in these cases (verdicts of $215 million, $81 million, $78.4 million, and $33 million) who can blame him? “The only difference between the generic and branded drug companies is that the illegal spread was larger at the generics,” he said. “I saw jurors after the trial at the clerk’s office. They were appalled by what they heard. They said they were shocked that a drug company would do that.”

Beasley’s firm is handling the Alabama cases on a 14 percent contingency fee contract with the state, with the firm paying all expenses. It’s a good enough deal for the firm that Beasley Allen is now working with more than a half-dozen other states on similar litigation against drug companies. “It’s something that should be done,” he said. “We’re going to stay after them until they straighten up.”

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