Jury: 2 drug firms owe Ala. $114M in price fraud

posted on:
July 1, 2008

author:
Bob Johnson

category:
Fraud

MONTGOMERY, Ala. (AP) – A state court jury on Tuesday found two major pharmaceutical companies defrauded Alabama in a long-running Medicaid drug pricing scheme and ordered the firms to pay more than $114 million in damages.

The jury found that GlaxoSmithKline should pay the state $80.8 million in compensatory damages and that Novartis should pay about $33.7 million in similar damages. But it declined to order any punitive damages.

An attorney representing the state, Jere Beasley of Montgomery, said the verdict should help Alabama and other states settle similar lawsuits with drug companies.

Overall, the state had asked for as much as $800 million in total damages in what its attorneys claimed was a scheme to overcharge for Medicaid prescription drugs from 1991 to 2005.

The jury awarded the amount of compensatory damages Beasley had asked for in closing arguments.

“I think the jury looked at the evidence and decided the fraud was substantial but that the compensatory damages plus interest was enough,” Beasley said.

The state claimed the two companies charged the Medicaid program one price for drugs while offering discounts and special prices to other companies.

The companies had denied any fraud, contending they followed proper procedures in setting drug prices.

Attorneys for both companies said Tuesday they were considering whether to appeal.

“It’s been our position all along that GSK reported true and accurate prices,” said Montgomery attorney Don Jones, representing GSK.

Novartis attorney Harlan Prater of Birmingham said he was also disappointed with the verdict.

“We’re grateful that the jury did not find the punitive damages were warranted,” Prater said. “We believed we reported appropriate prices.”

GlaxoSmithKline is a London-based health care company with U.S. headquarters in Philadelphia and Research Triangle Park, NC. Novartis is the U.S. affiliate of a Swiss company with U.S. headquarters in East Hanover, N.J.

The jury returned the verdict on its second day of deliberations after considering the case for about seven hours overall.

It was the second trial of the state’s lawsuits accusing more than 70 drug companies with Medicaid drug pricing fraud. In the first trial in February, a jury awarded the state $215 million against AstraZeneca Pharmaceuticals, LP. Montgomery County Circuit Judge Charles Price, who presided over both trials, later reduced that verdict to $160 million, which included $120 million in punitive damages.

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