Jury orders Sandoz to pay $78.4 million in Medicaid fraud case

posted on:
February 26, 2009

Wendi Lewis


MONTGOMERY, ALA. – (February 24, 2009) A jury in Montgomery County Circuit Court returned a verdict in favor of the State of Alabama today, finding drug manufacturer Sandoz Pharmaceuticals, Inc., guilty of defrauding the Medicaid system. The jury ordered the company to pay $78.4 million, including $28.4 million in compensatory damages and $50 million in punitive damages. The verdict is significant because German-based Sandoz, a subsidiary of Novartis, manufactures and markets generic drugs.

Beasley Allen is representing the State of Alabama against a total of 72 pharmaceutical companies in the Average Wholesale Price (AWP) litigation. The companies are accused of using false prices for Medicaid reimbursement. Sandoz is the fourth drug company to go to trial. Jere L. Beasley, W. Daniel “Dee” Miles III and Clinton C. Carter with Beasley Allen represented the state in this trial.

“The fact that a generic drug is cheaper than a brand did not give Sandoz the right to cheat the state out of $28 million,” Beasley said, adding that “Sandoz knowingly reported false prices to the state.”

In the first trial in February 2008, a state court jury awarded Alabama a $215 million verdict against AstraZeneca PLC. The second trial, in July 2008, resulted in a $114 million verdict in favor of the state against GlaxoSmithKline and Novartis. Settlements have been reached with seven companies and negotiations are ongoing with a number of others. Companies that have settled include Amgen, Inc.; Bayer, Boehringer/Roxane, Bristol-Meyers Squibb Company, Dey, LP; Ethex Corporation and KV Pharmaceutical Company, and Takeda Pharmaceuticals North America, Inc.

Twenty-two other states currently have pending Medicaid fraud suits and Beasley Allen has been selected to represent seven other states in their litigation against the drug manufacturers.

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