Pharmaceutical companies have 30 days to settle

posted on:
July 3, 2008

author:
Wendi Lewis

category:
Fraud

MONTGOMERY, ALA – Jere Beasley, founding shareholder of Beasley, Allen, Crow, Methvin, Portis & Miles, P.C., announced this morning Alabama Attorney General Troy King has put 69 pharmaceutical companies accused of defrauding Alabama’s Medicaid system on notice they have 30 days to settle or be brought to trial.

Beasley’s firm represents the State of Alabama in a series of cases against a total of 72 pharmaceutical companies. Three of the companies already have gone to trial, one in February and two in June, with juries in both trials finding in favor of the State, awarding a total of $329 million. There are 69 companies left facing charges of fraud. The State alleges the drug companies falsified pricing information, charging Medicaid much higher rates for drugs than they charged retailers, some by as much as 1,000 percent.

“The tragedy is the Medicaid program is designed to benefit the poor, the elderly, the disabled, and children,” Beasley said. “It is mind boggling that these companies would try to get away with cheating.”

At the news conference, representatives from AARP and Alabama Arise spoke out in favor of the State’s action against the drug companies, saying the issue is a matter of life and death, because Medicaid fraud impacts the ability of agencies that rely on the system to effectively serve Alabama’s elderly and low-income citizens.

“I want to underpin what Gov. Beasley has said, and we strongly support the State’s position,” said Dr. Joan Carter, State Director, AARP Alabama. “The key is truth in pricing.”

Jim Carnes of Alabama Arise, a coalition of religious, community and civic groups that promote state policies to improve the lives of low-income people, agreed, saying the decisions in this litigation will set the tone for future fair pricing, affecting the long-term health and well-being of the people served by Medicaid.

Beasley said that if any of the remaining 69 companies still facing charges chooses not to settle in the 30-day period set out by Atty. Gen. King, he will have no further interest in negotiating with them, and they will go to trial.

The first Medicaid fraud trial was held in February against AstraZeneca. A jury in that case determined the drug company must pay $215 million, which included $40 million in compensatory damages and $175 million in punitive damages. Alabama Circuit Judge Charles Price later lowered the punitive damages to $120 million.

The second of the cases to go to trial ended Tuesday, July 1. After five and a half hours of deliberation, the jury returned a verdict in favor of the State. Jurors held pharmaceutical companies GlaxoSmithKline and Novartis responsible for $114 million in compensatory damages, but awarded no punitive damages. Still, this is the 13th largest jury verdict in the U.S. so far this year, according to data compiled by the Bloomberg news service.

In addition to Alabama, 22 other states have filed lawsuits against the 72 pharmaceutical companies, alleging similar Medicaid fraud. Beasley Allen is representing five of these states, Alaska, Hawaii, Mississippi, South Carolina and Utah.

A video of the full news conference is now available for viewing on the Beasley Allen web site.

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