Ala. court rejects $274M verdicts in drug cases

By Bob Johnson

Published October 16, 2009 7:01AM (EDT)

The Alabama Supreme Court on Friday threw out jury decisions awarding the state more than $274 million from three pharmaceutical companies, ruling they did not defraud the state in pricing Medicaid prescription drugs.

The court overturned jury verdicts against the drug companies AstraZeneca, Novartis and GlaxoSmithKline, accused by the state of fraudulently manipulating prices of drugs for Medicaid recpients.

The court ruled 8-1 that the state did not have to rely on the drug companies' information in deciding what prices to pay pharmacists for prescription drugs for Medicaid recipients. The justices said state officials could have done their own research and determined the correct price.

The court ruled the state is continuing to rely on the same formulas established by the drug companies to set prices.

"The state has never altered its course of conduct since taking issue with the reporting methods," said the majority ruling written by Justice Tom Woodall.

Justice Tom Parker cast the lone dissent.

More than 70 lawsuits were filed in 2005 by the state against drug companies. The state has settled its lawsuits against 16 of the drug manufacturers for more than $124 million.

Alabama Attorney General Troy King filed the lawsuits, charging them with causing the state's Medicaid program to pay too much for prescription drugs for poor and elderly citizens.

The state's case against Wilmington, Del.-based AstraZeneca, the U.S. subsidiary of a British company, was the first to go to trial in February, 2008. The jury initially awarded the state $240 million in damages, but Circuit Judge Charles Price reduced the verdict to $160 million.

Later in 2008, another jury awarded the state $81 million in damages against GlaxoSmithKline PLC, a London-based health care company with U.S. headquarters in Philadelphia and Research Triangle Park, N.C., and $33 million in its lawsuit against Novartis, the U.S. affiliate of a Swiss company with U.S. headquarters in East Hanover, N.J.

In February, a Montgomery jury ordered Sandoz Pharmaceuticals to pay $78.4 million to the state. The Supreme Court has not ruled in that case.

Similar lawsuits have been filed against drug manufacturers by other states. A jury in Kentucky on Thursday ordered AstraZeneca to pay $14.7 million in a case that claimed the company inflated its prescription drug prices for Medicaid reimbursements.

Bob Johnson

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