King's attorneys go to court in pharmaceutical suit

John O'Brien Jun. 24, 2009, 5:15pm


MONTGOMERY, Ala. (Legal Newsline) - The trial in one of Alabama Attorney General Troy King's lawsuits against the pharmaceutical industry began Tuesday amidst the controversy over where any money recovered by a verdict will go.

Watson Pharmaceuticals, of California, and the State gave their opening arguments in the case, which alleges allege overcharges to the state's Medicaid system. Pharmaceutical companies misreported and inflated prices for drugs, King alleged in 2005.

Watson attorney James Matthews said the company saved the State millions of dollars by providing less expensive generic drugs, a report by The Associated Press says.

It also said the State is being represented by former Lieutenant Gov. Jere Beasley, who is now in private practice.

King recently reached $89 million in settlements and has also secured verdicts in the amount of more than $352 million, but those are under appeal to the state Supreme Court and the State has not received any funds.

At issue in a lawsuit by King against the federal Centers for Medicaid and Medicare Services is an Oct. 28 letter sent by CMS to the states. King alleges it allows the CMS to grab portions of settlements and awards that haven't been collected yet by the State.

The Oct. 28 letter from the CMS to the states says they are not allowed to segregate portions of their recovery as out of the Federal Government's reach.

"The (Heath and Human Services) Departmental Appeals Board has long recognized the Federal Government's entitlement to its proportionate share of civil penalties assessed by states against providers or other entities," the CMS letter states.

It adds that recently enacted federal legislation "provides that the full amount of any State (False Claims Act) recovery serve as the basis for measuring the federal share."

In fiscal year 2008, the Federal Government provided nearly 68 cents of every dollar spent on Medicaid in Alabama. King wrote that the new requirements "will have a devastating impact on the State of Alabama and the low-income and disabled individuals served by the State's Medicaid program."

King sued sued 79 pharmaceutical companies in 2005.

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