WLF paper praises Ala. SC decision

John O'Brien Jan. 27, 2010, 11:10am


WASHINGTON (Legal Newsline) - The Alabama Supreme Court's decision to reject three lawsuits against the pharmaceutical industry was a refusal of "regulation through litigation," a Washington Legal Foundation legal opinion paper says.

Mark Behrens and Cary Silverman wrote Jan. 15 wrote that the Alabama Supreme Court has made success in the more than 70 lawsuits filed by state Attorney General Troy King difficult by wiping out more than $270 million in verdicts in October.

King hired private attorneys to sue more than 70 companies, alleging they have been ripping off the state's Medicaid program by overcharging for their prescription drugs.

"When attorneys general work with private attorneys - individuals with interests that may be different from the state - the overall benefit to the public becomes suspect at best," wrote Behrens and Silverman, who work for Shook, Hardy & Bacon's Public Policy Group in Washington.

"As former Clinton Administration Labor Secretary Robert Reich, who coined the phrase 'regulation by litigation,' observed: 'This is faux legislation, which sacrifices democracy to the discretion of administration officials operating in secrecy.'"

State Medicaid agencies reimburse providers based on an estimated cost, like a wholesale average price. King, as well as other states, have claimed drug makers did not include discounts and rebates in their list prices for drugs, and the state used the list price to reimburse the provider.

Jury verdicts against AstraZeneca, Novartis Pharmaceutical and GlaxoSmithKline resulted in awards of $215 million, $33 million and $80.9 million, respectively.

The AstraZeneca verdict was reduced to $160 million before the Supreme Court overturned it.

Sandoz, Inc., is appealing an $80 million verdict against it, the paper says. It calls the state Supreme Court's decision to overturn the three verdicts one of the most important of 2009.

"Economic hardship and rising health care costs may be fueling efforts by state executives to use litigation as a way to control or recoup health care expenditures," it adds.

The WLF is a tort reform organization.

From Legal Newsline: Reach John O'Brien by e-mail at jobrienwv@gmail.com.

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