Ala. SC reverses $78M drug-pricing verdict

John O'Brien Jul. 17, 2012, 2:15pm


MONTGOMERY, Ala. (Legal Newsline) - The Alabama Supreme Court has again struck down a multimillion dollar verdict in a drug-pricing lawsuit filed by former state Attorney General Troy King.

The court ruled Monday for drugmaker Sandoz, Inc., in a $78 million case from Montgomery County Circuit Court. Sandoz was one 73 companies alleged by King to have overcharged the state Medicaid program by inflating the average wholesale price of its drugs.

King hired prominent plaintiffs attorney Jere Beasley to file the lawsuits on behalf of the State. Alabama's current attorney general is Luther Strange.

The court found evidence that the State did not actually rely on AWPs and wholesale acquisition costs reported by drugmakers.

"(I)nstead, State's methodology for reimbursements under Medicaid program were based on various policy decisions and the dictates of the federal government," the court's opinion says.

State Medicaid agencies reimburse providers based on an estimated cost, like an average wholesale price. King, as well as other state attorneys general, 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 eventually reduced to $160 million. However, the state Supreme Court overturned all three in 2009, and two others failed in lower courts.

The verdict against Sandoz included $28,443,572 in compensatory damages and $50 million in punitive damages.

Multimillion-dollar settlements with other companies, however, have been reached.

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