Healthy Skepticism Library item: 15158

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Publication type: news

Johnson B.
Alabama jury orders drug manufacturer Sandoz to pay the state $78.4M in drug-pricing lawsuit
Associated Press 2009 Feb 24
http://biotechresearchinfo.com/pharmaceuticals-sector/jury-orders-784m-judgment-drugpricing-trial-396313a

Full text:

MONTGOMERY, Ala. – Jurors ordered the German-based pharmaceutical company Sandoz Inc. on Tuesday to pay Alabama $78.4 million for causing the state Medicaid program to pay too much for prescription drugs from 1991 to 2005.

The jury ordered Sandoz, a subsidiary of Novartis AG, to pay $28.4 million to compensate that Medicaid program for its losses and another $50 million in punitive damages. Jurors took about four hours over two days to return a verdict.

“We had a very strong case and we are satisfied,” said attorney Jere Beasley, who represented the state in a trial lasting little more than two weeks.

Sandoz attorney Tavor Novak said the company would appeal.

“Sandoz continues to believe that the state of Alabama’s case was without merit,” Novak said.

Sandoz, which is based in Holzkirchen, Germany and has U.S. headquarters in Princeton, N.J., is one of more than 70 prescription drug makers sued by Alabama Attorney General Troy King in 2005 over Medicaid drug prices dating to 1991. This is the third time a jury in Alabama has ruled against pharmaceutical companies in lawsuits brought by King.

A year ago, an Alabama jury ordered the U.S. subsidiary of U.K. drug maker AstraZeneca to pay the state $215 million – $40 million in compensatory damages and $175 million in punitive damages. But Circuit Judge Charles Price reduced the combined amount to $160 million.

In July, another Montgomery County jury found GlaxoSmithKline liable for nearly $81 million in compensatory damages and Novartis liable for about $33 million in similar damages. No punitive damages were awarded.

“This sends a message that if you come into this state and steal from the neediest among us you are going to expect you are going to be held accountable. It doesn’t matter how big you are,” King said after being told of the verdict.

AstraZeneca, GlaxoSmithKline and Novartis have appealed their cases to the Alabama Supreme Court. The state has settled 10 of the lawsuits for nearly $35 million.

The state had asked for $28.4 million in compensatory damages, but Beasley had asked jurors to return up to five times that amount in punitive damages.

In closing arguments Monday, Beasley told jurors that Sandoz was arrogant in the way it reported drug prices and noted a company memo had said: “Go forward and take the position of a Roman legion, be greedy and take no prisoners.”

Novak told jurors, however, that the company reported accurate prices and Sandoz saved the Alabama agency millions by providing less expensive generic drugs. Novak said the memo was taken out of context and the reference to the Roman legion was a metaphor to inspire workers. Novak also told jurors that state officials did not understand the pricing system.

The verdict is the second time this month that a jury has ruled against a pharmaceutical company being sued by a state for allegedly inflating prescription drug prices.

Last week a jury in Madison, Wis. ruled that Parmacia Inc., a subsidiary of Pfizer Inc., had violated the state’s Medicaid fraud law more than 1.4 million times. The company was charged with knowingly inflating wholesale prices to obtain larger payments from Medicaid, private insurers and consumers. The jury ordered the company to pay $9 million in damages.

The state had asked for $28.4 million in compensatory damages, but Beasley had asked jurors to return up to five times that amount in punitive damages.

In closing arguments Monday, Beasley told jurors that Sandoz was arrogant in the way it reported drug prices and noted a company memo had said: “Go forward and take the position of a Roman legion, be greedy and take no prisoners.”

Novak told jurors, however, that the company reported accurate prices and Sandoz saved the Alabama agency millions by providing less expensive generic drugs. Novak said the memo was taken out of context and the reference to the Roman legion was a metaphor to inspire workers. Novak also told jurors that state officials did not understand the pricing system.

The verdict is the second time this month that a jury has ruled against a pharmaceutical company being sued by a state for allegedly inflating prescription drug prices.

Last week a jury in Madison, Wis. ruled that Parmacia Inc., a subsidiary of Pfizer Inc., had violated the state’s Medicaid fraud law more than 1.4 million times. The company was charged with knowingly inflating wholesale prices to obtain larger payments from Medicaid, private insurers and consumers. The jury ordered the company to pay $9 million in damages.