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Jury: 2 drug firms owe Ala. $114M in price fraud

July 02, 2008
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According to the Associated Press, a state court jury recently found two major pharmaceutical companies defrauded Alabama in a long-running Medicaid drug pricing scheme and ordered the firms to pay more than $114 million in damages.

The jury found that GlaxoSmithKline should pay the state $80.8 million in compensatory damages and that Novartis should pay about $33.7 million in similar damages. But it declined to order any punitive damages.

An attorney representing the state, Jere Beasley of Montgomery, said the verdict should help Alabama and other states settle similar lawsuits with drug companies.

Overall, the state had asked for as much as $800 million in total damages in what its attorneys claimed was a scheme to overcharge for Medicaid prescription drugs from 1991 to 2005.

The jury awarded the amount of compensatory damages Beasley had asked for in closing arguments.

The state claimed the two companies charged the Medicaid program one price for drugs while offering discounts and special prices to other companies.

The companies had denied any fraud, contending they followed proper procedures in setting drug prices.

Attorneys for both companies said they were considering whether to appeal.

Novartis attorney Harlan Prater of Birmingham said he was also disappointed with the verdict.

GlaxoSmithKline is a London-based health care company with U.S. headquarters in Philadelphia and Research Triangle Park, N.C. Novartis is the U.S. affiliate of a Swiss company with U.S. headquarters in East Hanover, N.J.

The jury returned the verdict on its second day of deliberations after considering the case for about seven hours overall.

It was the second trial of the state''s lawsuits filed in 2005 accusing more than 70 drug companies with Medicaid drug pricing fraud. In the first trial in February, a jury awarded the state $215 million against AstraZeneca Pharmaceuticals, LP. Montgomery County Circuit Judge Charles Price, who presided over both trials, later reduced that verdict to $160 million, which included $120 million in punitive damages.
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