Alabama Wants $800M From Novartis And Glaxo
7 CommentsBy Ed Silverman // June 30th, 2008 // 10:27 pm
An attorney for Alabama asked a jury to award the state up to $800 million from Glaxo and Novartis for overcharging for Medicaid drugs, the Associated Press report. The state claims the drugmakers engaged in fraud from 1991 to 2005, depriving the state Medicaid program of needed resources.
Alabama’s attorney, Jere Beasley, told jurors in closing arguments that big awards would send a message to drugmakers. “You can say we won’t tolerate a reimbursement shell game,” Beasley said, according to the AP. The state claims the drugmakers charged the Medicaid program one price for drugs while offering discounts and special prices to other companies.
But Novartis attorney Harlan Prater told jurors the drugmaker followed federal rules requiring companies to report list prices that do not include discounts, and that special prices are negotiated separately with pharmacists, the AP writes. “It is not fair to punish Novartis for doing what the federal government says for us to do,” Prater said.
An attorney for Glaxo, Don Jones, said the drugmaker did nothing wrong and the lawsuit was about the state trying to make money from the pharmaceutical industry. “It’s about trying to get you whipped into some sort of frenzy over money,” he told jurors. Deliberations will resume Tuesday morning.
Novartis and Glaxo are two of more than 70 companies sued by the state in 2005 over claims that they caused Alabama to pay too much for drugs, the AP writes, although this is only the second case to go to trial. In February, a jury awarded the state $215 million from AstraZeneca, although the award was later reduced to $160 million. Similar lawsuits against drugmakers are pending in other states, including Mississippi, South Carolina, Utah, Hawaii and Alaska.
Paul G
Another case of people, in this case states, wringing their hands trying to get industry money.
These legal theories are reaching the breaking point. I can’t wait for companies to start standing up to the blackmail. In a way, Merck did with the Vioxx plaintiffs, now it’s the time for Glaxo and Novartis to do the same with states.
Bring some common sense back.
Richard Williams
I pay about 10% of the US price for my prescriptions. How? I buy from an internet pharmacy in Germany. Is Germany cheap? No way. So why do Americans pay so much for their medications?
Barry R
Richard — You THINK that you are getting real drugs and that they are coming from Germany. In fact you could be getting anything (poison, placebo, etc.), and they could be coming from anywhere. Best of luck to you.
Consumer
Actually, you should follow this a bit closer. I think it is very likely that we will find out that indeed both Novartis and Glaxo acted fraudulently. This is a well known tactic that has been going on for quite some time. But they also need to look at the drug distributors involvement much like San Francisco did in June with their law suit.
This is what makes these cases so difficult. There is lots of money laundering going on. The profit on most of these drugs is at around 80% and in some cases 90% before it leaves the manufacturer. Drug distributors and pharmacies all take their cut further inflating the cost. The greed of every one in the distribution chain leaves patients and governments struggling with ways to try to cover the costs for these drugs.
Isn’t it funny that the country that boasts the most patriotic citizens is the one that is doing the least for its citizens with regards to health care support and educational support?
I sure hope the states win this one and I hope it starts a trend. Then we will really all have something to be proud and patriotic about.
Let the government do what it is supposed to do - ensure that its citizens access drugs and healthcare. This is what we elect them to do.
pharma PR hack
Medicaid pricing is set by a formula using the AWP and the lowest discounted price. The deal is that the manufacturers use loopholes to not report the lower “incentive” prices or special prices given to pharmacies. When states find out they are not getting the lowest price for Medicaid they sue for Medicaid fraud.
It isn’t unlike the Glaxo case settled in 2005 in San Diego, the Bayer settlement with multi-states in 2003, the $190 million settlement of Aventis in 2007.
States aggressively pursue these pricing gimmicks. And are only going to get more aggressive as they start to share information between themselves.
It isn’t going anywhere and if they aren’t careful- Medicaid and Medicare drug pricing will be taken away from the plans altogether and end up in a VA system platform.
ALS
The jury did not find either drug company guilty of fraud and did not award any punitive damages.
It was tough for Alabama citizens to decide against their state. A compromise verdict clear and simple.
Justice in MI
Paul G - You obviously are into the Greedy Trial Lawyer Conspiracy Theory of Everything Evil.
Can you let us know a bit about your own background? Genuinely curious.
Industry? Think tank? Lobbyist?
Thanks