Ala. lawyer asks jury for $800M in drug fraud case

Published 3:33 pm Tuesday, July 1, 2008

An attorney for Alabama asked jurors Monday to award the state as much as $800 million from two pharmaceutical companies accused of overcharging for Medicaid drugs.

The state claims GlaxoSmithKline and Novartis engaged in fraud from 1991 to 2005, depriving the cash-strapped Medicaid program of badly needed resources. Attorneys for the two firms said the companies followed federal rules and the prices were proper.

The jury deliberated for about an hour Monday, then broke for the night. Deliberations are scheduled to resume at 9 a.m. Tuesday.

GlaxoSmithKline is a London-based healthcare company with U.S. headquarters in Philadelphia and Research Triangle Park, N.C. Its drugs include the asthma medication Advair. Novartis, which makes blood pressure medications Diovan and Tekturna, is the U.S. affiliate of a Swiss company with headquarters in East Hanover, N.J.

Alabama’s attorney, Jere Beasley, told jurors in closing arguments that big awards would send a message to drug companies.

“You can say we won’t tolerate a reimbursement shell game,” Beasley said.

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

But Novartis attorney Harlan Prater told jurors Monday that his client was following federal rules requiring companies to report list prices that do not include discounts. He said special prices are negotiated separately with pharmacists.

“It is not fair to punish Novartis for doing what the federal government says for us to do,” Prater said.

An attorney for GlaxoSmithKline, Don Jones, said the company did nothing wrong and the lawsuit was about the state trying to make money from drug companies.

“It’s about trying to get you whipped into some sort of frenzy over money,” he told jurors.

Novartis and GlaxoSmithKline 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. Theirs is the second case to go to trial.

In the first, in February, a jury awarded the state $215 million from AstraZeneca Pharmaceuticals LP. Montgomery Circuit Judge Charles Price, who is also hearing the case against GlaxoSmithKline and Novartis, later reduced the amount to $160 million.

Similar lawsuits against pharmaceutical companies are pending in other states, including Mississippi, South Carolina, Utah, Hawaii and Alaska.