Life Sciences

Novartis, GlaxoSmithKline to appeal Alabama verdict

Pharma Compliance Alert, July 9, 2008

Novartis and GlaxoSmithKline (GSK) both plan to appeal a jury verdict ordering them to pay $114 million in compensatory damages to the Alabama State Medicaid Agency, while 69 other pharmaceutical companies were given a deadline to settle with the state or face trial.
 
A jury found Novartis and GSK guilty of defrauding Medicaid, but awarded compensatory damages without punitive damages. Novartis was ordered to pay $33.7 million, while GSK was ordered to pay $80.8 million.
 
Novaritis called the verdict “unfounded” and said it believes it properly reported prices to Alabama’s State Medicaid Agency, the company said in a release.
 
In a release from GSK, Chilton Varner, an attorney with King & Spalding of Atlanta who represented GSK, said Alabama made informed choices about payments to pharmacists and hasn’t changed its rules since filing the lawsuit three years ago.
 
The guilty verdict is the second in Alabama for alleged price fixing by pharmaceutical companies. A jury found AstraZeneca guilty of fraud in February and said the company had to pay $215 million for alleged false and misleading reporting of drug prices. Circuit Court Judge Charles Price reduced the damage award to $160 million in June.
 
Alabama Attorney General (AG) Troy King filed suit against 73 pharmaceutical companies in 2005, claiming the companies illegally inflated prices. Two pharmaceutical companies, Dey and Takeda Pharmaceuticals, collectively agreed to pay $6.75 million to settle with the AG. King sent letters to the remaining companies, telling them they had 30 days to settle their cases or face trial, according to an article in the international edition of the New York Times.

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