GlaxoSmithKline, Novartis Found Guilty Of Overcharging Alabama Medicaid Program, Must Pay State $114M

Main Category: Medicare / Medicaid / SCHIP
Also Included In: Pharma Industry / Biotech Industry;  Litigation / Medical Malpractice
Article Date: 03 Jul 2008 - 6:00 PDT

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An Alabama state court jury on Tuesday found pharmaceutical companies GlaxoSmithKline and Novartis guilty of defrauding the state Medicaid program by charging artificially high prices for medications and ordered the two companies to pay more than $114 million in restitution, the AP/Minneapolis Star Tribune reports. GSK was ordered to pay the state $80.8 million and Novartis about $33.7 million in compensatory damages.

State attorneys claimed the companies charged the Medicaid program one price for drugs while offering discounted prices to private insurers from 1991 to 2005 and asked that the companies pay as much as $800 million in total damages. Lawyers for GSK and Novartis argued the companies followed proper procedures in setting drug prices. Jere Beasley, a lawyer representing the state, said, "I think the jury looked at the evidence and decided the fraud was substantial but that the compensatory damages plus interest was enough." Beasley added that the decision could help other states settle similar lawsuits with pharmaceutical companies.

Attorneys for both firms said they were considering appealing the decision. "It's been our position all along that GSK reported true and accurate prices," Don Jones, an attorney representing GSK, said. Harlan Prater, an attorney representing Novartis, said, "We're grateful that the jury did not find the punitive damages were warranted. We believe we reported appropriate prices" (Johnson, AP/Minneapolis Star Tribune, 7/1).

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