GSK, Novartis to Appeal Judgment in Alabama Drug Price Suit

July 10, 2008

GlaxoSmithKline (GSK) and Novartis plan to appeal an Alabama jury verdict that would cost them $80.9 million and $33.2 million, respectively.

The state began its trial last month against the two companies, telling prospective jurors it would seek as much as $800 million for overcharges to Medicare, Medicaid and private insurers stemming from the companies’ inflation of the average wholesale price of drugs, according to Paul Lynn, one of the state’s attorneys.

The suit was the second brought by the state against 73 drugmakers in 2005 for allegedly overcharging the state’s healthcare programs.

The first case, State of Alabama v. AstraZeneca LP, ended in February with a jury verdict of $40 million in compensatory damages and $175 million in punitive damages. A state judge later reduced the punitive total to $120 million because Alabama limits such damages to three times the compensatory amount.
GSK maintains it reported true and accurate prices to the state. “Evidence also shows that, although the state now says it was not being fairly treated, the state has not changed the rules since it filed the lawsuit more than three years ago,” Chilton Varner, an attorney with King & Spalding of Atlanta who represented GSK, said.

Novartis also said it disputes claims that the prices it provided to reporting services resulted in overpayment to pharmacists and doctors in the state Medicaid system.