Medicaid Drug Suits Net Millions for State

By: State: Alabama | Source: AARP.org

AARP Alabama recently filed an amicus brief in support of the state of Alabama's lawsuit against pharmaceutical manufacturers who supplied drugs to Alabama's Medicaid program. An amicus brief, or "friend of the court" brief, is filed by an interested party who is not a party to a case, who volunteers to offer information on a point of law or some other aspect of the case to assist the court in deciding a matter before it.

The state filed suits against 72 pharmaceutical manufacturers, alleging they fraudulently inflated prices for prescription drugs, causing the state Medicaid agency to overpay pharmacists and doctors.

In the first trial in February 2008, a state court jury awarded Alabama a $215 million verdict against AstraZeneca PLC. The second trial, in July 2008, resulted in a $114 million verdict in favor of the state against GlaxoSmithKline and Novartis. Settlements have been reached with seven companies and negotiations are ongoing with a number of others. Companies that have settled include Amgen, Inc.; Bayer, Boehringer/Roxane, Bristol-Meyers Squibb Company, Dey, LP; Ethex Corporation and KV Pharmaceutical Company, and Takeda Pharmaceuticals North America, Inc.

In February 2009, a Montgomery County Circuit Court jury returned a verdict in favor of the State of Alabama, finding drug manufacturer Sandoz Pharmaceuticals, Inc., guilty of defrauding the Medicaid system. The jury ordered the company to pay $78.4 million, including $28.4 million in compensatory damages and $50 million in punitive damages. The verdict is significant because German-based Sandoz, a subsidiary of Novartis, manufactures and markets generic drugs.

The Medicaid agency could potentially receive millions of dollars from lawsuits against drug manufacturers, and AARP wants that money earmarked for services that help people live in their own homes as they age.

By earmarking the money for home-and-community-based care, Alabama could ultimately save money. The state spent almost 90 percent of its 2006 Medicaid long-term care budget on nursing home care, even though home- and community-based services are often more cost-effective.