The state of Alabama has scored another round of significant victories in its ongoing war with major pharmaceutical companies which allegedly bilked the state Medicaid agency out of an estimated $1 billion in drug overcharges. Attorney General Troy King says that six more drug companies have settled with the state for $89 million.
The latest settlements, announced by King on Friday, bring to nearly $124 million the amount the state has won through negotiated settlements with drug manufacturers. The state has also won more than $352 million in jury verdicts against pharmaceutical companies what would not settle and instead chose to go to trial. Those verdicts are being appealed by the drug makers, so those funds have yet to be recovered by the state.
When King first took action in January 2005, more than 70 drug firms were named in suits alleging $1 billion in fraudulent drug overcharges. Today, about 45 defendants remain.
"I (took) legal action against these drug companies simply to right a wrong, and to recover public funds that had been illegally taken from our state," King said. "My intent was then - and is now - to make Alabama's taxpayers whole."
The latest settlements were reached with Abbott Laboratories, Aventis Pharmaceutical L.P., TEVA Pharmaceuticals USA, Shering-Plough/Warrick Companies, Forest Laboratories and Baxter International. King would not disclose the exact amount each defendant agreed to pay the state, saying the individual amounts were being kept confidential as part of the settlements.
Previous settlements were reached with seven other major pharmaceutical manufacturers totaling $34.75 million. That, plus the $89 million in settlements announced Friday brings to $123,750,000 the amount of money the state has and will realize from 13 of the more than 70 defendants.
"As we deposit these monies back into the General Fund, it is my hope that they can be used to offset some of the massive budget shortfalls within the Alabama Department of Corrections, and, perhaps, even be used to provide relief to those Alabama families who acted in good faith, saving and investing in the Alabama Prepaid College Tuition program," King said.
The state initially filed suit against 72 pharmaceutical companies. The first case went to trial in Montgomery in February 2008. A jury awarded the state $215 million against AstraZeneca PLC. Montgomery County Circuit Court Judge Charles Price later reduced the verdict to $160 million.
The second case went to trial in Montgomery last July, with another $114 million verdict in favor of the state. The jury awarded Alabama $81 million against GlaxoSmithKline PLC and $33 million against Novartis AG. Two smaller drug companies, Takeda Pharmaceuticals North America Inc. and Dey LP settled before trial last July for about $7 million.
In February of this year, a Montgomery County Circuit Court jury awarded the state $78.4 million against Sandoz, Inc.
King originally hired the Hand Arendall law firm of Mobile to handle the cases for the state. Hand Arendall then associated the Montgomery law firm of Beasley Allen. Roger Bates of Hand Arendall and Jere Beasley of Beasley Allen lead the team of attorneys representing the state in the courtroom and in settlement negotiations.
The firms will receive about 14 percent of the verdicts and settlements, plus expenses.
Beasley said Friday's announced settlements show the state's cases against the drug makers are well-founded. "No group would pay $89 million if they had any idea we had been wrong in bringing the lawsuit," he said.
The next trial, against Watson Pharmaceuticals, Inc. is scheduled for June 22. Then, on September 21, Mylan Pharmaceuticals, Inc is scheduled for trial. Both cases will be heard in Montgomery County Circuit Court.
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