State scores victories against pharmaceutical companies in new settlements

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.

Drug Firms' Spending on Consumer Ads Fell 8% in '08, a Rare Marketing Pullback

The nation's pharmaceutical makers spent more than $2.9 million on Vermont's doctors, hospitals and universities to market their products in the last fiscal year, according to a report issued Wednesday by the state attorney general's office.

That's down slightly from the previous year, but Attorney General William Sorrell says he's not sure if the drug companies are tightening their belts or if they want to avoid public scrutiny for the payments, whose recipients aren't identified.

The report shows 78 companies spent the money in the year ending July 1, 2008. By law, the companies have to report their spending on consulting and speakers' fees, travel expenses, gifts and other payments to or for physicians, hospitals, universities and others authorized to prescribe drugs.

The cash payments are made directly to health care providers, Sorrell said.

"It's `I pay you money to give me feedback on how your patients react to my drugs,' `I give you free samples that you can prescribe to your patients,' `I'll pay you a consulting fee or take you to dinner or pay for you to take a trip someplace to hear lectures or presentations on how this drug works or how effective it is for various conditions,'" Sorrell said.

The Pharmaceutical Marketing Disclosure Law, adopted in 2002, requires drugmakers to report their spending by Dec. 1 and the attorney general to issue a report summarizing them. At least four other states have such disclosure laws, but the report released Wednesday dealt only with Vermont. The disclosures don't include money spent on advertising.

The industry says that the money helps pay for education programs about drugs for doctors and patients and that the drug companies develop some of their medicines using feedback from prescribers and users.

Among the findings of the report released Wednesday:

_Eli Lilly and Co., Pfizer Inc., Novartis Pharmaceuticals Corp., Merck & Co. and Forest Pharmaceuticals Inc. were the biggest spenders.

_25 doctors and nurses each got more than $20,000 in cash or benefits from the companies, 10 got more than $50,000 and one psychiatrist took in $112,000.

In the year ending July 1, 2007, 84 companies had reported spending $3.1 million, following a larger trend in which the number of companies spending the money increases but the overall amount decreases. From 2004 to 2008, the number of manufacturers reporting climbed 40 percent but the amount they spent dropped by 30 percent.

The report doesn't identify the recipients of the money, an exemption at the heart of a bill before the state legislature. The bill would eliminate the drug companies' ability to claim "trade secret" in providing the information to the state but barring the state from releasing it to the public.

Sorrell said more than 80 percent of the expenditures analyzed for the report claimed the trade secret designation. He said consumers would be better off if that weren't an option so people would know if a health care provider recommending a drug had been paid by its manufacturer.

"If I was a patient or one of my kids was a patient, and my doctor was telling me, `You ought to try drug X,' I would like to know that my doctor received $40,000 from the company that manufactures and markets this drug," he said.

The Vermont Medical Society, a physician advocacy group, and the Vermont Psychiatric Association, an organization of psychiatrists, endorse the bill. They say it would improve patient confidence if the information were public.

The Pharmaceutical Research and Manufacturers of America, which represents drug companies, says much of the money goes toward helping doctors know when to prescribe a certain medication.

"An individual who's prescribing, particularly a new medication, needs to know when it should be used, what patient populations it should be used for, for what conditions and when it should not be used," said Marjorie Powell, senior assistant general counsel for the group, a trade association.

The group opposes elimination of the exemption, saying it would allow competitors to know their trade secrets.

"The amount I'm spending on how to improve a product would be valuable information to a company that's considering making a competing product," Powell said.

She said the reason for the trade secret designation wasn't to hide anything from patients.