WSFA 12 News Montgomery, AL |State Sues 79 Drug Companies, Claims Fraud, Overcharging in Medicaid Drug Billing

State Sues 79 Drug Companies, Claims Fraud, Overcharging in Medicaid Drug Billing

Did dozens of drug companies victimize Alabama's poor, sick and elderly?

The state says the large corporations deliberately overcharged Medicaid in a huge drug fraud and in doing so, one company even charged eight hundred times it should for what is essentially salt.

The corporate names are an A to Z galaxy of the biggest drug companies in the world including Abbot, Bayer, Bristol Meyers Squibb, Johnson and Johnson, all the way to the former ZLB Behring.

"There are 79 defendants in this lawsuit," said the attorney hired by the state to handle the case, Jere Beasley.

The companies share in common one accusation in the state's lawsuit;  that not only did they vastly overcharge the system, they used an elaborate scheme to hide it.

"Obviously, it hurts the state, and it hurts the people who are the beneficiaries under the system," Beasley said.

The state says drug companies listed one price for medical officials to use in Medicaid reimbursements, but when the companies actually delivered the drugs to wholesalers, they gave deep discounts, creating huge overcharges and profits down the line.

"They were very successful in hiding the information and that's what this trial is really about is educating the people, really what happens to them when big folks hurt little folks," said Beasley.

The lawsuit offers several blatant examples.

Among the worst: Baxter Pharmaceuticals told the state the retail cost for a unit of sodium chloride - essentially salt - was 928 dollars.

A later investigation revealed its real cost was $1.71. The means the markup is 800 times the real cost.

The state previously settled the same case against two co-defendant drug companies.

Between them, Dey Pharmaceuticals and Takeda Pharmaceuticals will pay about seven million dollars to Alabama plus plus attorney's fees.

Beasley says this is the first lawsuit of its kind to go to trial anywhere in the United States, so a lot of people will keep an eye on what happens in Judge Charles Price's courtroom.

Price has already ordered the court system to provide sophisitcated video and audio equipment installed in his courtroom to handle the case

Jury selection begins Tuesday and is expected to last about a week.

Reporter: Chris Holmes