AG King announces $28 million in new settlements

MONTGOMERY, AL., (WSFA) -- Attorney General Troy King announced the latest round in a series of victories in ongoing litigiaton against drug companies for massive overcharges to the Alabama Medicaid Agency. He reported the following update on recent developments, as well as an overview of previous settlements and awards:


To date, Attorney General King, acting on behalf of the State of Alabama Medicaid Agency, has recovered $34,750,000 million dollars in settlements with drug manufacturers in the State's continuing Average Wholesale Price (AWP) litigation.

The AWP litigation was filed in 2005 in Montgomery Circuit Court alleging massive overcharges to the Alabama Medicaid Agency over a period of 1991-2005 as a result of pharmaceutical companies misreporting and inflating prices for drugs.

In the AWP litigation, the State contends that more than 70 drug manufacturers falsely inflated the price of drugs and reported these fictitious prices to a reporting service called First Databank. The manufacturers submitted prices called Wholesale Acquisition Cost (WAC) and AWP to these reporting services, knowing those prices bore no relation at all to real marketplace prices, but would be used by state Medicaid programs in reimbursement. Alabama Medicaid, like most other states, reimburses pharmacies and doctors based on the prices submitted by the manufacturers and published by First Databank.


The State of Alabama has settled with drug manufacturers Bristol-Myers Squibb Company, Ethex Corporation/KV Pharmaceuticals, Amgen, Inc/ Immunex Corporation, Roxanne Laboratories/Boehringer Ingelheim, and Bayer Phamaceuticals, in the State's Average Wholesale Price litigation for a combined recovery of $28 million Dollars. In addition, previous settlements were made with Dey Laboratories, L.P. and Takeda Phamaceuticals North America, Inc., for a total of $6.75 million.

State Medicaid programs are jointly-funded with the assistance of the federal government and therefore a portion of the settlements received are returned to the federal government, where appropriate. Despite the federal share being returned, the State of Alabama has collected over $10.3 million for use in the general fund from the recent $28 million settlements.


Verdicts over $250 million in favor of the State of Alabama have been reached in Montgomery Circuit Court  AstraZeneca Pharmaceuticals, L.P., Novartis Pharmaceuticals Corporation, and SmithKline Beecham Corporation (known as GlaxoSmithKline), in the ongoing AWP litigation.  However, these funds have yet to be recovered on behalf of the State because the manufacturers have appealed all three verdicts to the Alabama Supreme Court.


On February 9, 2009, the State of Alabama will try another jury case and assert the same fraudulent conduct against the additional drug manufacturer, Sandoz, Inc. (headquartered in Princeton, New Jersey). Trials against more than 60 remaining defendants will be scheduled later.