Alabama files lawsuit against drug companies
ASSOCIATED PRESS















MONTGOMERY -- The state of Alabama filed a lawsuit accusing 79 drug companies of causing massive overcharges to the Alabama Medicaid Agency that siphoned away hundreds of millions of dollars from other health services for the needy.

The suit, filed Wednesday in Montgomery County Circuit Court, accuses the companies of intentionally misreporting the average wholesale price for their drugs, which the Medicaid Agency uses to determine its payments for prescriptions.

"This practice has unfairly and artificially raised the cost of drugs to Alabama Medicaid, thereby diverting scarce resources and limiting access to lifesaving medicines and other services for some of the neediest in our state,'' Attorney General Troy King said Thursday.

King said Alabama is the 18th state to file such a suit. None of the earlier suits has resulted in a ruling yet.

The suit goes into specifics with drug companies, such as alleging that Bristol-Myers reported an average wholesale price for Etoposide of $136.49 when it was actually $34.30 -- a 298 percent spread.

Company spokesman Brian Henry said the company could not comment because it had not seen the suit.

Other pharmaceutical companies contacted by The Associated Press either had no immediate comment or said they couldn't comment until they receive the lawsuit.

The suit comes at a time when the Alabama Legislature must find an additional $129 million to maintain the status quo in the Medicaid program. Roger Bates, one of the

private attorneys handling the case for the state, said the suit won't go to trial for at least a year, and it will not affect the state's current Medicaid funding problem.

Two private law firms are handling the litigation for the state on a contingency basis: Hand Arendall and Beasley Allen. If the state wins, the lawyers could get up to 14 percent of the verdict. The exact amount would be determined by a judge, King said.

King said the state decided to bring in private lawyers because "it is going to be expensive and protracted litigation.''

The suit seeks both compensatory and punitive damages. It doesn't state a specific amount, but King said the case involves hundreds of millions of dollars in alleged overcharges during the last decade.

If the state wins, it would have to give about 70 percent of the compensatory damages to the federal government because the federal government pays for about that portion of the Medicaid program in Alabama, Medicaid Commissioner Carol Hermann said at a news conference.

Alabama is no stranger to taking corporations to court. In 2003, a Montgomery jury awarded the state $11.9 billion in a lawsuit accusing Exxon Mobil of underpaying natural gas royalties to the state. A judge reduced the verdict to $3.6 billion, and Exxon Mobil is appealing to the Alabama Supreme Court.
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