Alabama seeks $800M from Novartis, SmithKline for alleged Medicare fraud

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Alabama has begun its trial to sue Novartis and SmithKline Beecham, a subsidiary of GlaxoSmithKline (GSK), for as much as $800 million for allegedly overcharging Medicare, Medicaid and private insurers by inflating the average wholesale price (AWP) of drugs.

In the current case, the state is requesting that the London-based GSK and the Basel, Switzerland-based Novartis pay up to $200 million in compensatory damages and as much as $600 million in punitive damages.

The monetary amounts are not mentioned in the complaint, but they were stated in an argument before the jury, according to Paul Lynn, one of the attorneys for the state.

The attorneys for the two plaintiffs have said they reported fair, correct prices to Medicaid and did not commit fraud.

“The defendants have engaged in false, misleading, wanton, unfair and deceptive acts and practices in the pricing and marketing of their prescription drug products,” Alabama complaint stated. “

The suit is the second brought by the state against approximately 76 pharmaceutical companies on overcharges to the state’s healthcare programs. The first case, State of Alabama v. AstraZeneca, ended in February with a jury verdict of $215 million against AstraZeneca. The London-based company appealed to have the damages reduced or set aside. The judge later upheld the original verdict, but reduced the charge to $160 million.