Tuesday, July 17, 2012

Alabama Supreme Court Rejects Medicaid Pricing Claims … Again

            It has been almost three years since we reported that the Alabama Supreme Court overturned jury verdicts against three pharmaceutical companies in cases brought by the Alabama Attorney General alleging the defendants fraudulently manipulated the prices the state paid for drugs under Medicaid.  See AstraZeneca LP v. State of Alabama, 41 So.3d 15 (Ala. 2009).   The state’s lawsuit -- pending since 2005 – makes virtually identical price-inflation claims against over 70 pharmaceutical companies.  While, several defendants settled, a few have taken the cases to trial.  Back in 2009, the defendants (AstraZeneca, Novartis & GlaxoSmithKline) who went to trial were manufacturers of brand name pharmaceuticals.  In 2012, the issue was presented in the context of a generic manufacturer, Sandoz.  The result was the same.

            Here is the decision in Sandoz, Inc. v. State of Alabama, slip op.  We are fans of well-reasoned and thoughtful opinions, especially if they go in favor of the defense -- and this decision is all of that.  But we are also fans of the environment and against the needless destruction of trees.  Even a quick skim through this decision and you will see the court probably could have said:  Reversed, see AstraZeneca.  Well, really that is practically what they did say – except they also block quoted almost all of the AstraZeneca decision (even the dissent, authored by the same judge as in AstraZeneca is a repeat).  Since this is the second time around for us too, we’ll heed our own advice and be brief.

Despite some differences in how brand name and generic drugs are priced, the legal issue and the bases for the decisions are the same – to prove a misrepresentation claim you have to have actually relied on the information at issue.  Further, if you are aware the information you are relying on is false (or could reasonably have discovered it was false/inaccurate), it is not reasonable to rely on that information and so your claim fails.  The court found the state’s case failed on both counts –  just like it did three years ago.  (see slip op. at 27-38 (state had knowledge that prices it allegedly relied on were not “net” prices reflective of discounts) and 38-45 (state did not rely on prices reported by defendant but rather its reimbursement decisions were based on policy decisions and federal requirements)

           Maybe what we should take away from the court's repetition is a clear signal that this issue has been fully heard and ruled on in Alabama.  In other words, we don't expect to be doing another follow up in 2015.  

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