The Alabama Supreme Court overturned a $78.4 million verdict the state won against German drug manufacturer Sandoz Inc., ruling Friday there wasn't evidence to support allegations that the company defrauded the Alabama Medicaid Agency.
The justices ruled 7-1 in an unsigned opinion that the case shouldn't even have made it to jurors, much less resulted in a verdict against the company.
The state won the verdict in 2009 claiming the company made Alabama Medicaid pay too much for prescription medication over a 14-year period ending in 2005. Jurors ordered Sandoz, a subsidiary of Novartis AG, to pay $28.4 million to compensate Medicaid for its losses and another $50 million in punitive damages.
But the Supreme Court threw out the judgment, ruling the state based its Medicaid reimbursement payments on policy concerns and regulations, not actions by Sandoz.
The court previously overturned similar verdicts totaling $274 million against three other drug makers, AstraZeneca, Novartis and GlaxoSmithKline. The justices cited the AstraZeneca case in ruling in favor of Sandoz.
Justice Tom Parker issued a dissenting opinion, just as he did when the court overturned the AstraZeneca verdict.
Health care providers, typically pharmacies, that participate in Medicaid provide medication to eligible recipients. The state, in turn, reimburses the providers for the drugs. In the lawsuit, the state claimed it was paying too much in reimbursements based on the reported price of medicine.
Then-Alabama Attorney General Troy King filed more than 70 lawsuits against drug makers in 2005 about pricing. Some makers agreed to settlements, but others fought back.
During the trial, Sandoz argued that it actually saved the state millions by providing less-expensive generic drugs.