Has the tide turned against states in their drug pricing suits against Big Pharma? Last month, we reported on a landmark ruling from the Alabama Supreme Court that threw out more than $270 million in verdicts against Novartis, GlaxoSmithKline and AstraZeneca, which had been found liable for overcharging the state Medicaid system for drugs. Now comes word that a jury in Frankfurt, Ky., has rejected similar allegations against GSK. In a verdict returned Friday, the jury found for GSK on the state’s Medicare fraud and false advertising claims. It ruled for the state on a consumer protection count, but awarded only $661,000 in damages. That’s less than 3 percent of the $25 million the state was seeking. (Here are the jury instructions and verdict form.)
Big Pharma had been on a losing streak in Kentucky before the GSK verdict. In October a jury found AstraZeneca liable for $14.72 million, following a $16 million verdict against Sandoz in June.
For its defense, GSK relied on Kentucky lawyers John Famularo and Carol Browning of Stites & Harbison. Mark Lynch of Covington & Burling, which is national counsel to GSK in these suits, handled the company’s witness.
“This proves that the pharmaceutical manufacturers can win these cases,” Lynch told us. He said GSK had better facts than some other drug companies because it didn’t publish average wholesale prices — the supposedly inflated price indexes at the heart of most of the states’ suits — during the damages period.
You know GSK has reason to be happy with the trial’s outcome when the plaintiffs describe it as “a major victory” for the defense. That’s what P. Jeffrey Archibald, who tried the case for the state of Kentucky with Charles Barnhill Jr., of Miner, Barnhill & Galland, told us about the jury’s verdict and damages award. But he also said that GSK could still face significant fines because the jury held the company liable for violating the state’s Consumer Protection Act. Archibald said that in a previous ruling, Circuit Court Judge Roger Crittenden found that each violation of the act resulted in a $1,000 fine. If Crittenden applies the same reasoning against GSK, the company could be on the hook for about $11 million, according to Archibald.
Archibald told us that GSK put on a streamlined case, with defense witnesses testifying for only about six hours. The defense, he said, did not call an expert witness. “It was a gamble,” said Archibald. “But it was a strategy that worked.”
The next big battleground in the drug pricing suits will be in Madison, Wis., where the state is going up against Johnson & Johnson in March. Barnhill will be representing Wisconsin; J&J will be defended by Andrew Schau and Peter Harvey of Patterson Belknap Webb & Tyler and Don Schott of Quarles & Brady.
This article first appeared on The Am Law Litigation Daily blog on AmericanLawyer.com.