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Discovery may proceed in the state’s lawsuit against 13 pharmaceutical companies that allegedly engaged in a price-inflation scheme, now that the Commonwealth Court has rejected most of the defendants’ preliminary objections. The decision last week is a victory for the Pennsylvania Attorney General’s Office and the Philadelphia firm of Kline & Specter, which is prosecuting the case with the state’s lawyers. Both were dealt a setback in February when the court dismissed the attorney general’s action for a lack of “specificity” as required by the Rules of Civil Procedure. But the court gave the attorney general leave in that ruling to file an amended complaint with more specific pleadings against all defendants but one — the Japanese pharmaceutical firm Takeda Chemical Industries Inc. Now, in Commonwealth v. TAP Pharmaceutical Products Inc., the unanimous seven-judge panel has found the state’s amended complaint adequate, rejecting most of the preliminary objections raised by the defendant companies. The court, however, did sustain preliminary objections to the state’s parens patriae claims against Bayer Corp. and subsidiary Bayer AG on Medicaid reimbursements involving certain drugs subject to a 2001 settlement agreement Bayer signed with the state. And the court has deferred ruling on the personal jurisdiction objections of three companies — Bayer AG, AstraZeneca PLC and AstraZeneca Holdings. Shanin Specter, a Kline & Specter partner and lead attorney for the state, said the most significant aspect of the ruling is the court’s finding that the attorney general has standing to pursue parens patriae claims for alleged unfair trade practices committed by the defendants. The court found that such a claim may be brought by the state to protect “the economic well-being of the commonwealth and its citizens.” “[W]e were most pleased that the court affirmed the authority of the office of the attorney general to represent the citizens of Pennsylvania in remedying the effects of unlawful business practices in this state,” Specter said in an e-mail message. (He was in meetings today and responded to questions by e-mail.) The state’s action stems from allegations that the pharmaceutical companies manipulated a pricing standard known as the average wholesale price to increase its profit margin by generating more money from product sales and increasing market shares. Read more about it in Wednesday’s Legal.

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