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AstraZeneca to appeal US Medicaid court ruling

AstraZeneca is to appeal a US court's verdict that found it guilty of overcharging Medicaid patients for its drug.

AstraZeneca (AZ) is to appeal a US court's verdict that found it guilty of overcharging Medicaid patients for its drug.

Initial claims that AZ levied over-inflated, marked-up prices for prescribed drugs to the Alabama Medicaid system have been upheld and the company faces a substantial fine.

The Montgomery County Circuit Court in the southern state of Alabama ordered AZ to pay $215m, $40m of which is compensatory damages with the remaining $175m being punitive damages.

AZ maintains that it fully complied with the law. "This lawsuit is legally and factually unfounded," AZ said, and believes that, "serious errors occurred during the proceedings and that the verdict should not be upheld".

Alabama attorney general, Tory King, filed lawsuits against 70 pharmaceutical companies in 2005 and AZ was the first company to be tried for price related fraud.

Pharmaceutical companies awaiting trail, such as GlaxoSmithKline and Novartis, could see this as an indicator of the potential verdicts to come.

Jere Beasley, lawyer for the state, said: "It's obvious the pharmaceutical industry has been taking advantage of the federal and state governments and this jury backs up what we've been saying ñ they've been cheating."

Beasley alleges that AZ never provided Medicaid with "honest and accurate" pricing for its medicines but the company's lawyer, Tom Christian, said that "prices charged the state were barely enough for the pharmacists to stay in business".

Christian said any judgement against pharma companies that forced lower prices "would make it financially impossible for pharmacists to fill prescriptions for Medicaid patients".

A similar July 2007 ruling in a Boston (Massachusetts) court case saw AZ, Bristol Myers-Squibb, and Schering-Plough accused of deliberately misleading the public about the severity of price mark-ups.

However, despite consumers, patients, and the state lobbying for compensatory remunerations into the hundreds of millions, analysts at Dresdner Klienwort said: "There will be limited impact for the industry [pharmaceutical] financially".

22nd February 2008

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