Wis. Supreme Court upholds damages in drug lawsuit

MADISON, Wis. (AP) - The Wisconsin Supreme Court on Friday upheld damages that were awarded in a lawsuit the state brought against a prescription drug company accused of inflating prices.

The lawsuit dates back to 2004 when then-Attorney General Peg Lautenschlager sued 36 drug companies alleging they inflated wholesale prices to get larger payments from Medicaid, private insurers and consumers.

The case against Pharmacia Inc. was the first to go to trial, and in 2009 a jury found that the drug maker violated the state's Medicaid fraud law 1.44 million times over a decade. After reviewing the evidence, the judge found the actual tally was 4,578 and ordered the company to pay $4.5 million in forfeitures and other costs. The jury also awarded $9 million in damages.

Pharmacia appealed, arguing that the jury incorrectly calculated the damages, that the number of violations should be reduced to zero, and that a jury trial was improper.

But the state Supreme Court, in a unanimous opinion written by Justice Michael Gableman, rejected all of those arguments and upheld the lower court's decision. It sent the case back to the court of appeals to resolve more than a dozen other issues appealed by the state and Pharmacia.

Chris Loder, a spokesman Pharmacia's corporate parent Pfizer, called the decision disappointing.

"The reimbursement rates paid to Wisconsin pharmacists were the result of deliberate decisions by the state of Wisconsin about how best to serve its Medicaid population," Loder said. "Wisconsin knew the range of actual prices in the marketplace. It was not misled."

Attorney General J.B. Van Hollen issued a statement praising the decision, saying it goes a long way toward holding Pharmacia accountable and puts other defendants in similar cases on notice that the state "is prepared to do whatever it takes to bring these cases to a successful conclusion."

The jury set the damages at $9 million after determining that represented how much money Medicaid would have saved had it received and used actual wholesale prices from Pharmacia. But the company argued there was no way the jury could determine that because Medicaid reimbursements are set through the political process and there's no way it could have known what the Legislature and governor would have done with different wholesale prices.

The Supreme Court rejected that argument, saying there was plentiful evidence from a wide range of credible witnesses to substantiate the argument that the Legislature would have reduced reimbursements to reflect the actual wholesale price of the drugs.

The court also rejected Pharmacia's argument that the number of violations, which had already been reduced from 1.44 million to 4,578, should actually have been zero. The lower court imposed a $1,000 fine for each violation, for a total of $4.578 million.

The Supreme Court said it would be "absurd" to lower the violations to zero and upheld the lower court's reasoning for setting the number at 4,578.

The state was also awarded $8.8 million in attorneys' fees and costs.

According to the lawsuit, Pharmacia sold the breast cancer drug Adriamycin for as little as $33.43 but it listed the wholesale price as $241.36 so providers could get reimbursed for that amount.

It then advertised the $207-plus spread to cancer doctors to give them a financial incentive to provide the drug. The schemes were meant to increase the drugs' market share, and profit with that, the lawsuit said.

In some cases, doctors, hospitals and pharmacies benefited from the overcharges to Medicaid. In others, most of the money went back to the manufacturers through chargebacks from wholesalers, the state's lawsuit said.

Of the 36 companies that were originally sued in 2004, 10 have settled for a total of $17 million, Van Hollen's office said. The major companies that settled are Amgen, Immunex, Baxter Healthcare, Boehringer, and Warrick/Schering Plough. There are 25 other cases, not counting Pharmacia, still pending.

Three Supreme Court justices did not participate in Friday's ruling — Ann Walsh Bradley, Patrick Crooks and David Prosser.