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Drug Company Profits Taken Back

Week one of the trial will conclude this week in Alabama (Montgomery County Circuit Court) in the state’s prosecution of drug company Watson Pharmaceuticals for overpricing. The claim is that Watson inflated the prices of drugs provided to participants in the state’s Medicare program. As a result, the state argues that it overpaid by approximately $23 million from 1991 to 2005. Watson manufactures generic and brand-name drugs, including OxyContin.
Alabama has already settled similar lawsuits against sixteen other drug companies for about $124 million. Furthermore, the state has won at trials involving four other drug companies, totaling $352.4 million. This is terrific work by the state on behalf of its taxpayers. Attorney General Troy King is really taking these companies to task for greedy behavior. You can see King’s news release here:

A.G. Secures $89 Million in New Drug Company Settlements
Watson retorts that, had the prices been set any lower, pharmacists would have lost money in Medicaid transactions, and their prices “kept Alabama drug stores in business.” That might be a little tough to prove—number one, that it’s the drug company’s job to keep pharmacists in business; and number two, that a significant number of Alabama pharmacies would have gone out of business but for the higher prices. I can’t see the judge really allowing testimony on that. It’s too speculative without expert testimony, and it really doesn’t bear on the issues of the case. Odds are, the AG office will continue its record of exemplary verdicts.