Astrazeneca LP v. State of Alabama

Case Updates

The Alabama Supreme Court reversed the judgments against the three pharmaceutical companies because the state failed to show that it relied on the AWP reports to establish its reimbursement methodology.

NCLC urged the Supreme Court of Alabama to hold that pharmaceutical manufacturers cannot be held liable for fraud, or penalized with a substantial punitive damage award, based on industry-standard drug price reporting conventions that are accepted by federal and state officials. NCLC also argued that the awards of punitive damages against Astrazeneca, Novartis, and Glaxosmithkline for their use of “Average Wholesale Price” and “Wholesale Acquisition Cost” reporting conventions was unconstitutional because it was not 'reprehensible' conduct.

This case was consolidated with Smithkline Beecham Corp. v. State of Alabama and Novartis Pharmaceuticals Corp. v. State of Alabama. In earlier stages of the litigation, the case was known as In re: Alabama Medicaid Pharmaceuticals Average Wholesale Litigation.

The Alabama Supreme Court declined to review the trial court's consolidation of the cases.

NCLC urged the Alabama Supreme Court to review and reverse the trial court’s erroneous consolidation of the state’s separate actions against three drug manufacturers. The State of Alabama claimed that the three drug manufacturers' reported “Average Wholesale Prices” (AWP) fraudulently misrepresented what wholesalers actually paid for the drugs because the AWP rates did not reflect discounts often provided by the manufacturers to pharmacies, physicians, and others. However, the manufacturers showed that for decades, the state Medicaid agency was fully aware of the manufacturers' standard drug pricing methods. Employing a novel theory of liability and seeking punitive damages, these actions concern decisions involving hundreds of drugs over a fifteen year period. In its brief, NCLC argued that, by joining these cases together, the trial court set a dangerously low standard for consolidation that threatens defendants’ rights to a fair trial and presents significant risks of jury confusion.