Judge won’t dismiss suit against drug companies

Wednesday, July 21, 2004 | 11:11 a.m.

CARSON CITY -- A district judge in Reno has refused to dismiss a suit by the state that alleges several drug manufacturers jacked up the price of prescription drugs sold to the Medicaid program and consumers, Attorney General Brian Sandoval said Tuesday.

District Judge Steven R. Kosach ruled last Friday that the state could not sue the manufacturers under Nevada's racketeering law but it could proceed with its complaint that the drug makers inflated the average wholesale price of drugs.

Senior Deputy Attorney General Tim Hay, in charge of the Medicaid Fraud Unit, said a successful outcome could mean "tens of millions of dollars for our state."

In Texas, he said, the state sued one manufacturer and received $20 million. Nevada is suing at least six companies in its complaint in district court in Reno.

Hay said the ruling will allow the state to go forward with discovery and to go to trial. He also said the state is suing other pharmaceutical manufacturers in federal court in Boston.

Nevada Medicaid, Medicare and many private programs pay for prescription drugs on the basis of average wholesale price. The civil suit alleges the companies were involved in false claims, deceptive trade practices and violations of the state's Medicaid price program.

Sandoval said "this case is incredibly important to Nevada health care consumers -- particularly those with limited incomes.

"Any willful practice that artificially inflates the price of prescription drugs on the market is a fraud exacted upon consumers," he said.

The attorney general's office has hired Hagens Berman of Seattle to handle the case.

Among those being sued by the state are Abbott Labs, Baxter, Bristol-Myers Squibb, Dey, GlaxoSmithKline and Pharmacia.

Allen J. Wilt, Reno attorney for GlaxoSmithKline, declined comment on Judge Kosach's order until he had a chance to read it. But he said the company in its answer to the suit has denied the allegations of inflating the prices. Representatives of the other companies did not return phone calls this morning.