Jury Orders Warrick To Pay State $4.5M For Inflated Albuterol Prices

BOSTON - (Mealey's) A Massachusetts federal jury on Oct. 1 ordered a defunct Merck & Co. Inc. subsidiary, Warrick Pharmaceuticals Corp., to pay $4,563,328 for causing the state to pay inflated prices for the asthma drug albuterol (Commonwealth of Massachusetts v. Mylan Laboratories, Inc., et al., No. 03-11865, D. Mass.).

In 2003, Massachusetts sued Warrick and 12 other drug manufacturers in the U.S. District Court for the District of Massachusetts, alleging that they falsely reported prices for generic drugs paid for by the state Medicaid program.  The commonwealth alleged violations under the state False Claims Act and the Medicaid False Claims Act, the Medicaid Rebate Statute and the Medicaid Rebate Agreement.

Trial involving Warrick began Sept. 9, and the jury found Merck liable and awarded the state compensatory damages.

The jury began deliberating  Sept. 28.

In a statement issued Sept. 30, Merck said Judge Patti B. Saris deferred a decision on penalties under Massachusetts law - penalties that it said could be substantial.

The defendant's  Sept. 24 motion for judgment as a matter of law remains pending.

Merck said "significant legal issues remain to be decided by the court before penalties could be imposed in any amount."  It said it will seek reversal of the verdict and will appeal if necessary.  It added:  "We strongly believe the evidence showed that the Commonwealth made informed choices about amounts to be paid to Massachusetts pharmacists, and that Warrick was in no way responsible for those choices.

The company said the evidence showed that Warrick was never required or asked to provide information to Massachusetts regarding the price of albuterol, that the prices Warrick reported to other parties were true and accurate and that the state had "extensive and accurate information regarding those prices from sources other than Warrick." 

Warrick was a subsidiary of Schering-Plough Corp., which was subsequently acquired by Merck.

[Editor's Note:  Full coverage will be in the Oct. 7 issue of Mealey's Emerging Drugs & Devices.  For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]

For more information, call editor Tom Moylan at 610-205-1120, or e-mail him at tom.moylan@lexisnexis.com.