Mississippi Supreme Court Upholds $30,110,618 Ruling Against Sandoz, Inc. for Common-Law Fraud and Violations of the Mississippi Consumer Protection Act
The Mississippi Supreme Court upheld a $30,110,618 ruling against generic pharmaceutical provider, Sandoz, Inc. and affirmed that the company committed common-law fraud against the State of Mississippi and violated the Mississippi Consumer Protection Act.
This is a significant victory for the tax payers of Mississippi who were cheated by Sandoz, Inc. of more than $23 million dollars when the company lied about its prices and defrauded the state.
The Attorney General’s Office filed suit against Sandoz, Inc. after discovering that from 1991 to 1999 the company reported over-inflated fictitious “Average Wholesale Prices” (AWPs) to the national data service used by Mississippi and other states to calculate the reimbursement of pharmaceuticals purchased from Sandoz, Inc. After a ten day trial in April, 2011, Rankin County Chancery Judge Thomas Zebert ruled that the company committed common-law fraud, that it violated the Mississippi Consumer Protection Act, and that Mississippi was overcharged $23,661,618 as a direct result of the falsified AWPs by Sandoz. Judge Zebert also ordered Sandoz to repay the $23,661,618, as well as $2,699,000 in civil penalties and $3,750,000 in punitive damages for its fraudulent conduct for a total of $30,110,618.
In a decision handed down Thursday, the Mississippi Supreme Court affirmed each of Judge Zebert’s rulings. Justice Chandler wrote, “Sandoz’s practice of reporting false AWPs was a deceptive trade practice. The “prices” were exaggerated to an extent that they were not even prices. Providing false information is deceptive and violates the Act.”
This company had a net worth of some $500 million dollars and basically stole $23,661,618 million dollars from the tax-paying consumers of one of the nation’s poorest states.
The Division of Medicaid (DOM) provides healthcare assistance, including prescription drug coverage, to Mississippians who meet a specific lower income threshold. The AWP provided by a pharmaceutical company to the national data service was the most important figure in the formula to determine the price used by Medicaid. The AWP was defined as the average price paid to the wholesaler for a particular drug, yet in 1998 Sandoz bragged to a client that it reported the AWP for one drug as $86 dollars, but the actual price would be only $7.16.
Any company which falsifies data in order to overcharge consumers should be held accountable. Sandoz fabricated prices and Mississippi consumers paid heavily. I thank the learned, late Judge Tom Zebert, who spent hundreds of hours on this complex case, and the members of our Supreme Court who helped us protect the consumers of Mississippi.
As a result of this claim against Sandoz and similar AWP claims against more than 50 pharmaceutical companies, most of which settled, the Attorney General’s Office has recovered $147,422,012 for Mississippi.