Attorney General Jim Hood announced today that his office recovered over $33 million from pharmaceutical manufacturer Watson, Inc., after a decision announced earlier this month by the Mississippi Supreme Court found that the company defrauded the state by manipulating the prices it charged for its drugs to the state Medicaid program.
The trial court concluded that, in defrauding Mississippi, Watson cost the taxpayers over $7 million when it reported Average Wholesale Prices (“AWPs”) that grossly exceeded the actual prices Watson charged its customers. These manipulated prices caused the state to overpay for prescription drugs for Medicaid recipients. Inflated prices varied from drug to drug, in some cases as much as 1,000 percent. As a result of this fraud, the trial court awarded the state statutory and punitive damages for a total of $33,408,546.72. The Watson case was one of dozens brought against other drug companies that also inflated drug prices causing Mississippi Medicaid to pay too much for prescription drugs.
“We have recovered over $200 million from drug companies in our Average Wholesale Price litigation for overcharges and penalties on drugs paid for by our Department of Medicaid. Of all the companies we have done battle with, Watson Pharmaceuticals is one of the worst offenders. The trial court found they overcharged the state by 1,000 percent on some drugs. A chancery judge in Rankin County issued a $20 million punitive damage verdict, which was upheld by the Mississippi Supreme Court,” said General Hood. “These types of corporate robbers get away with it unless an attorney general holds them accountable.”
When monies are recovered by the Attorney General’s Office, as was done in the Watson case above, they are sent to various treasuries of the Mississippi Legislature. However, by way of House Bill 1475 this session, the Legislature is attempting to remove the prosecutorial powers of the Office of the Attorney General. If this bill passes, the $30 million from Watson, in addition to the more than $3 billion recovered since Hood took office in 2004, would never make it to the state’s treasuries, which includes the General Fund, Budget Contingency Fund, State and School Insurance Fund, and Health Care Expendable Fund. HB 1475 aims to shift prosecutorial authority from the AG to members of the “Outside Counsel Oversight Commission,” which was created by the Legislature and made up of the governor, lieutenant governor, and secretary of state.
“The corporate crooks are salivating at some of the bills introduced by some legislators trying to protect their corporate benefactors instead of their fellow Mississippians,” said General Hood.
Section 173 of the Constitution provides for an independently elected attorney general with all the powers of the Attorney General at Common Law, including the power to bring, control and manage litigation on behalf of the state. Additionally, the Supreme Court has stated, “As to all litigation, the subject matter of which is of state-wide interest, the Attorney General alone has the right to represent the state.” [Kennington-Saenger Theatres v. State, 196 Miss. 841, 18 So. 2d 483, 486 (1944).]
Additionally, House Bill 1238, which passed out of committee last week, would allow companies who are federally regulated, such as Watson, to claim they do not fall under the Mississippi Consumer Protection Act. The Watson case was argued under that Act, and more than $5.2 million in civil penalties were recovered as part of the entire judgement.
“Should HB 1238 pass, it would be devastating to the protection of Mississippians,” said General Hood. “Much of the successes in our office have been protecting consumers from corporate wrongdoers, and the people of Mississippi deserve more than their lawmakers stripping those protections.”
Under General Hood, the AG’s office has recovered $224,137,686.96 in AWP litigation. An attached list provides each of those cases and amounts recovered.
List of the AWP recoveries below: