A federal appeals court has upheld a $183.7 million judgment against Eli Lilly and Co. (NYSE:LLY), rejecting the drugmaker's attempt to overturn a whistleblower lawsuit that accused it of defrauding Medicaid.
Reuters reported that the ruling reinforces a jury's finding that Lilly knowingly misreported drug prices, depriving the government of millions in rebates.
The 7th U.S. Circuit Court of Appeals in Chicago said a federal jury reasonably concluded Eli Lilly concealed retroactive price increases on some drugs and failed to adjust Medicaid rebates accordingly.
The Reuters report added that jurors had "ample evidence" showing Lilly was either aware of or disregarded the legal risks and chose to obscure its actions instead of making proper disclosures.
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The case stems from a lawsuit filed by whistleblower Ronald Streck, a lawyer and pharmacist. Streck argued Lilly violated the federal False Claims Act.
In 2022, jurors ordered Lilly to pay $61.23 million, which tripled to $183.7 million under the statute. Streck sought a larger award, but the appeals court also rejected his claim that the trial judge undercounted the company's violations.
At the center of the case was Lilly's practice between 2005 and 2017 of retroactively raising drug prices on products already sold to wholesalers but not yet resold to pharmacies.
Streck argued Lilly should have reported both the original and higher prices to the government, which would have increased Medicaid rebates.
Lilly countered that the service fees it paid wholesalers offset the retroactive charges. The company insists it informed regulators of its approach multiple times without objection. However, the appeals panel disagreed.
Judge Kolar wrote that it was "without qualification" unreasonable for Lilly to report only the original prices as its Average Manufacturer Price, given federal law, regulations, and Medicaid rebate rules.
The court noted that Lilly deprived the government of more than $60 million while generating more than $600 million in revenue from price increases during the period.
Eli Lilly disagreed with the ruling and intends to appeal further. The pharma giant also argues it conflicts with a 2018 appellate decision in Philadelphia involving other drugmakers. "We remain committed to upholding the highest standards of corporate conduct in our business dealings," the company said.
Price Action: LLY stock is down 0.18% at $754.95 at the last check on Friday.
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