Drug maker sues AG in Avandia drug case

Drug maker GlaxoSmithKline sued Louisiana Attorney General Buddy Caldwell Thursday, alleging that private attorneys hired by Caldwell to prosecute the state’s lawsuit against the company have a “personal financial interest’’ in the suit’s outcome.

GlaxoSmithKline claims the fee agreement Caldwell has with the attorneys violates the state Constitution and the company’s constitutional rights. The firm wants a judge to bar Caldwell from prosecuting the state’s suit through private attorneys.

“GlaxoSmithKline has a legal right to face law-enforcement decisions that are not structurally tainted by substantial financial incentives for the prosecutors to seek and exact substantial penalties,’’ the company contends in its lawsuit filed in state court in Baton Rouge.

State Attorney General’s Office spokeswoman Amanda Larkins issued a statement that read, “We have total confidence in the procedures relied upon to institute this important work for the State.’’

GlaxoSmithKline issued a statement of its own which said, “GSK believes there is an important issue — the need for a neutral prosecutor — that the Louisiana courts should resolve promptly.’’

The state sued GSK in February 2011, alleging the firm misrepresented the safety and efficacy of its prescription diabetes drug Avandia, causing Louisiana physicians to submit more than 304,000 “false claims’’ for Avandia for Louisiana Medicaid recipients.

Medicaid is the state-federal health insurance program for the poor.

GSK says Caldwell is seeking more than $10 billion in civil penalties from the company, along with actual damages, attorneys’ fees and other expenses.

Under the fee agreement with Caldwell, the private attorneys he retained can be compensated for their services only in the event the state recovers on its claims against GSK, the company says in its suit.

“It is antithetical to our system of justice for a criminal or civil prosecutor to have a personal stake in a public prosecution that might affect the proper exercise of the prosecutor’s official duty to seek justice and to further the public interest,’’ GSK’s suit states.

GSK contends Caldwell’s fee agreement with New Orleans lawyer Allan Kanner on behalf of the law firm of Kanner and Whiteley required legislative approval.

“Only the Legislature has the authority to decide how the State’s recovery funds are spent, including any amount paid to private counsel,’’ the suit states. “Any promise by the Attorney General to share fees awarded to the State with private counsel amounts to an unlawful transfer or pledge of state property.’’

GSK also complains that Kanner and Whiteley subcontracted with lawyers E. Wade Shows, T. Allen Usry and Tony Clayton.

“The Attorney General did not seek or obtain legislative or other approvals of the subcontracts,’’ the suit contends.

Shows, of Baton Rouge, was identified as Caldwell’s re-election campaign treasurer in a February filing with the state, the suit notes, and Usry was identified in public documents as Caldwell’s campaign chief.

Caldwell’s office previously hired Kanner, Shows and Usry, of New Orleans, as special counsel as the state pursues damages resulting from the BP oil disaster in the Gulf of Mexico.

GSK’s suit has been assigned to state District Judge Wilson Fields.

GSK is represented by Overton & Loupe Law Firm LLC and Decuir, Clark & Adams LLP, both of Baton Rouge; Irwin, Fritchie, Urquhart & Moore LLC of New Orleans; and Morgan, Lewis & Bockius LLP and Pepper Hamilton LLP, both of Philadelphia.