AG Watch

Texas AG Greg Abbott settled a lawsuit with Baxter Healthcare Corporation, “a corporation organized under the laws of Delaware with its principal offices in Deerfield, Illinois.” Per the terms of the settlement, Texas will receive $8.5M, but will kick $3,792,000 to the U.S government (because Medicaid involves everyone). Texas will also kick “a percentage” to Ven-A-Care of the Florida Keys, the real plaintiffs in this lawsuit (and, as we’ll discuss, many others).

Not surprisingly, the settlement loves itself: “The STATE has concluded that this settlement is in the public interest.” Which state? The settlement means Texas, but consumers, shareholders, and employees from four states are directly involved and citizens from all fifty are affected.

More disheartening than even the mess-traterritoriality of the suit, though, are the perverse incentives that have been created by the Medicaid whistleblower rules. Ven-A-Care, a one-time pharmacy, seems to have become a full-time whisleblower; and law firms specializing in Medicaid whistleblower suits have sprung up as well.

Moreover, states (led by AGs) have fed the litigulation monster by continually suing and settling over pill-supplier pricing practices. We’re no champions of drug-suppliers sharping the Medicaid reimbursements system, but we don’t see why surplus-skimming lawsuits (and lawyers) are preferable.

Retroactive price-fixing via state litigation doesn’t ameliorate the problem—though it certainly lines more lawyers’ wallets with graft. If the states want to limit their pharmaceutical spending, they can do it up front; a back-end race among the states’ Attorneys General to raid the pharmaceutical piggy bank should, and eventually will, make us all sick.

Walter Olson at Point-of-Law brings some good news: the Brattle Group’s independent assessment of the MSA has now been brought to light. The Competitive Enterprise Institute and the Evergreen Freedom Foundation have won an open records case in Washington and now the full report and much more can be found on the CEI’s website.

If you are too lazy to get through the 150 pages of tobacco econometrics, this snippet of the decision says it all: “The Firm, therefore, concludes that MSA disadvantages were a significant factor in the Market Share Loss.” Mark it, folks: the whole point of the inquiry was to measure whether or not Big Tobacco was harmed by the MSA, and the NAAG argument hinged on Big Tobacco being unharmed.

Your state attorney general has cartelled your state government and Big Tobacco. Good gravy.

As if the litigulation of national pharmaceutical companies by the 50 AGs wasn’t bad enough, the city attorney of San Diego and district attorneys in Alameda, Kern, Marin, Monterey, Napa, San Benito, San Francisco, Solano and Sonoma counties (all in CA) have joined the magnificent rent-seeking battle.

If every county in the US wants to start playing regulator, we just got 3,086 more worries.

And San Diego?(!) Do municipal ordinances now apply to national industries?

Can an individual family’s Fifteen Minutes in the Bathroom in the Morning rule become the basis of a suit against Advil for sitting too long in the medicine cabinet? And what other bizarre microrealms are going to start claiming jurisdiction? Can I sue you for violating the rules of my imagination?

We can’t build our dreams with this upside-down regulation regime in place…

Mississippi, the birthplace of AG tobacco shenanigans, has started to reconsider the arrangement of its tobacco settlement funds. Or, to put it more bluntly, the Mississippi executive and legislative branches (with help from last week’s Jackson County Chancery Court ruling) have finally decided that the Attorney General is not a fourth branch of government, yanking Mississippi’s tobacco settlement revenue out of the AG’s Partnership for a Healthy Mississippi and placing it in the legislature’s piggy bank.

For eight years now, money from Mississippi’s settlement has been pouring into the Partnership’s coffers, providing former AG Mike Moore with beaucoup public relations points—and giving current and future AGs big incentive to continue a-pirating the seas of interstate commerce. Last week’s ruling does little to change that. Future Mississippi AGs may not behave like a perfectly autonomous government agency unto themselves, but the basic calculus of extraterritorial lawsuits will not change until the feds tell the states that they cannot keep ripping one another off.

Judge Bradley’s ruling restores a seemingly sane state fiscal-political system within the insane national economic arrangement of AGocracy; as long as that insane national arrangement operates—as long as Mississippi or any other state can steal from all other states—the states’ bookkeeping systems don’t really matter.