$54.24
-0.20 (-0.37%)
Abbott Laboratories (ABT)
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Principal business is the discovery, development, manufacture and sale of a broad and diversified line of health care products. Company has four segments: Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Vascular Products.
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Idaho has filed a lawsuit that alleges Abbott Laboratories falsified wholesale drug prices and that the state has overpaid Medicaid reimbursements because of the manipulated drug prices. In the complaint, the Idaho attorney general's office says the prices charged to hospitals and pharmacies for Abbott's prescription drugs were less than what the company reported to the state. About 175,000, an estimated 8-10% of the population, people in Idaho currently receive Medicaid benefits. This is most likely not an isolated incident and, in my experience, the Idaho AG's office has not moved against companies in consumer protection issues haphazardly.
Lawsuits are a way of life for many large companies and few have a material affect on stock values. With all due respect to Idaho it seems likely to end up at the same place. Even lawsuits that cost companies a lot of money (tobacco) ended up having little impact on company profits in the long run because the settling states needed to see the company do well in order to pay the settlement.
All this litigation is going to catch up with them eventually. Drug companies have three problems that might destroy them. 1. They've been completely reliant upon the American government's lax policies regulating price and advertising claims. 2. Because of this many products are rushed to market carelessly, creating a culture of recklessness 3. Preventive medicine works way better than treating disease with expensive drugs.Change the rules of the game, and the pharma giants either fall or have to rethink their business. For now though, I agree they are safe, especially with the sheepish baby boomers getting older and buying into the system.