A US court has ruled AstraZeneca must pay more than $200 million for inflating the prices of drugs prescribed under Alabama's Medicaid system.

The Montgomery County Circuit Court wants AZ to pay $40 million in compensatory damages and $175 million in punitive damages for false and misleading reporting of drugs prices.

The pharma company denies the charges, saying the lawsuit on which they are based is "legally and factually unfounded", and will appeal the verdict.

In a statement AZ said: "The case was based on the misleading premise that the Alabama State Medicaid Agency did not understand how drug prices are established and reported.

"The company fully complied with the law, government guidelines and contracts that govern Medicaid pricing."

The company contends the verdict should not be upheld because of serious errors during proceedings. It also noted that the over past two years Alabama patients have received more than $25.5 million in savings through its prescription savings programmes.

Around 70 pharma companies had similar suits filed against them in 2005 by Alabama's attorney general and AstraZeneca's case is the first to go to trial.

The state has already settled suits against two drug companies: Takeda Pharmaceuticals North America and Day LP.

pharmafocus@wiley.co.uk