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Location: Strasburg, Virginia

Friday, July 15, 2005

Deeds says Kilgore let drug firm soak state for millions; B2

By Garren Shipley
Daily Staff Writer

The Democratic candidate for attorney general says that former Attorney General Jerry Kilgore looked the other way while a Kilgore campaign donor took taxpayers to the cleaners.

Kilgore’s camp says the charge proves that the Democratic ticket, including gubernatorial candidate Lt. Gov. Tim Kaine, are either liars or incompetent to run Virginia.

State Sen. Creigh Deeds, D-Bath County, ratcheted up Democratic criticism of Kilgore, accusing the former attorney general of looking the other way while King Pharmaceuticals overcharged the commonwealth’s Medicaid program for prescription drugs.

The company, located just across the state line in Bristol, Tenn., manufactures the blood pressure medication Altace and hypothyroid treatment Levoxyl, among others.

Speaking at the Richmond Senior Citizens Center, Deeds called for the state to launch an inquiry into King’s drug pricing.

Kilgore declined to investigate, Deeds alleged, because of his relationship with King founder John M. Gregory.

The retired Tennessean has donated some $475,000 to Kilgore’s various campaigns since 2001.

“Investigating drug companies for artificially inflated prices and defrauding the commonwealth will never take a back seat to campaign contributions,” Deeds said.

“I will never let personal friendship or campaign contributions come before the best interests of the taxpayers of Virginia,” he said. “The attorney general can do so much more to make affordable prescription drugs available to all Virginians.

“It starts by taking a pass on hundreds of thousands of dollars in campaign contributions from drug companies and focusing on the needs of ordinary Virginians.”

Kilgore spokesman Tim Murtaugh came out swinging in response, saying Deeds’ attack — and direct mail from Kaine attacking Gregory by name — was just another attempt by the top of the Democratic ticket to make blatantly incorrect, political charges resonate.

Deeds’ statement “demonstrates a willing disregard for the truth or an outstanding misunderstanding about how the office of the attorney general works,” he said.

Kilgore hasn’t taken a single dollar from King Pharmaceuticals, Murtaugh said. Rather, all the money came from Gregory’s personal funds. He left the company in 2002 and severed all ties to the firm.

But that doesn’t absolve Gregory of any responsibility, said Deeds spokesman Peter Jackson. The investigation includes time while Gregory was in charge.

“When you’ve got this much money in campaign contributions” and a potential multimillion-dollar fraud, “it makes sense to clear the air,” he said.

King is being investigated by the federal government for problems with drug pricing — allegedly overcharging the government by some $65 million over a period of several years for drugs it manufactures. A number of other drug companies also are being investigated.

Others already have been taken to court.

It was King, not the government that noticed the problem, Murtaugh said. And Virginia has been investigating King, along with 49 other states, through the National Association of Medicaid Fraud Control Units.

“Virginia has been involved in the investigation since the earliest moment it was possible for us to be involved,” he said. King already has set aside some $130 million to pay back the government and any fines that result from any overcharging.

That investigation is nearly complete and could end soon with a financial settlement, according to the company.

Further, “the attorney general’s office cannot conduct investigations of the kind we’re talking about unless there’s a complaint or a referral from another state agency,” Murtaugh said.

That’s not true, according to Jackson. Kilgore could have asked for a referral from a state agency, which would have allowed his office to investigate.

But so could Kaine. “He did not,” Murtaugh said.

“Either they know all this and don’t care, or they don’t know any of this and demonstrate their incompetence to lead Virginia,” he said.

Election Day is Nov. 8.