JACKSON, Miss. (Legal Newsline)-The Mississippi Supreme Court has revived a lawsuit against Bayer AG, ruling the state can refile a claim the pharmaceutical giant defrauded its Medicaid program.

Bayer Corp. USA was accused of inflating the average wholesale price of medications, causing the state to overpay drug providers to patients on its Medicaid program. The false price reports led the Mississippi Medicaid program to spend millions of taxpayers' dollars unnecessarily, the state claimed.

In 2005, Mississippi Attorney General Jim Hood filed lawsuit against more than 86 drugmakers, including three Bayer units, accusing them of defrauding the state by inflating average wholesale prices of medications.

Bayer, Germany's largest drugmaker, argued in Hinds County Chancery Court that due to a 2001 settlement it had with Mississippi over drug pricing, the state had no grounds to sue its units: Bayer Corp., Bayer Pharmaceuticals Corp. and Bayer Healthcare LLC.

The trial court agreed. The state appealed.

The 2001 settlement, in which Bayer agreed to pay the state $48,608, included a provision that the company provide the state "with true pricing information that accurately reflects the prices at which actual purchasers buy the drug and biological products sold by Bayer."

The trial court found that Bayer and its subsidiaries had followed the settlement and that the state was without grounds to file another suit against them and dismissed the case.

The Supreme Court overturned the decision Thursday in a majority opinion by Associate Justice James Kitchens.

"The trial court considered matters outside the pleadings when it took into account the 2001 settlement agreement. Having done so, the trial court was required to convert Bayer's motion for summary judgment," Kitchens wrote.

The case is State of Mississippi v. Bayer Corp. No. 2008-CA-01659-SCT.