[MTC JNJ] Drug Price-Fixing Trial Begins
Thursday September 24, 4:17 am Eastern Time
By NICOLE ZIEGLER DIZON
Associated Press Writer
CHICAGO (AP) -- Five manufacturers conspired to create a 'dual pricing'' system for drugs that penalized pharmacies and benefited managed-care groups, said a lawyer suing the companies in a price-fixing trial.
''It's plain why the conspirators decided to draw the line at retail pharmacies,'' said attorney Michael Freed in opening statements Wednesday. ''It's simply because that's where the money is.''
But Charles W. Douglas, attorney for one of the defendants, said it was good business for drug manufacturers to give discounts to HMO groups because those companies determine what drugs their doctors prescribe, guaranteeing greater sales. Pharmacies must stock all drugs and cannot control purchases.
''Retail pharmacies do not have the same ability to influence the choice of drugs,'' Douglas said, who represents Monsanto Corp.'s (NYSE:MTC - news) Searle unit. ''The plaintiffs here are simply
asking for something for nothing.''
Johnson & Johnson (NYSE:JNJ - news), Searle, Ciba-Geigy AG, Sandoz AG and Forest (AMEX:FRX - news) Laboratories are accused of creating the price-fixing scheme in the mid-1980s as retail pharmacists banded together into large purchasing groups in the hope of getting discounts from drug manufacturers.
Lawyers representing about 41,000 pharmacies, including Walgreen Co. (NYSE:WAG - news), Kmart and Wal-Mart, contend drug makers brokered an illegal deal with wholesalers to set high prices. Their lawsuit seeks reimbursement and damages from the wholesalers and manufacturers.
William F. Cavanaugh Jr., an attorney for Johnson & Johnson, said manufacturers did offer retail druggists experimental discounts during the time of the alleged conspiracy. But he said those discounts often failed to turn a profit.
Meanwhile, managed care companies could take away large portions of a drug maker's customer base if discounts were not offered, Cavanaugh said.
Fifteen drug companies already have agreed to settlements worth more than $700 million which force the manufacturers to end the ''dual pricing'' system.
The five defendants refused to settle, saying they did not participate in unfair pricing. Ciba-Geigy and Sandoz merged in 1996 to form Novartis AG. |
