Drug Cos. Settle Price Gouging Suit
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Filed at 6:08 p.m. EST
By The Associated Press
SAN FRANCISCO (AP) -- Nineteen drug makers have agreed to pay
more than $176 million to settle a class-action lawsuit alleging they
gouged the public by overcharging for medicines sold through
independent pharmacies.
As part of the deal, the companies will furnish $148 million worth of
brand-name drugs to 300 nonprofit California medical clinics that provide
drugs to the poor. The manufacturers would pay $1.6 million to
administer the three-year program.
Under the settlement, given preliminary court approval Thursday, the
companies could pay as much as $27 million in fees to attorneys for the
plaintiffs.
Merck & Co. would pay the most, more than $19 million, while Carter
Wallace would pay the least, at $705,000. Nine companies named in the
suit did not join in the settlement.
''We view this to be an exceptional result,'' said plaintiffs' attorney Bill
Bernstein. ''The cost of auditing claims and distributing money would eat
up so much of the benefit that we thought we could do so much public
good by distributing through the public health community.''
In a federal case filed in Chicago, many of the same companies agreed
three years ago to pay $700 million to settle allegations they conspired to
charge pharmacists more than health maintenance organizations and other
big volume buyers like mail-order drug firms.
Several companies declined to take part in the Chicago settlement, and
when they went to trial the judge dismissed the case.
Although federal law does not allow it, California law allows suits to be
filed on behalf of so-called ''indirect purchasers'' -- in this case
prescription drug users who bought the products from pharmacies and
not directly from the companies themselves.
Last December, a judge approved a $64.3 million settlement between 10
states and the District of Columbia and the world's largest drug
companies in a lawsuit that charged the manufacturers conspired to
destroy competition between retailers and health maintenance
organizations.
Merck spokesman John Doorley said the company settled the California
case ''rather than risk an inaccurate verdict. We price our products
competitively and fairly in response to market pressure and we never
have been involved in any price conspiracy.''
Lowell Weiner, a spokesman for American Home Products Corp., said
the companies ''agreed to the settlement solely to avoid the burden and
expense of litigation.''
Bernstein said the suit did not quantify the discrepancy in pricing, calling it
''a hotly contested issue.'' He said the alleged price gouging affected
mostly people who do not belong to HMOs or are not covered by
government insurance programs such as Medicaid.
But druggists have claimed they paid up to $28.90 for 100 tablets of a
synthetic thyroid drug, while HMOs paid as little as $1.43.
Fred Mayer, a Sausalito, Calif., pharmacist, said the agreement
''represents a cheap settlement for the drug companies, and they'll go on,
business as usual, ripping off the public.''
Bernstein said Mayer's view was not representative of most class
members.
''This is a very substantial and important benefit they're going to receive,''
he said.
Others companies involved in the settlement are:Glaxo Wellcome,
Bristol-Myers Squibb, Eli Lilly, Pfizer, SmithKline Beecham, Pharmacia
& Upjohn, Schering-Plough, Zeneca, Warner Lambert, Abbott,
Rhone-Poulenc, Dupont, Boehringer Ingleheim and Knoll.
Companies named in the class-action lawsuit that did not join the
settlement are: Ciba-Geigy, G.D. Searle, Hoffmann LaRoche, Johnson &
Johnson, Marion Merrell Dow, Ortho Pharmaceutical,
Purdue-Frederick, Forest Laboratories and Sandoz Pharmaceuticals.
Related Information From Hoover's Inc.
Rhone Poulenc
Schering Plough
Johnson & Johnson
Forest Labs
Bristol Myers Squibb
Warner Lambert
Knoll Inc
Merck & Co
Pharmacia & Upjohn Inc
Carter-Wallace, Inc.
Lilly, Eli
Smithkline Beecham PLC |
