Settlement reached in drug suit

Hundreds of elderly in Md. could get prescription refunds

July 14, 2000|By Eric Siegel | Eric Siegel,SUN STAFF

Hundreds of mostly poor and elderly Marylanders could receive reimbursements of up to $2,000 each for overpriced prescriptions, under a tentative settlement of antitrust lawsuits against a leading generic drug maker.

In addition, Maryland would receive hundreds of thousands of dollars as repayment for the drugs used in government programs, bringing the value of the settlement with Pittsburgh- based Mylan Laboratories Inc. to a total of up to $1.5 million.

The money represents Maryland's share of a $100 million pool Mylan and three other defendants made to settle federal and state charges of price-fixing and monopolization that allegedly allowed the company to raise the price up to 34-fold for two widely prescribed sedatives used to treat Alzheimer's and other diseases.

The final terms of the settlement, which was announced Wednesday, are expected to be completed in several weeks. The settlement brings to an end separate lawsuits filed in December 1998 by the Federal Trade Commission and 33 states.

Maryland also will share in another $8 million pool provided by Mylan to cover legal and investigative costs borne by the states in the 2-year-old case.

Maryland Attorney General J. Joseph Curran Jr., whose office played a leading role in the states' litigation, said in a statement that the companies' "illegal conduct has harmed Maryland consumers."

"What makes this behavior even more unconscionable is that these drugs are frequently prescribed for elderly, nursing home and hospice patients, including those suffering from long-term debilitating conditions such as Alzheimer's disease," Curran said. "Moreover, a great many of the patients are uninsured senior citizens on fixed incomes."

In addition to the $100 million settlement of the government suits, Mylan said it had also agreed to pay $35 million to settle private class-action lawsuits filed against the company on behalf of consumers and insurers. It said it continues to dispute the allegations and admits no wrongdoing in the settlements.

"This is the first time in Mylan's 39-year history that any government agency has accused us of improper conduct," Chairman and Chief Executive Officer Milan Puskar said in a statement. "We continue to believe we acted properly.

"However, the board and I view these settlements to be in the best interest of our company's shareholders, customers and employees. By putting a significant portion of this case behind us, we can now look forward to devoting our full resources to the business of this company," the statement said.

Mylan, a publicly traded company, had income of $154 million on revenue of $790 million in its most recent fiscal year.

In public filings this year, Mylan said it had agreed to indemnify the three other defendants: Profarmaco S.R.L., an Italian drug ingredient maker; its parent company, New Jersey-based Cambrex Corp.; and Gyma Laboratories of Westbury, N.Y., a drug distribution company.

According to the lawsuits filed by the FTC and the states, Mylan's price-fixing scheme began in late 1997, when it entered into exclusive agreements to buy the active ingredients of two generic sedatives, clorazepate and lorazepam, effectively cutting competitors out of the market.

In January 1998, Mylan raised the price of clorazepate 34-fold, increasing the cost of a 1,000-tablet supply of the drug from just under $23 to $754, government attorneys said. Clorazepate, a generic version of Abbott Laboratories' Tranxene, is prescribed nearly 3 million times a year in the United States.

In March 1998, Mylan raised the price of lorazepam 27-fold, increasing the cost of a 1,000-tablet supply of the drug from just under $14 to $378, government attorneys said. Lorazepam, a generic version of Wyeth-Ayerst's Ativan, is prescribed 17 million times a year in the United States.

The price increases helped distort a widely followed indicator of wholesale inflation and spurred congressional calls for investigations of the company's business practices.

Besides the $100 million payment, Mylan agreed to restrictions in its dealings with its suppliers, an agreement government attorneys say will prevent future price-fixing.

The agreement does not require Mylan to roll back its prices, but government lawyers say the cost of the two drugs have begun decreasing and are expected to drop further as the marketplace becomes more competitive.

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