Healthy Skepticism Library item: 506

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

California Pharmacies Sue Drug Makers, Allege Price Fixing
The Wall Street Journal 2004 Jul 26

Full text:

Nineteen California pharmacies filed a lawsuit in state court Thursday accusing the world’s largest pharmaceutical companies of conspiring to inflate U.S. drug prices.

The pharmacies accuse the 15 drug makers of illegally conspiring to charge inflated prices in the U.S. while barring pharmacies from buying the makers’ drugs at lower prices outside the country.

“We are being charged higher prices than foreigners are being charged,” said Joseph Alioto, the San Francisco attorney representing the pharmacies. “If we are selling the same drug we want to pay the same prices as everyone else.”

Mr. Alioto filed the suit in Alameda County Superior Court in Oakland. The suit alleges the pharmaceutical companies have hurt the pharmacies’ bottom lines by violating California’s antitrust and unfair business practices laws.

The California lawsuit comes at a time when pharmaceutical companies are coming under increased scrutiny over their drug costs and marketing practices. Many of the same drugs sold in the U.S. are available in Canada and elsewhere for fractions of the retail prices.

The Food and Drug Administration has repeatedly denied requests to import drugs from Canada, where the government controls prices and drugs are less expensive. The state of Vermont has filed a lawsuit against the federal agency over the issue.

Last month, Schering-Plough Corp. agreed to pay $346 million to settle charges that it paid a kickback to a health insurer in an attempt to evade a law requiring it to give its lowest prices to Medicaid, the government health program for the poor. Bayer has paid $257 million and GlaxoSmithKline has paid $86.7 million to settle similar allegations that they failed to give their best prices to Medicaid.

The companies named in the lawsuit include Pfizer Inc., Johnson & Johnson and Bristol-Myers Squibb Co.

Many of the drug companies listed in the lawsuit either declined comment or didn’t return telephone calls Thursday. The drug industry has in the past defended its U.S. prices as a way to recoup research and development costs.