Drugstores Sue Makers Over Prices

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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 United States while barring pharmacies from buying the makers' drugs at lower prices outside the country.

"Each of the companies, all of them, are doing exactly the same thing: They're charging substantially more in the United States than they are elsewhere," Joseph Alioto, the San Francisco attorney representing the pharmacies, told KCBS Radio's Matt Bigler. "Almost all of the countries of the world are in one price range and the United States is 300 to 400 times greater."

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.

"While Pfizer hasn't had an opportunity to review this lawsuit in detail, any allegations of price fixing are totally without merit," said Bryant Haskins, a spokesman for New York-based Pfizer Inc., which is named in the lawsuit. "Importation of pharmaceutical products into the U.S. market is both illegal and dangerous because it increases the opportunity to introduce counterfeit or unapproved drugs into the distribution system."

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 United States are available in Canada and elsewhere for fractions of the retail prices.

"I get people that are going online and checking prices and saying 'Wow, I can buy this drug up in Canada for a third of the price you're charging me here,' and I don't have anything to respond other than the fact that I say, 'Jeez, you better go do it,'" said San Francisco pharmacist John Gelinas.

The Food and Drug Administration has repeatedly denied requests to import drugs from Canada, where the government controls prices and drugs are less expensive. It says that would open the door, through Canada, to drugs from other countries where quality control isn't as stringent as in the U.S.

Alioto says there's an overall conspiracy to create an artificial trade barrier around the U.S.

"The smoking gun obviously is very obvious, and that is the extreme price differential on the same drug," he told KCBS-AM.

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.

Other companies named in the lawsuit include Merck, Johnson & Johnson, Bristol-Myers Squibb Co. and Abbott Laboratories.

The drug industry has in the past defended its U.S. prices as a way to recoup hefty research and development costs.