Pills, Price-Fixing And Penalties

The Federal Trade Commission on Wednesday approved a tentative $100 million settlement of claims that Mylan Laboratories Inc. fixed prices of anti-anxiety drugs widely used by senior citizens — the generic and brand-name forms of Ativan and Traxene.

The settlement, the largest in FTC history, still must be approved by attorneys general in 32 states and U.S. District Judge Thomas Hogan.

"Anticompetitive acts in the pharmaceutical industry potentially cost consumers millions of dollars in higher prescription prices," said Richard Parker, director of the FTC's Bureau of Competition, in announcing the proposed deal. "This settlement serves notice of the Commission's determination to pursue investigations of such behavior and to seek disgorgement of ill-gotten gains in appropriate cases."

Thirty-two states, the District of Columbia, patients and the federal government filed lawsuits in 1998 accusing the Pittsburgh-based pharmaceutical giant of illegally increasing prices for the drugs lorazepam and clorazepate.

Mylan says the actions it took which are at the heart of the lawsuit were intended to make sure that its supply of ingredients would not be interrupted.

The FTC viewpoint is a little different.

In a statement, the agency notes that "by 1997, vigorous competition among generic manufacturers had driven down the prices of both lorazepam and clorazepate, to very competitive levels."

The federal agency says that price slide was abruptly reversed when Mylan made a deal in late 1997 with Profarmaco S.R.L., which supplied Mylan and most of its competitors with the active ingredient for the two drugs; Cambrex Corporation, Profarmaco's parent company; and Gyma Laboratories of America, Profarmaco's distributor.

The FTC charges the supplier and distributor made a profit-sharing deal with Mylan to deprive Mylan's competitors of the active ingredients needed to make generic versions of the two drugs.

Generic drugs are identical versions of branded drugs that usually sell at a fraction of the price. Many companies that manufacture generic drugs purchase the ingredients from a third-party.

Pennsylvania Attorney General Mike Fisher said the company hiked the price of clorazepate 3,000 percent in January 1998 and lorazepam by 2,500 percent in March that year.

The FTC said Mylan raised the price of a 500-count bottle of 7.5 mg clorazepate tablets from $11.36 to $377.00, and raised the price of a 500-count bottle of 1 mg lorazepam tablets from $7.30 to $191.00.

Lorazepam is the generic form of Ativan, a highly prescribed anti-anxiety medication, and clorazepate is the generic form of Traxene, an anti-anxiety medication also used as an adjunct therapy for nicotine and opiate withdrawal.

FTC Chairman Robert Pitofsky said users of the drugs paid even higher prices, adding that many may have reduced the number of tablets they took or stopped taking the drugs altogether because they could no longer affod them.

The FTC contends the arrangement between Mylan and the other three companies added up to an additional $120 million in profits for Mylan.

If finalized, the $100 million settlement of the lawsuits will be divided among the states, including Pennsylvania, which sued Mylan. The money then will be used to repay consumers and state agencies who paid the hiked prices for the drugs.

In addition to the $100 million, Mylan has tentatively agreed to pay another $47 million, in attorney's fees and payments to settle class actions filed by insurers and managed care organizations.

The proposed settlement includes a ten-year injunction prohibiting Mylan from making any exclusive agreement on active pharmaceutical ingredients which could create a monopoly or harm competition.

Consumers who believe they were injured by the 1998 lorazepam and clorazepate price increases are advised to contact the Attorney General of their state.

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