DRUG PRICING: Drugmakers Settle, Donate $150M in Drugs to Community Clinics
Nineteen of the nation's largest pharmaceutical companies have agreed to settle a $176 million class-action price-fixing lawsuit brought on behalf of California's 32 million consumers, the San Francisco Chronicle reports. The bulk of the settlement will go to 300 not-for-profit medical centers that serve the indigent. The five-year-old suit accused the drug companies of instituting an illegal, two-tiered pricing system that benefitted HMOs and other bulk purchasers while asking "exorbitant rates" of independent pharmacies and some drug store chains. Under terms of the agreement, the drugmakers will provide $148 million in name-brand drugs to 300 medical clinics that serve the poor throughout the state. An additional $1.6 million will be supplied to administer the three-year distribution program and $27 million will pay attorneys fees. Fred Mayer, former president of the California Public Health Association who was instrumental in bringing the lawsuit, said, "The settlement is no damn good because it does nothing to alter the behavior of the drug companies. It represents a cheap settlement for the drug companies and they'll go on, business as usual, ripping off the public." Mary Cranston, attorney for one of the drugmakers, said, "We believe the basic complaint had little merit," adding that "there isn't ... anything illegal about the pricing system in place." San Francisco Superior Court Judge Alfred Chiantelli will hear final arguments April 21, including those surrounding what price the drug companies will value the drugs donated to the community clinics (Smith, 2/19).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.