State High Court Allows Lawsuit To Proceed on Alleged Drug Price-Fixing
On Monday, the California Supreme Court decided to permit a lawsuit in which retail pharmacies are accusing major drugmakers of inflating prices, Bloomberg reports. The defendants include AstraZeneca, Eli Lilly, GlaxoSmithKline and Pfizer (Rosenblatt, Bloomberg, 7/12).
The suit was filed in Alameda County in 2004.
The pharmacies allege that the drug companies overcharged purchasers by as much as 400% from 2000 to 2004, marking up the price of drugs in the U.S. when identical versions were available at cheaper prices in other countries (Egelko, San Francisco Chronicle, 7/13).
The suit originally was dismissed by two lower courts on the basis that the pharmacies lacked standing because they passed on the price increases to consumers and therefore did not sustain damages (Loftus, Dow Jones/Wall Street Journal, 7/13).
Supreme Court Decision
In Monday's ruling, Justice Kathryn Mickle Werdegar said that if such lawsuits are prohibited, overcharged retailers would be forced to choose between absorbing losses or raising their prices and facing potential sales decreases.
Werdegar said blocking the suit potentially could allow drugmakers to fix prices with impunity.
According to Joseph Alioto, a lawyer for the pharmacies, the decision "will prevent manufacturers throughout the state from fleeing liability" (San Francisco Chronicle, 7/13).
The case will be remanded to trial court, which will decide on the merits of the lawsuit.
The drug companies say they are confident that the trial court will dismiss the case based on its merits (Dow Jones/Wall Street Journal, 7/13).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.