Miller: Iowans Eligible for $1 Million in Refunds in Case Alleging Monopoly Scheme by Giant Prescription Drug Maker
States and FTC alleged that Mylan Laboratories "cornered the market" on ingredients and then raised the price of two key drugs by over 2000 percent.
DES MOINES-- Attorney General Tom Miller announced Monday that Iowans are eligible for an estimated $1 million in refunds as a result of an antitrust lawsuit that alleged a monopolization scheme led by Mylan Laboratories of Pittsburgh PA.
"People will have to apply for the refunds over the next few months," Miller said. "Today we are launching an effort to explain who's eligible and how to submit a claim for refunds."
Miller said the case involved illegal price increases by Mylan for Lorazepam and Clorazepate - two medications widely used to treat symptoms of anxiety, including use by nursing home and hospice patients and people with Alzheimer's disease.
Consumers who bought the drugs any time in 1998 or 1999 and were not fully reimbursed by insurance are eligible for refunds. The claim filing period will run from June 1 through September 29, 2001. The nationwide settlement totals about $100 million, with $72 million earmarked for consumer refunds. It is estimated that many of the refund checks will be considerable and could range from several hundred dollars to nearly $2,000.
Consumers may obtain detailed information on the settlement and claims procedures by calling toll free to 800-899-5806 or going to the web site www.agsettlement.com.
"The States and Federal Trade Commission alleged that Mylan developed an illegal plan late in 1997 to drastically increase prices on the two generic drugs," Miller said. "First, Mylan eliminated real and potential competitors by cornering the market on the drugs' active ingredients. Then, in early 1998, Mylan raised the price of one drug by 2000 percent and the other by 3000 percent," he said.
"We alleged that Mylan's actions were illegal and unconscionable - all the more so because the drugs are so important to many people," he said.
Late Friday, U.S. District Court Judge Thomas Hogan gave formal preliminary approval to the $100 million settlement, which also includes an injunction under which Mylan agreed to restrictions in its future supplier agreements.
Miller said the State of Iowa will receive over $500,000 in the settlement because of overcharges it suffered because of the defendants' activities, although about half of that is expected to be returned to the Federal government which helps fund states' Medicaid programs.
The lawsuit alleged that Mylan Labs cornered the market on ingredients for the two drugs, Clorazepate and Lorazepam, by entering into long-term agreements with suppliers and distributors so that only Mylan would have reliable sources to obtain the active ingredients. Other defendants named in the suit were Cambrex Corporation, a New Jersey maker and marketer of specialized chemicals; Profarmaco, a wholly-owned Italian subsidiary of Cambrex; and Gyma, a New York company that distributes pharmaceutical compounds for Profarmaco and other manufacturers. The defendants denied the allegations.
After cutting off competitors' supply of key active ingredients for the drugs, the suit alleged, Mylan raised the price of Clorazepate more than 3000 percent in January 1998. The price jump translated to an increase from about two cents per tablet to over 75 cents per tablet for Clorazepate.
Two months later, Mylan increased the price of Lorazepam more than 2000 percent, or an increase from just over one cent per tablet to over 37 cents per tablet.
Together, the two drugs are prescribed nationally about 20 million times per year.
The suit alleged antitrust violations by Mylan including illegal restraint of trade, monopolization, and conspiracy to monopolize the markets for the two generic drugs. "It is illegal for companies to eliminate competition and then raise prices like this," Miller said.
"I am especially pleased we were able to take this action in the area of prescription drugs. High drug prices concern everyone, especially older Iowans. While we can't guarantee lower prices, we will take action when companies violate antitrust laws, because that hurts consumers, taxpayers and companies that play by the rules."
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