Consumer News Release
For immediate release - Monday, November 7, 2005.
Contact Bob Brammer - 515-281-6699
States Allege Illegal Agreement Prevented Generic Version of Oral Contraceptive
Lawsuit alleges "a naked restraint of trade with the purpose of stifling competition."
DES MOINES. Iowa and a total of 21 states plus the District of Columbia filed a lawsuit today alleging that two pharmaceutical companies entered into an illegal agreement that blocked marketing of a lower-priced generic version of the oral contraceptive drug "Ovcon®."
"We allege that Warner Chilcott Corporation paid Barr Pharmaceuticals, Inc., $20 million to keep Barr from marketing a generic version of Ovcon," Attorney General Tom Miller said today.
"When generic drugs come on the market it almost always results in competition and lower prices," Miller said. "In this instance, we allege that Warner Chilcott was the exclusive marketer of Ovcon, and then entered an illegal agreement and paid Barr $20 million so Barr wouldn't bring a generic version to market."
"We allege the agreement was a naked restraint of trade with the purpose of stifling competition," he said. "We allege the agreement destroyed the competition that is intrinsic to our market-based economy."
The lawsuit was filed today in U.S. District Court for the District of Columbia by the Attorneys General of 21 states and the District of Columbia: AK, AZ, AR, CA, CO, DE, DC, FL, ID, IL, IA, MD, MI, MS, MO, NY, NC, OH, OR, SC, TX, and VA. The suit was filed in conjunction with the Federal Trade Commission, which also filed a lawsuit today.
Warner Chilcott is based in Rockaway, NJ. Barr Pharmaceuticals, Inc., is based in Woodcliff Lake, NJ.
Background and details:
The lawsuit indicates that Ovcon® has been sold in the United States since 1976 as a safe and effective oral contraceptive. Warner Chilcott became the exclusive U.S. distributor of Ovcon beginning in 2000. In 2001, Barr Pharmaceuticals filed an application with the FDA to allow Barr to bring a generic version of Ovcon to market, and, in early 2003, Barr publicly announced that it planned to have the generic on the market by the end of that year.
In response to this threat to its monopoly, the suit says, Warner Chilcott paid Barr $1 million in September 2003 for an option agreement, including terms that, once Barr received FDA approval to market generic Ovcon, Warner Chilcott had 90 days to pay Barr $19 million, and Barr would be prevented from coming to market with generic Ovcon.
On April 23, 2004, the FDA gave Barr approval to market generic Ovcon. On May 6, 2004, Warner Chilcott exercised its option by paying Barr $19 million. As a result of the option agreement, as of today, Warner Chilcott remains the only company in the United States which markets Ovcon.
The suit alleges that Barr intended to offer its generic version of Ovcon for sale at a price approximately 30% less than the price charged by Warner Chilcott, and that Warner Chilcott was aware that its revenues could be substantially decreased if a generic version of Ovcon became available to consumers. The suit alleges: "If Barr had introduced its generic product into the market, the average price paid for Ovcon products would have decreased rapidly and substantially."
The States' suit asks the court to find the companies in violation of Federal and State antitrust laws, to prohibit anti-competitive conduct, and to impose civil penalties.
Miller said Iowa and other states have united in several prior cases alleging companies used illegal means to thwart lower-priced generic drugs from coming to market.
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