Drug makers inflated prices, judge rules

A federal judge in Massachusetts ruled today that the pharmaceutical companies AstraZeneca, Bristol-Myers Squibb, and Warrick Pharmaceuticals falsely marked up drug prices at various times in 2003.

The judge found the three companies grossly inflated prices, to the detriment of the Medicare program, insurance companies, and individuals.

Plaintiffs in the class-action lawsuit said the drug makers boosted published average wholesale prices, which until 2003 were the basis for reimbursements from Medicare, state governments, and private insurers.

The marked-up prices created a spread between a doctor or pharmacy’s real cost and the drug’s published cost.

When their drugs faced competition, companies used spreads to make their drugs more attractive to doctors, who could pocket excess cash resulting from the scheme.

US District Judge Patti Saris found that AstraZeneca overcharged for Zoladex, a treatment for prostate cancer, and levied damages of nearly $4.5 million for one group of plaintiffs. She said the court needed additional information to figure damages for the other.

Saris ruled that Bristol-Myers Squibb overcharged for its cancer drugs Taxol, Vepesid, Cytoxan, Blenoxane, and Rubex. She levied damages of $183,454 for one group of plaintiffs and is collecting information to figure the other group’s damages.

She found that Warrick overcharged for its generic asthma drug albuterol sulfate. Damages are pending.

The judge cleared Johnson & Johnson, saying that while its "conduct was at times troubling, it did not rise to the level of egregious misconduct."

An AstraZeneca spokeswoman said the lawsuit’s claims are without merit. The company may appeal.

Representatives for the other defendants could not be immediately reached for comment.
(Reuters)