Judge doubles damages in drug pricing case
By Emily Chasan
NEW YORK (Reuters) - A U.S. judge has ordered pharmaceutical companies AstraZeneca (AZN.L) and Bristol-Myers Squibb Co (BMY.N) to pay double damages in a case over false mark ups of U.S. drug prices through 2003, according to court documents filed on Friday.
U.S. District Judge Patti Saris, who sits in Massachusetts District Court, found that the companies had acted willfully, and ordered AstraZeneca to pay more than $12.9 million in total damages, while Bristol-Myers was ordered to pay $695,594.
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.
In an earlier ruling in June, Saris found that the two companies and Schering Plough Corp SGP.N subsidiary Warrick Pharmaceuticals grossly inflated the prices of drugs, including chemotherapy agents, to the detriment of the U.S. government's Medicare program for the elderly, insurance companies and individuals.
In her ruling this week, Saris said that the companies "knew that Medicare beneficiaries, and thus their insurers, were locked by statute into paying twenty-percent of grossly inflated phony AWPs, which bore no relation to any average of wholesale prices in the marketplace."
AstraZeneca said in a statement on Friday that it was "disappointed" with the ruling and intends to appeal.
"We believe the ruling is unsupported as the conduct at issue was the result of highly competitive conditions in the pharmaceutical marketplace, which led to discounting," AstraZeneca said.
A Bristol-Myers spokesman said the company also intends to appeal.
"Bristol-Myers Squibb has long maintained that it is not responsible for the average wholesale price reimbursement benchmark used by private insurers and medicare, and that its own pricing sales and marketing practices were fair and reasonable," Spokesman Tony Plohoros said.
The judge did not double damages against Warrick.
The plaintiffs in the case had argued that 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.
Steve Berman, a lawyer for the plaintiffs, said they were pleased with the ruling and would continue pursuing the case.
"The court has invited plaintiffs to expand this case to a nationwide class action for the next trial, potentially giving consumers across the country the same remedies this state case affords," Berman said in a statement.
Several claims in the case have already been settled.GlaxoSmithKline settled all claims prior to the trial and AstraZeneca settled claims involving Medicare beneficiaries prior to the trial.
(Reporting by Emily Chasan; Editing by Kim Coghill; Reuters Messaging: rm://emily.chasan.reuters.com@reuters.net;Tel: +1 646 223 6114))
