State Distributes $13 Million In Antitrust Settlement Funds

Attorney General Spitzer announced the distribution of more than $13 million in antitrust settlement funds to state agencies and hospitals that purchased two common medications, BuSpar and Taxol.

The payments – which total $13,163,086 – were made by Bristol-Myers Squibb Co. to settle charges brought by New York and other states in two separate federal court lawsuits, which claim that Bristol had unlawfully blocked the market entry of cheaper generic alternatives to both drugs. The recoveries are intended to compensate agencies which paid illegally inflated prices to provide the drugs to New Yorkers.

"Anti-competitive practices that boost already sky-high drug prices and cost taxpayers and consumers millions are unacceptable," Spitzer said. "I'm pleased to be able to return these funds to the New York State agencies and hospitals responsible for helping New Yorkers obtain vital medications."

BuSpar, the brand name of buspirone hydrochloride, is a widely prescribed drug used to treat anxiety. In a federal court complaint filed in New York State in December 2001, Spitzer alleged that Bristol violated state and federal antitrust laws by illegally obtaining a new patent extending BuSpar's exclusive hold on the market. The complaint further alleged that Bristol knowingly made false statements to the FDA concerning the scope of its new patent as part of a scheme to extend its patent monopoly over BuSpar, thereby preventing competition from less expensive generic drugs.

Taxol is administered by physicians and hospitals to patients suffering from breast, ovarian and other cancers. A course of treatment employing Taxol frequently costs from $6,000 to $10,000; the cost of a dose of the branded medication is approximately $1,625, while the same dosage marketed by a generic company may cost $1,200. In a June 2002 suit filed in federal court in Washington, D.C., Sptizer and other state attorneys general alleged that Bristol, despite assurances given in congressional hearings that Taxol was unpatentable and would enjoy no more than five years of marketing exclusivity, illegally obtained patents, which the company misused to block generic competitors from marketing competing drugs.

In the BuSpar case, Spitzer recovered $9,803,400, which will be divided among state agencies and hospitals that purchased the drug, in proportion to the size of their purchases. By far the largest amount will go to the New York State Department of Health's Office of Medicaid Management, which pays for medications for New York's neediest citizens. The Department of Health's Elderly Pharmaceutical Insurance Coverage (EPIC) Program, which assists senior citizens in purchasing drugs and its AIDS Drug Assitance Program (ADAP), will also benefit from the recovery.

Other agencies sharing in the recovery include the New York State Department of Civil Service, which administers the Empire Plan, the health insurance plan of many state and local government employees; the New York State Office of Mental Health and the New York State Office of Mental Retardation and Developmental Disabilities; the New York City Health and Hospitals Corporation; and the New York State Department of Correctional Services.

In the Taxol case, $3,359,686 will be divided between the Department of Health's Office of Medicaid Management (which again will receive the bulk of the funds), the Department of Civil Service's Empire Plan, and two hospitals: the State University of New York (SUNY) and Roswell Park Cancer Center, a hospital specializing in cancer treatment.

New York consumers who submitted claims for compensation have already received separate payments as a result of the two lawsuits. Approximately $37 million has been distributed nationwide to consumers as a result of the BuSpar settlement, and approximately $12.5 million as a result of the Taxol case.

The matter was handled by Assistant Attorneys General Richard L. Schwartz and John A. Ioannou, the Antitrust Bureau's Director of Economics Hampton Finer, and Antitrust Bureau Economic Research Analyst Lisa Vura-Weis, under the supervision of Jay L. Himes, Chief of the Attorney General's Antitrust Bureau.