States Obtain Landmark Settlement In Generic Drug Case

Attorney General Spitzer today announced a landmark settlement of antitrust charges against two major drug companies accused of conspiring to keep a generic version of a widely used blood pressure medication off the market.

Under the settlement, the drug manufacturers -- Aventis and Andrx -- must pay $80 million to compensate consumers, state agencies, and insurance companies who overpaid for Cardizem CD and its generic equivalents.

The settlement marks the first time that consumers will receive direct compensation in a generic drug case. The average consumer will be eligible to recover 20 percent of the amount spent by the consumer on the drug during a 14-month period in 1998 and 1999. For many individuals, this will mean a refund of several hundred dollars.

"Today's settlement continues our mission to protect consumers by fighting prescription drug companies' efforts to manipulate the law to keep cheaper generic drugs off the market, " Spitzer said. "We will not allow companies to increase their profits on the backs of the sick and the elderly."

The case, co-led by New York and Michigan, along with the attorneys general of 27 other states and commonwealths, charged that for a year beginning in July 1998, Hoechst, a pharmaceutical company acquired by Aventis in 2000, paid Andrx just under $100 million not to market a generic version of Cardizem CD. The delay in the availability of the generic form of Cardizem CD meant that consumers, medical insurance companies and the government were forced to purchase the higher priced brand name version of the drug for at least an extra year.

Of the settlement amount, approximately $21 million in cash will be used to compensate consumers in all 50 states, Puerto Rico and the District of Columbia who were overcharged for Cardizem CD purchases. Approximately $30 million will be used to compensate third-party payers, such as medical insurance companies, who were overcharged for Cardizem CD purchases. Approximately $4.5 million will be distributed among the states to reimburse certain government purchasers, including Medicaid, for their damages. The remaining money will be used to pay administrative costs of the settlement and legal fees.

It is estimated that some 70,000 people in New York, and one million nationwide, take Cardizem CD or its generic versions. Based on population, New Yorkers may receive approximately $1.5 million of the $21 million available for consumer distribution. However, the amount individual consumers receive will depend on when they took Cardizem CD, how much they paid, and the total number of claimants.

The New York State Department of Health (which includes Medicaid), New York City Health and Hospitals Corporation, New York State Department of Civil Service, and other New York agencies will share about $820,000 in compensation for their purchases of Cardizem CD.

The settlement is in addition to a $110 million settlement previously reached between the companies and drug wholesalers involving the same illegal conduct. In total, the drug companies will be required to pay over $190 million.

The proposed settlement was filed today with U.S. Federal District Court Judge Nancy Edmunds in Detroit and requires the court's approval to become effective. If the settlement is approved, a claims process will begin this summer for consumers who purchased Cardizem CD or its generic equivalent at any time between January of 1998 and January 2003.

The case is being handled by Director of Litigation Robert L. Hubbard and Assistant Attorney General Aimee Pollak, along with Director of Economics Hampton Finer, all of Spitzer's Antitrust Bureau.