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APPEAL PROMISED BY LOW-BIDDING DRUG COMPANIES THAT WOULD HAVE SAVED MILLIONS IN TAXPAYER DOLLARS FOR SUCH DRUGS AS AZT, PROZAC AND ZANTAC

APPEAL PROMISED BY LOW-BIDDING DRUG COMPANIES THAT WOULD HAVE SAVED MILLIONS IN TAXPAYER DOLLARS FOR SUCH DRUGS AS AZT, PROZAC AND ZANTAC
 LOS ANGELES, June 30 /PRNewswire/ -- Two rival companies that supply wholesale drugs to health facilities throughout Los Angeles and seven other counties today said they plan to aggressively appeal a recent decision by a Los Angeles Superior Court judge effectively destroying the long-standing process of awarding contracts to lowest responsible bidders and costing taxpayers millions of dollars.
 Golden State Medical Supply Inc. of Valencia and U.S. Trading Corp. of Los Angeles, which recently submitted the lowest bids to supply Los Angeles County health facilities with pharmaceutical drugs, both vowed to continue their legal battle to win reinstatement of their low bids.
 Officials of both firms claim Los Angeles Superior Court Judge Stephen E. O'Neil's decision to allow the county to arbitrarily bypass low-bidding firms, if allowed to stand, would allow county bureaucrats to play favorites and cost taxpayers millions of dollars.
 The rival drug suppliers have both transacted business with Los Angeles County's huge public health system for the past 10 years and experienced no problems.
 "It's as if he has said that it's okay for the county to discriminate against any company for any reason even if they are the low bidders," said James Stroud, vice president of operations for Golden State. "This decision will now cost taxpayers in Los Angeles County about $1 million in additional costs over what our two firms had proposed for exactly the same products."
 As an example, said Stroud, taxpayers in other areas of the state such as San Francisco, with its high rates of AIDs and HIV infection, can expect to pay as much as $1 million more for the drug AZT if the two low-bidding firms are eliminated.
 During a court hearing in Los Angeles last week, O'Neil, in ruling against the low-bidding drug companies, said it was his interpretation that the county did not have to award contracts to low bidders. But, the two firms claim, that is contrary to state law and goes against every stated fiscal policy ever enacted by a public body.
 In fact, the two drug wholesalers have been excluded from a list of potential suppliers because of their reluctance to pay questionable and arbitrary 2 percent rebates to county departments and the subsequent refusal of the county's prime vendor to accommodate the low bidders.
 Attorney Laurence P. Lubka, representing the drug companies, said that by not awarding the contract to his clients, who had abided by all regulations when submitting their low bids, an "abuse of discretionary powers" had occurred on the part of a handful of county functionaries.
 He noted that these employees were unduly and unfairly influenced by the county's prime vendor system, which acts as a drug-buying consortium for eight counties throughout the state. Other counties involved in the consortium and named in the lawsuit are San Diego, Santa Cruz, Santa Clara, Riverside, Placer, San Francisco and Alameda.
 "No other prime vendor systems in the state or in the nation have posed any problems whatsoever," said Stroud. "With minor adjustments, the system could accommodate us, but they refuse."
 According to the court documents, the drug wholesalers charge that the 2 percent rebate is distributed back to certain departments within the county medical system so that managers of those departments can show better year-end financial statements.
 "The better their department performs financially," said Barry Sugarman, a vice president of U.S. Trading Corp., "the bigger department head bonuses are at year end."
 Larger drug companies have refused to pay the 2 percent rebate as well, but because many of them are the exclusive manufacturers and distributors of a particular drug, they remain on the county's vendor list.
 -0- 6/30/92
 /CONTACT: Morris Goldstein of Golden State, 805-295-8101; or Keith Karpe or Craig Parsons, 310-207-9300, both of Pondel Parsons & Wilkinson, for Golden State Medical Supply/ CO: Golden State Medical Supply Inc.; U.S. Trading Corp. ST: California IN: MTC SU:


AL -- LA012 -- 5253 06/30/92 14:35 EDT
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Publication:PR Newswire
Date:Jun 30, 1992
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