Agreement Reached With Drug Manufacturer.

Business/News Editors, City Desks, Health/Legal Writers

SEATTLE--(BUSINESS WIRE)--July 12, 2000

Washington Attorney General Christine Gregoire said today an estimated $1.3 million would be recovered for Washington consumers and state agencies under a tentative settlement with drug companies which were sued for fixing prices of medications often used by the elderly.

The lawsuit contends that Mylan Laboratories, manufacturer of two widely-prescribed medications, and its co-defendants, Italian pharmaceutical ingredient manufacturer Profarmaco S.r.l, Cambrex Corp., and New York-based pharmaceutical distributor Gyma, engaged in a scheme that allowed the firm to hike the medications' prices by as much as 3,000 percent.

"This is a victory for consumers who depend on these medications to help them make it through the day," Gregoire said. "A license to manufacture prescription drugs is not a license to engage in unfair market manipulation to boost profits - especially at the expense of people who depend on these medicines," she said.

Final terms of the agreement are expected to be completed within several weeks, and are subject to approval by the Federal Trade Commission, 33 State Attorneys General, and U.S. District Judge Thomas F. Hogan. Mylan's board of directors has approved the terms of the settlement in principle.

While Washington's share of the proceeds from the agreement remain undetermined at this time, tentative estimates indicate Washington could recover up to $1.3 million for consumers and state agencies who incurred higher costs as a result of the price hikes.

Nationally, Mylan will pay an estimated $100 million to the states in monetary damages, and up to $8 million in attorney fees. In addition to the monetary terms of the settlement in principle, Mylan agrees to certain restrictions in its supplier agreements in order to restore competitive balance to the pharmaceutical market.

Mylan and the others were sued by the states and by the Federal Trade Commission. The lawsuit alleged that Mylan developed a plan in 1997 to drastically increase prices of the drugs by cutting off the supply of the drugs' active ingredients to its competitors. Mylan accomplished this by entering into long-term profit sharing agreements with suppliers and distributors.

The medications in question are lorazepam and clorazepate, two generic drugs widely used to treat anxiety and hypertension in the elderly and infirm.

Uncovered in the investigation was evidence that Mylan raised the price of clorazepate by about 3,200 percent in January 1998. Clorazepate is a generic version of Abbott Laboratories' Tranxene that is prescribed nearly 3 million times each year in the United States. The price increase drove the drug's cost from $11.36 to $377 for a 500-tablet supply.

Two months later, Mylan raised the price of lorazepam more than 2,000 percent. Lorazepam is a generic version of Wyeth-Ayerst's Ativan that is prescribed more than 17 million times a year. The cost for lorazepam jumped from $7.30 to $191.50 for a 500-tablet supply.

"Our investigation has shown that consumers and state agencies have paid outrageous prices as the result of the defendants' conduct," Gregoire said. "What's even more unconscionable is that these drugs, particularly lorazepam, are often prescribed to our most vulnerable citizens, including those suffering from such debilitating diseases as Alzheimer's," she added.