Sandoz Pharmaceuticals Corp. and the attorneys general of all 50 states have reached a $21 million settlement in an antitrust case involving the company's medication for schizophrenia.
The agreement announced Thursday ends a lawsuit brought in December 1990 by attorneys general in New Jersey, New York, Utah and 30 other states over the marketing of a Sandoz drug called Clozaril. The drug was sold only to patients who subscribed to a monitoring service that pushed costs of the treatment to about $9,000 a year.Utah Attorney General Paul Van Dam said Utah patients will receive reimbursements of up to $2,500 each.
"This is a significant settlement for the state of Utah because most Utah Clozaril users are under the state's care," Van Dam said. "As a result of ending this illegal marketing arrangement, Utah will not only be reimbursed for past overpayment, but as a result of the lower price may be able to treat additional patients who desperately need this drug."
Until 1991, Clozaril was distributed only if patients also purchased an expensive blood-moni-toring service from Care-mark Inc. of Lincolnshire, Ill., with which Sandoz had an exclusive contract.
Dr. David L. Winter, Sandoz's vice president of scientific and external affairs, said the monitoring was necessary because of side effects in 1 percent to 2 percent of patients, which had caused at least 50 deaths in Europe.
But that arrangement pushed the average cost of the drug and blood monitoring to $172 per week, or $9,000 per year, prompting the lawsuits.
Under the settlement, Sandoz and Caremark will pay about $10 million to Clozaril users as rebates. Another $3 million will go to state mental health agencies in 33 states as credits toward Clozaril purchases; $3 million will go to supply the drug to those who cannot afford it, and $1 million in rebates for up to 2,000 patients eligible for Social Security Disability Income. The companies also will pay the states about $4 million in fees and costs.
Winter said the company ended the monitoring arrangement in June 1991, instead requiring dispensing physicians and pharmacists to ensure that patients had a weekly blood test. The drug alone now costs the average patient $4,160 per year, the company said, but Medicaid and other government programs pick up part of the cost for many patients.
Winter said that after several attorneys general questioned the monitoring arrangement, his company informed them shortly before the lawsuit was brought that it was working on the switch in how the drug was distributed.
In some patients, Clozaril causes a sharp decrease in the white blood cells that fight infection, leaving patients open to serious infection unless their blood is checked weekly. Winter said the federal Food and Drug Administration required Sandoz to label Clozaril with the requirement for weekly testing.
Schizophrenia is a mental disorder that can be characterized by a distortion of reality, delusions, hallucinations, a fragmentation of the personality and bizarre behavior.