Utah is expected to get more than half a million dollars from a multistate lawsuit settlement against the manufacturer, based in Pittsburg, of a drug used to treat Alzheimer's disease.
Utah Chief Deputy Attorney General Reed Richards announced Wednesday that the 1998 lawsuit, which was filed in conjunction with 32 other states and the Federal Trade Commission against pharmaceutical company Mylan Laboratories and three other companies, has been settled in principle for $100 million, subject to approval by all the parties involved.
The lawsuit targeted an "illegal, astronomical price increase" for two generic drugs manufactured by Mylan that are used to treat Alzheimer's disease and other afflictions, said attorney general spokeswoman Tracey Tabet.
The lawsuit alleged that in late 1997, Mylan entered into long-term profit-sharing agreements with suppliers and distributors that gave Mylan the only reliable sources of the drugs' active ingredients, thereby eliminating all competition. Then, in early 1998, Mylan increased the prices of the two widely prescribed sedatives, Clorazepate and Lorazepam, by more than 2,000 percent.
A 1,000 tablet supply of Clorazepate, prescribed about 3 million times a year in the United States, jumped in price from $22.72 to $754, according to the lawsuit. The price for the same amount of Lorazepam, prescribed more than 17 million times each year, increased from $13.60 to $378.
"Our investigation has shown that this illegal conduct harmed consumers," Richards said. "What makes Mylan's behavior even more unconscionable is that these drugs, especially Lorazepam, are anti-anxiety medications frequently prescribed for nursing home and hospice patients."
Under the agreement, Utah will get about $770,000 to reimburse the state's Medicaid program and to benefit consumers who have paid inflated prices for the drugs.
"This settlement ensures that Mylan will be penalized for the harm it has caused and will provide relief for consumers who rely on these medications," Richards added.
As part of the settlement, Mylan has agreed to restrict its supplier contracts in order to restore competitive balance to the pharmaceutical market and to reimburse the states for up to $8 million in legal fees, Tabet said.
The settlement was reached about a year after a landmark decision where a U.S. District Court judge ruled that the FTC has the legal authority to seek monetary remedies. The settlement includes both recovery of damages for the states and the forfeiture of ill-gotten profits sought by the FTC.
Tabet said Mylan's board of directors have approved the settlement in principle, but that final terms are expected to be completed within several weeks.
Mylan, which manufactures most of its 91 generic drugs in West Virginia and Puerto Rico, reported total revenues of $790 million with net earnings of $154 million for the 1999 fiscal year. Also named in the lawsuit were Cambrex Corp., based in New Jersey; the Italian pharmaceutical ingredient manufacturer Profarmaco; and drug distributor Gyma, based in New York.