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Aventis, Andrx to Settle Antitrust Case

The drug makers will pay $80 million. Claims allege a conspiracy to stifle generic form of blood-pressure drug.

January 28, 2003|From Bloomberg News

Aventis and Andrx Corp. agreed to pay $80 million to settle lawsuits that claimed the companies conspired to keep generic forms of the blood-pressure drug Cardizem CD off the U.S. market, New York Atty. Gen. Eliot Spitzer said Monday.

Under the agreement, the two drug manufacturers will compensate 29 states that sued, as well as consumers and insurers that overpaid for the drug, Spitzer said. As many as 1 million consumers in all 50 states might get money back. Both companies maintain that their actions were lawful.

Aventis and Andrx already have agreed to pay $110 million to settle similar claims brought by drug wholesalers.

People who overpaid for Cardizem and other generic versions during 1998 and 1999 will receive $21 million of the money to be paid by the companies, Spitzer said. About $30 million will go to insurance companies, and the states will get $4.5 million. The rest will go to administrative costs and legal fees.

The suits alleged that Hoechst, which merged with Rhone-Poulenc in 1999 to create Aventis, agreed in 1997 to pay Andrx almost $90 million to delay marketing a cheaper version of Cardizem for about a year. The companies said the agreement was lawful. Cardizem sales peaked at $810 million in 1998 before generic competition reached the market.

"It's a settlement and obviously not an admission of guilt," said Lise Geduldig, an Aventis spokeswoman. "We remain steadfast that the agreement was necessary to protect the unexpired Cardizem formulation patent."

Andrx said the agreement with Aventis "resulted in the marketing of its generic alternative sooner than it would have otherwise" and that the company settled because it "was preferable to the uncertainties and distractions inherent in continued litigation of this matter."

Aventis shares fell $1.74 to close at $48.85 in trading on the New York Stock Exchange. Andrx shares fell 35 cents to $14.22 on Nasdaq.

U.S. District Judge Nancy Edmunds' approval is required before the settlement takes effect. The judge is scheduled to hold a hearing on the settlement today.

"This establishes for the first time that a company that has a right to a drug cannot pay another company to keep the generic drug off the market," Spitzer said.

Aventis and Andrx reached a settlement in April with the Federal Trade Commission that bars them from making agreements to restrict generic-drug makers from producing alternatives to brand-name products. The FTC said the Aventis-Andrx agreement didn't delay the marketing of generic alternatives to Cardizem CD.

Edmunds had ruled that the agreement violated antitrust laws, and the companies had appealed that ruling.

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