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Drug Makers Sued on Pricing

Fourteen pharmacies accuse the companies of charging more for medicines in the U.S.

August 27, 2004|James F. Peltz | Times Staff Writer

A group of California pharmacies sued more than a dozen drug makers Thursday, accusing them of conspiring to keep U.S. prices well above those for the same drugs in Canada and other countries.

Tapping into the national debate over prescription drug prices, the lawsuit alleges that the companies broke state antitrust laws by collectively maintaining "artificially high prices for their drugs in the United States, including California," and blocking lower-priced imports.

That left the pharmacies at a competitive disadvantage to Canadian and Mexican pharmacies as well as a growing number of Internet sites that offer brand-name drugs from those countries at sharply lower prices, the suit contends.

It was filed in Alameda County Superior Court in Oakland by 14 independent pharmacies, including four in Southern California.

"My business has definitely been harmed," said John Tilley, owner of Tilley Apothecaries Inc. in Downey, which operates 19 Zweber's pharmacies in Southern California. "We end up losing business to these other countries."

Most of the largest pharmaceutical makers are named as defendants, including Pfizer Inc., Merck & Co., AstraZeneca and Irvine-based Allergan Inc.

AstraZeneca "believes the claims are without merit and intends to defend itself vigorously," spokeswoman Michele Meeker said. Pfizer spokesman Bryant Haskins said, "Any allegations of price fixing are totally without merit." Merck spokesman Chris Loder said executives hadn't seen the suit and thus had no response. Allergan didn't respond to requests for comment.

The suit alleges that the drug makers on average charge Americans twice as much for many brand-name medicines as they charge Canadians, with the price gap reaching 400% in some cases.

There is a long-running debate over whether Americans should be able to buy brand-name drugs at substantially lower prices from vendors in Canada and other foreign countries.

Drug imports from Canada are largely banned by the U.S. Food and Drug Administration, mostly on safety grounds. Nonetheless, drugs worth more than $1 billion were imported into the U.S. last year from Canada and other foreign countries, the FDA has said.

Some states, including California, are trying to get around the FDA's restrictions. Vermont made a formal drug-importation request to the agency and recently sued when its request was denied. Illinois, Minnesota, New Hampshire, North Dakota and Wisconsin are among the states that have made informal inquiries to the FDA.

Even if a manufacturer has FDA approval to sell a drug in the United States, the version it makes for foreign markets "usually does not meet all of the requirements of the United States approval, and thus it is considered to be unapproved," William Hubbard, the FDA's associate commissioner, wrote in a letter to the California attorney general's office last year.

Hubbard also wrote that any state law that would legalize drug imports "would be preempted by federal law." That is one reason Gov. Arnold Schwarzenegger is said to be leaning against several bills to allow for imports of lower-cost drugs.

The pharmacies' lawyer, Joseph M. Alioto, said the lawsuit was aimed more at U.S. drug prices than the import question. "We should be getting the same prices in the United States and in California as all the foreign countries are getting for the same drugs made with the same ingredients," he said.

The suit seeks unspecified damages and an injunction stopping the drug companies from charging the plaintiffs higher prices than those paid by foreign customers for the same drugs.

The drug industry has long insisted that its U.S. price levels are necessary to fund research on new pharmaceuticals, a task that's time-consuming and expensive.

The other Southern California pharmacies in the lawsuit are Pediatric Care Pharmacy Inc. in Los Angeles, Meyers Pharmacy Inc. in Canoga Park and Uptown Drug Co. in Los Angeles.

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