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Pharmaceuticals

In recent years, the Attorney General, often working with similar officials in other states, has obtained from many large pharmaceutical companies accused of various antitrust violations hundreds of millions of dollars used for consumer refunds and to support various programs that benefit the general public.

  • In January 2010, California and twenty-three other states achieved a $22.5 million settlement with pharmaceutical giants Abbott and Fournier after the companies "illegally blocked" cheaper generic substitutes for the patented brand-name cholesterol-reducing drug Tricor. The settlement is the result of one of the country's first legal actions challenging pharmaceutical companies for "product hopping", a strategy to block generic competition by making slight changes to the formulation of an existing patented drug.

    “Abbott and Fournier devised a complex scheme that illegally blocked cheaper generic drugs from entering the market,” Attorney General Edmund G. Brown Jr. said. “They used minor reformulations of the drug to delay competition and filed frivolous patent lawsuits. This scheme cost California and other states millions of dollars.”

    The settlement agreement requires the companies to cease illegal efforts to block generic competition to Tricor and to pay the states approximately $22.5 million dollars. In California, the Department of General Services, Medi-Cal, and the Department of Corrections will be reimbursed for overcharges.

  • California, together with thirty-three other states and the District of Columbia, challenged an agreement by which Barr Pharmaceuticals received $20 million from pharmaceutical giant Warner Chilcott in exchange for withholding from the market a generic version of Ovcon, a prescription oral contraceptive. After litigation was filed, Warner Chilcott and Barr Pharmaceuticals voided their agreement, and began competing with one another, resulting in a 20 percent drop in the price of the contraceptive within just one month. In 2008, California and the other states settled the lawsuit with Warner Chilcott and Barr Pharmaceuticals. The latter company agreed to a ten-year consent decree barring similar agreements, and requiring the payment of civil penalties and the prosecutors’ attorney fees.

  • California, along with several other states, filed a lawsuit challenging Bristol-Myer Squibbs’s (“BMS”) manipulation of the patent-law system to extend a monopoly over the brand-name anti-cancer drug Taxol. BMS had entered into agreements with generic manufacturers preventing them from selling competing versions of Taxol. California obtained an injunction against such practices, and millions of dollars of reimbursements for California consumers and various state entities that had paid too much for the drugs. Additionally, BMS donated a finite amount of free Taxol to persons who needed the drug, but could not afford it. Later, BMS attempted to enter into another secret deal with a generic manufacturer of Plavix, a drug used to prevent blood clotting in recent victims of heart attacks or strokes. These actions were a second violation of the antitrust laws and resulted in California receiving additional monetary penalties.

  • In March 2006, GlaxoSmithKline (“GSK”) agreed to pay $14 million to resolve allegations of charging improperly inflated prices for the anti-depressant drug Paxil to state government programs, because GSK engaged in patent fraud, antitrust violations, and frivolous litigation to maintain a monopoly on the drug and to block generic versions of the drug from entering the market. GSK entered the settlement with California, and forty-six other states, plus U.S. territories. California received $2 million of the total recovery.

  • The FTC and multiple states including California brought lawsuits alleging that Mylan Laboratories, Cambrex, Profarmaco, and Gyma Laboratories of America monopolized, attempted to monopolize, and conspired to monopolize the market for lorazepam and clorazepate, two generic anti-anxiety drugs. After cornering the market on these two drugs, these companies increased the prices 1,900 to over 3,200 percent. In July 2000, the FTC, California, and thirty-one other states obtained injunctive relief and a $100 million settlement payment from the defendants. California obtained approximately $1.8 million for injured California consumers and $925,000 for harmed state agencies.

  • Aventis Pharmaceuticals and Andrx agreed to an $80 million settlement with California and other states for unfair business competition related to the popular generic heart medication Cardizem CD.

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