Attorney General Lockyer Announces $55 Million Settlement with Bristol in Lawsuit Alleging Firm Denied Consumers Cheaper Anti-Cancer Drugs

(SACRAMENTO) – Attorney General Bill Lockyer today announced a $55 million, multi-state settlement of a lawsuit that alleged pharmaceutical manufacturer Bristol-Myers Squibb (Bristol) illegally denied consumers access to cheaper, generic versions of its cancer-fighting drug Taxol.

"This settlement will help compensate the State of California and individual cancer patients, who overpaid for potentially life-saving treatments because Bristol abused the patent process to stifle competition," said Lockyer. "Just as important, the settlement prevents Bristol from repeating this conduct in the future."

The settlement requires Bristol to pay $12.5 million to compensate consumers who purchased Taxol or its generic equivalent, paclitaxel, between January 1, 1999 and February 28, 2003. Bristol must provide another $37 million in restitution for governmental entities which bought Taxol or paclitaxel. The balance of the firm's $55 million payment will fund the claims administration process and reimburse litigating states for their costs.

The settlement was filed in the U.S. District Court in Washington, D.C., by California, 45 other states, Puerto Rico, the Virgin Islands, American Samoa and the Northern Miriana Islands. The court must approve the settlement before it becomes final.

Cancer victims who paid for Taxol or paclitaxel with no help from insurance will have first claim on the $12.5 million consumer restitution fund. These "cash consumers" overpaid for the two drugs by as much as 30 percent, according to the litigating states. The average, per-patient cost of a standard course of treatment using Taxol totaled $6,000 to $10,000. After the cash consumers have been compensated, the balance of the $12.5 million will be distributed to consumers whose purchases of Taxol or paclitaxel were at least partially covered by private or public insurance.

The litigating states estimate there are 150,000 claimants nationwide. The number of Californians who overpaid for Taxol or paclitaxel is not known.

The exact amount each state will receive to compensate governmental entities and programs remains undetermined. California officials estimate, based on distribution formulas under discussion, the state will receive at least $3.5 million. That figure represents money spent on Taxol or paclitaxel under the Medicaid program, by state institutions and by the Public Employees' Retirement System for self-insurance of state workers.

Paclitaxel, the actual pharmaceutical ingredient in Taxol, is used to treat ovarian, breast, lung and AIDS-related cancer. It was discovered by the National Cancer Institute, and developed and tested at taxpayer expense. In 1992, the U.S. Food and Drug Administration gave Bristol exclusive rights to market Taxol for five years. In 1993, Bristol told a congressional committee that "near-term generic competition for Taxol is a certainty."

The antitrust complaint, however, alleged Bristol delayed market entry of a generic version of Taxol until 2000 by fraudulently securing patents that had no legal validity. Bristol's sales of Taxol have totaled more than $5.4 billion since 1998.

The settlement prohibits Bristol from filing a patent infringement claim related to Taxol, and from collecting royalties pursuant to a Taxol license, for 10 years. During the same period, the settlement also bars Bristol from making fraudulent or baseless claims related to any patent, and from enforcing or seeking to enforce any patent it knows to be invalid. For the first five years of the settlement, Bristol must file annual compliance reports with the court.

The Bristol settlement is the latest development in a series of actions taken by Attorneys General against illegal marketplace manipulation, improper patent monopolization, wholesale price fixing and other unlawful conduct that artificially inflates drug prices.