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June 17, 2002

Miller: Drug Company Paying $1.26 Million for Rx Drug Overcharges

Payments start today in wake of antitrust case alleging monopoly scheme.

DES MOINES. Attorney General Tom Miller announced today that 3,619 Iowans are being paid a total of $1,263,997.26 by Mylan Laboratories of Pittsburgh PA as a result of a multi-state antitrust lawsuit that alleged Mylan engineered a prescription drug monopolization scheme. The scheme caused the price of two key drugs to soar by over 2000 percent over a matter of months.

Miller said the refunds result from a strong team effort in Iowa to alert victims who were eligible for refunds. He credited Iowa pharmacists, Alzheimer's Associations, and network of aging organizations for the high number of claims and high payment total headed to Iowans.

"The case involved illegal price increases by Mylan for Lorazepam and Clorazepate, two medications widely used to treat symptoms of anxiety, including use by nursing home and hospice patients and people with Alzheimer's disease," Miller said. "Overcharge victims would tend to be older persons, and especially older women. I'm elated they are getting money back."

The Iowa refunds will average over $349, and some could range up to a couple thousand dollars, Miller said. Refunds checks are scheduled to be mailed Monday and Tuesday. [Note: the claim filing period ended previously; claims no longer are being received.]

Miller said state agencies that purchased the drugs or made reimbursements for them also would be paid about $562,000. Most would go to compensate Iowa's Medicaid program, with smaller payments to the Iowa Veteran's Home, mental health institutes and correction facilities.

Nationwide, 203,176 consumers will receive a total of $42,839,049.23. Claimants are being paid 100 per cent of the amount they paid for the two drugs during 1998 and 1999.

"This was one of the best antitrust refund cases we have seen," Miller said. "Usually it is very difficult to pinpoint exactly who was a victim of price-fixing or monopolization, but with this kind of drug purchase there usually are good records of who paid what and when. That's where Iowa pharmacists came in - they worked hard to notify people and help them reconstruct records to file a claim," he said.

Jerry Karbeling, Senior Vice President of Public Affairs for the Iowa Pharmacy Association and owner of Big Creek Pharmacy in Polk City joined Miller at the Des Moines news conference to announce the Mylan payments.

Background: The Antitrust Case

The States and Federal Trade Commission alleged that Mylan developed an illegal plan late in 1997 to drastically increase prices on the two generic drugs. "First, Mylan eliminated real and potential competitors by cornering the market on the drugs' active ingredients. Then, in early 1998, Mylan raised the price of one drug by 2000 percent and the other by 3000 percent," Miller said.

"We alleged that Mylan's actions were illegal and unconscionable -- all the more so because the drugs are so important to so many people," Miller said. "The two drugs are prescribed about 20 million times a year, and studies show that most users are older women, often with low incomes."

The lawsuit alleged that Mylan Labs cornered the market on ingredients for the two drugs, Clorazepate and Lorazepam, by entering into long-term agreements with suppliers and distributors so that only Mylan would have reliable sources to obtain the active ingredients. The defendants denied the allegations.

After cutting off competitors' supply of key active ingredients for the drugs, the suit alleged, Mylan raised the price of Clorazepate more than 3000 percent in January 1998. The price jump translated to an increase from about two cents per tablet to over 75 cents per tablet for Clorazepate. Two months later, Mylan increased the price of Lorazepam more than 2000 percent, or an increase from just over one cent per tablet to over 37 cents per tablet.

The suit alleged antitrust violations by Mylan including illegal restraint of trade, monopolization, and conspiracy to monopolize the markets for the two generic drugs. "It is illegal for companies to eliminate competition and then raise prices like this," Miller said.

"I am especially pleased we were able to take this action in the area of prescription drugs. High drug prices concern everyone, especially older Iowans. While we can't guarantee lower prices, we will take action when companies violate antitrust laws, because that hurts consumers, taxpayers and companies that play by the rules."

The Claim Process: Grass Roots Efforts in Iowa

The antitrust suit was settled April 27, 2001, in the U.S. District Court for the District of Columbia, determining that consumers who purchased the drugs anytime in 1998 or 1999 could be eligible for refunds. The claim period for consumers ran from June 1 through Sept. 29, 2001.

Kinsella Communications of Washington and Rust Consulting of Faribault MN organized a strong nationwide notification and claim process on behalf of the State Attorneys General. The project included targeted TV ads, materials for use at pharmacies, a national web site, toll-free telephone information lines, and other means to notify persons about the claim and refund process.

Iowa has the twelfth highest amount of payments nationwide, and the states with a higher amount almost all have very much larger populations than Iowa.

Miller said a team effort in Iowa is responsible for the high number of individual claims. "The Iowa Pharmacy Association and many of its members have exerted strong efforts to assist their patients and reach out and encourage their patients to file a claim," Miller said.

"Iowa's Alzheimer's Associations and our aging network also have done an outstanding job of spreading the word about this important case and refund arrangement," he said. "There has been impressive networking and communication work by Iowa's Area Agencies on Aging, local senior centers all over Iowa, the State Department of Elder Affairs and Department of Public Health."

News media in communities all over the state also have been crucial, Miller said. A "Consumer Advisory" bulletin on the Mylan refunds issued for July appeared in more newspapers than any previous "Advisory."

"I am very proud of Iowa's grass roots efforts to help people recover these refunds," Miller said.

Rust Communications is slated to mail about half the refund checks today and the remainder on Tuesday, so most payments will be received before the end of this week.

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