Pharmacists Group to Try to Overturn Suit Settlement

The trade group representing thousands of drugstores said Monday that it will try to overturn the settlement agreement of a class-action lawsuit many of its members filed against major drug manufacturers.

The National Assn. of Retail Pharmacists said the proposed settlement is inadequate because it would allow drug manufacturers to continue denying discounts to retailers while offering them to health management organizations and hospital groups.

Under the settlement, announced Friday and still subject to judicial approval, 15 large drug companies would pay more than $408 million in cash and discount coupons to the more than 30,000 independent drugstores that brought the class action.

Since word of a settlement began circulating several weeks ago, “the phones have been ringing constantly” at the trade group’s offices as members call to complain about the terms, said John Rector, the association’s general counsel.

The group members who joined the lawsuit must accept the settlement if U.S. District Judge Charles P. Kocoras, who is hearing the case in Chicago, accepts it. Kocoras could also reject the settlement or give the members the opportunity to withdraw, Rector said. The association and some of its members plan to testify against the settlement in court, he said. Kocoras has scheduled a hearing on the settlement for March 27.

Rector said the settlement would not compensate pharmacists adequately for the billions of dollars in lost earnings they suffered, nor would it require the drug companies to stop the pricing practices that led the independent pharmacists to sue in the first place.

In addition, the pharmacists must give up all legal grievances filed against the drug companies through last month.

The lawsuit charges that the drug companies conspired to deny independent pharmacies the discounts commonly offered to health management companies and others, putting them at a competitive disadvantage even when they bought in bulk.

The drug makers deny any illegal action and say they priced their products based on market forces--that is, that managed-care companies can influence market share and independent pharmacies cannot.

“There are a variety of features to the settlement that we don’t like at all,” Rector said. “We thought $600 million was extraordinarily modest, given the actual damages that are involved,” he said, referring to a previous proposed settlement amount.

More than half a dozen drug companies didn’t agree to the settlement, including Johnson & Johnson, Pharmacia & Upjohn and Rhone-Poulenc Rorer. The court case against those companies will continue.

In addition, several thousand independent pharmacists chose to exit the class-action lawsuit and are going after the drug companies on their own. Their suits, plus others filed by the chain drugstores and grocery stores, are pending.