FTC Opens Inquiry into Drug Pricing
The Federal Trade Commission is investigating 22 major drug manufacturers to find out whether they have illegally conspired to fix prices.
The five-member commission earlier this month authorized its staff to subpoena records from the pharmaceutical manufacturers to determine whether they violated federal laws by “engaging in unlawful concerted activities to raise, fix, maintain, or stabilize the prices of pharmaceutical products in the United States.”
FTC officials on Tuesday declined to comment on the case.
The FTC inquiry appears to grow out of a class-action lawsuit in which independent pharmacists claim they are victims of price discrimination resulting from collusion among large drug manufacturers.
Last month, a federal judge granted preliminary approval to the $408.9-million settlement of a class-action lawsuit brought by independent pharmacists against the drug makers. A hearing on terms of the settlement is scheduled today before Judge Charles P. Kocoras in U.S. District Court in Chicago.
The FTC investigation could provide the drug retailers with relief they failed to get in the class-action settlement, which does not require the manufacturers to change their pricing practices. Under federal law, the FTC has the authority to seek a court order prohibiting anti-competitive practices, but cannot pursue criminal or civil penalties.
In the class-action lawsuit, the drug retailers complained that manufacturers discriminate by denying them discounts while offering them to health management organizations, hospitals, pharmacy benefits managers and others.
In authorizing the subpoenas, the commission said possible targets of the inquiry include Abbott Laboratories, American Home Products Corp., Boehringer Ingelheim Corp., Bristol-Myers Squibb Co., Ciba-Geigy Corp., Eli Lilly & Co., Forest Laboratories Inc., G.D. Searle & Co., Glaxo Wellcome Inc., Hoechst Marion Roussel Inc., Hoffmann-La Roche Inc., Johnson & Johnson, Knoll Pharmaceuticals Ltd., Merck & Co., Pfizer Inc., Pharmacia & Upjohn Inc., Rhone-Poulenc Rorer Inc., Sandoz Pharmaceuticals Corp., Schering-Plough Corp., SmithKline Beecham, Warner-Lambert Co., and Zeneca.
The class-action settlement involves 13 of those companies.
An official at American Home Products said the company is cooperating with the investigation and “our pricing decisions are always made independently.” Officials for other companies declined to comment or could not immediately be reached.
Drug companies have denied that there is any conspiracy to maintain high prices for independent or other pharmacies and say they have agreed to the settlement to avoid litigation costs. The discounts are justified because health management groups are able to specify which drugs their patients use, giving drug companies a greater assurance of sales, according to the manufacturers.
