Judge Gives Preliminary OK to Drug Firms’ New Settlement

A federal judge gave preliminary approval Wednesday to an amended $351-million settlement of a lawsuit over pricing by some of the nation’s biggest pharmaceutical companies, although analysts said consumers are unlikely to see a major change in drug prices right away.

Under the settlement, drug makers agreed to stop charging retail pharmacies higher prices for the same drugs that health maintenance organizations and similar groups get at a discount.

Analysts said that could mean drug makers will start offering discounts to pharmacies as well. Or it could mean HMOs will have to start paying the higher prices that pharmacies pay.

Or, more likely, it could mean a little of both, analysts said.

“I think the manufacturers will try to keep this neutral by raising the price a little to managed care and lowering it a little to retail pharmacies,” said Stephen Schondlemeyer, a professor of pharmacy at the University of Minnesota who monitors drug industry pricing practices.

“For consumers, I’d say it’s a neutral to good effect,” Schondlemeyer said.

Judge Charles Kocoras of U.S. District Court for Northern Illinois in Chicago gave preliminary approval Wednesday to the amended settlement of the massive antitrust lawsuit, which was brought two years ago by nearly 40,000 retail pharmacies against several major drug makers.

An initial settlement in the case was rejected in April by Kocoras, who said it did not address future pricing practices by the manufacturers.

The pharmacies had alleged that they were being unfairly charged more for wholesale drugs than health maintenance organizations and other managed-care customers.

In the settlement, 11 major drug makers agreed to pay the pharmacies $351.1 million. The judge scheduled a hearing for June 11 to discuss the fairness of the proposed settlement.

Companies that have agreed to the settlement include American Home Products Corp., Bristol-Myers Squibb Co., Glaxo Wellcome, Eli Lilly & Co., Merck & Co., Pfizer Inc., Schering-Plough Corp., Warner-Lambert Co., Zeneca Group, SmithKline Beecham and Knoll Pharmaceutical Co.