States Sue Drug Firms in Alleged Price Fix

California and 14 other states sued Aventis and Andrx Corp. Monday for conspiring to keep cheap knockoffs of a widely used blood pressure drug off the market, the latest salvo in a mounting legal assault on the pharmaceutical industry.

The lawsuit, filed in federal district court in Michigan, accuses the drug makers of using regulatory loopholes to prop up the price of Aventis’ Cardizem CD. The suit said a pharmaceutical company acquired by Aventis agreed in 1997 to pay Andrx nearly $90 million to delay launch of a generic version of the blood pressure medication.

California Atty. Gen. Bill Lockyer said the agreement cost elderly Californians who use the medication $400 a year. Generic versions of Cardizem CD, which are now available, cost half the $65 monthly price for the name-brand drug, he said.

Cardizem CD was among the top 20 most-prescribed medications in the United States last year.

Representatives of Aventis and Andrx denied the allegations, which are similar to charges made in nearly two dozen civil lawsuits by consumers and health insurers, including Aetna U.S. Healthcare. The suits have been consolidated in U.S. District Court in Detroit, where the state actions were filed Monday.

In a statement, Aventis said the agreement between it and Andrx was intended to “reduce the risk” of patent litigation to both companies. Andrx President Elliott F. Hahn has said that at the time of the agreement, Andrx was not prepared to begin marketing its drug.

Last month, the Federal Trade Commission settled a civil antitrust complaint against the two drug makers over their Cardizem CD agreement.

The FTC settlement prevents the companies from making other deals that would restrict introduction of lower-cost generic medications.

“We are going after the conspiracy of greed,” Lockyer said. The suit seeks refunds for consumers and for government programs such as Medi-Cal “forced to pay more for the name-brand drug,” he said.

No estimate of the alleged overpayment was available.

The suits are part of an undeclared war on the pharmaceutical industry over prescription drug prices.

The National Organization for Women said Monday it was preparing a lawsuit against Bristol-Myers Squibb for tactics used to delay cheap knockoffs of the breast cancer drug Taxol. Last year, the Federal Trade Commission disclosed an investigation into Bristol-Myers’ alleged effort to extend its Taxol monopoly. The company has denied the allegations.

In the last month or so, drug makers have faced other accusations, which they deny.

At issue in many of the lawsuits is the federal Hatch-Waxman Act, which was passed in 1984 to ease introduction of generics. But government investigators and consumer groups say that loopholes in the law have instead allowed makers of brand-name drugs to delay competition.

Sens. John McCain (R-Ariz.) and Charles E. Schumer (D-N.Y.) have introduced legislation, opposed by the drug industry, that would tighten the law.

Monday’s suit is the first by the states to allege abuses of Hatch-Waxman.

The suit said that in August 1995, Andrx alerted Hoescht Marion Roussel, now Aventis, that it planned to produce a version of Cardizem CD that did not infringe on HMR’s patents. Andrx received a patent on its version in October 1996.

But in January 1996, HMR sued Andrx for patent infringement. The lawsuit triggered the 30-month waiting period under Hatch-Waxman, during which the FDA could not approve Andrx’s product unless the litigation was resolved. In September 1997, the FDA gave Andrx approval for its generic, pending resolution of its lawsuit.

A week later, the two companies reached an agreement under which HMR would pay Andrx nearly $90 million a year until the patent litigation was resolved. In June 1999, the companies settled the suit and Andrx introduced its generic, called Cartia CT.

As a result of competition, sales of Aventis’ Cardizem have plummeted and it now has 30% of the market for the drug, attorneys said. Before generic competition, Cardizem CD accounted for $700 million in annual sales for Aventis.

Shares of Andrx fell $2.68, or 4.7%, to $54.04 in Nasdaq trading Monday. Aventis eased 58 cents, closing at $74.95 on the NYSE.