Thursday, April 24, 2003

Holding Taxol hostage

You often hear about the costs of developing pharmaceuticals to meet arbitrary FDA regulatory standards. But there’s also lesser known regulatory cost of paying antitrust ransom to manipulative state attorneys general:

[Ohio] Attorney General Jim Petro announced Thursday that Ohio and all other states have resolved an antitrust lawsuit with Bristol Myers-Squibb Co. involving the cancer-fighting drug Taxol.

Ohio, which led negotiations for the plaintiff states, will recover more than $1.5 million for state agencies and hospitals as part of a $55 million settlement to help compensate the state and consumers who overpaid for the drug, Petro said.

"This is a significant victory for Ohio because Bristol Myers-Squibb Co. has agreed to much more than just financial reparations," Petro said. "The company will also provide free quantities of Taxol to DEA-approved health care facilities, provided the recipients meet eligibility guidelines, and will abide by a strong agreement prohibiting anti-competitive conduct in the future."

While the ultimate allocation among the litigating states has not yet been determined and must be approved by the court, more than $37.5 million will be set aside to be divided for this purpose. An additional $12.5 million will be set aside to reimburse consumers for some of their out-of-pocket payments.


How does providing free Taxol remedy an antitrust violation? Shouldn’t compensating the customers who, ahem, “overpaid” for Taxol be sufficient? This settlement seems to send a bad message: If states don’t want to pay market price for drugs, they can simply bring an antitrust suit and force the company to provide the drug for free as part of a “settlement.”

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