Settlement of Pharmacies’ Lawsuit OKd

CHICAGO —  A federal judge on Friday approved a $351.3-million settlement of a class-action lawsuit by drugstores that argued that a dual-pricing policy by major drug makers made them less competitive than managed-care firms.

Up to 40,000 retail pharmacies could receive awards in the settlement.

The lawsuit filed in 1994 accused the drug makers of inflating prices to retailers while offering discounts to managed-care and mail-order operations.

In a 10-page opinion, U.S. District Judge Charles Kocoras ruled that the amended settlement ensured that retail pharmacies would no longer be denied discounts strictly because they were retailers.

Kocoras had rejected a $408.9-million settlement proposal in April, saying, among other things, that it did not address future pricing practices by the defendants.

Kocoras said he believes the new settlement “sufficiently addresses our stated concerns and, in fact, represents a firm commitment on the part of the settling defendants.”

In the amended proposal, 13 defendant drug companies offered to pay retail pharmacies $351.3 million to settle the price-fixing claims and promised to provide them discounts in the future, although access to discounts can depend on a retailer’s market share.

Both Abbott Laboratories Inc. and Ciba-Geigy refused to join the amended settlement.

In ruling for the amended settlement, Kocoras said only 162 complaints were lodged against it, compared with more than 3,000 against the original settlement proposal.

Much of the change in opinion was because of the inclusion of stronger language concerning compliance and the inclusion of a clause ensuring that defendants who accept the settlement will still receive favorable terms the drug makers may offer in settlements with drugstores that are not in the lawsuit.

Companies that have agreed to settle in the case are American Home Products Corp.; Bristol-Myers Squibb Co.; Glaxo Co. and Burroughs Wellcome Co., which have since merged into Glaxo Wellcome; Eli Lilly & Co.; Merck & Co.; Pfizer Inc.; Schering-Plough Corp.; Warner-Lambert Co.; Zeneca Group; SmithKline Beecham; American Cyanamid, which was recently acquired by American Home products; and Knoll Pharmaceutical Co.