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Barnett Announces $100 Million Settlement With Prescription Drug Manufacturer

Barnett Announces $100 Million Settlement With Prescription Drug Manufacturer

(Pierre) – Attorney General Mark Barnett announced today a $100 million settlement in principle of lawsuits against drug manufacturer Mylan Laboratories and three other defendants. The lawsuits, filed by South Dakota, 32 other states, and the Federal Trade Commission, alleged illegal price increases for two drugs used to treat Alzheimer’s disease and other afflictions. In addition to the monetary settlement, Mylan will agree to certain restrictions in its supplier agreements in order to restore competitive balance to the pharmaceutical market, and to reimburse the states for legal and investigative costs.

The final terms of the settlement with Mylan, expected to be complete within several weeks, are subject to approval by the State Attorneys General, FTC, and the presiding United States District Court judge. Mylan’s Board of Directors has approved the terms of the settlement in principle.

The thirty-three states and the FTC filed parallel lawsuits in United States District Court in Washington D.C. against defendants Pittsburgh-based Mylan, New Jersey-based Cambrex Corporation, Italian pharmaceutical ingredient manufacturer Profarmaco S.r.l., and New York-based drug distributor Gyma Laboratories of America, Inc. The lawsuits alleged that Mylan developed a plan in late 1997 to drastically increase the price of two generic drugs it manufactured, Lorazepam and Clorazepate, by cutting off its competitor’s supply of the drug’s active ingredients. Mylan accomplished this by entering into long-term profit sharing agreements with industry suppliers and distributors. In 1998, Mylan raised the price of these two generic drugs by more than 2000%.

Attorney General Barnett stated that the settlement is a victory for South Dakota consumers. "The settlement should deter drug manufacturers from illegal price-gouging activities," he said.

Distribution on the fund will be determined by the final settlement agreement. No formula for distribution has been agreed to. However, South Dakota’s portion of the settlement is estimated to be several hundred thousand dollars.

The settlement announced today does not affect numerous pending class action lawsuits filed by private attorneys on behalf of insurers, drug retailers and others.