Baxter International agreed to pay $64 million to settle a class-action lawsuit that alleged the Deerfield, Ill.-based company and some of its competitors colluded to raise prices of plasma-based therapies.
Hospitals and drug distributors, saying they bought the plasma products at inflated prices, sued in 2009 Baxter; Victoria, Australia-based CSL; and the Plasma Protein Therapeutics Association, an Annapolis, Md.-based trade group.
Though agreeing to the settlement, Baxter is not admitting any wrongdoing.
"The company's decision to settle the litigation is not an admission of liability, but rather a reflection of the costs involved in defending this matter," Baxter spokeswoman Deborah Spak wrote in an email. "The company has previously reserved for the costs associated with the litigation and therefore this settlement does not have additional impact on the company."
Indeed, the company had set aside a "litigation reserve" totaling $72 million as of the end of 2013, according to its latest annual financial statement with the Securities and Exchange Commission.
Plaintiffs' lawyers secured an identical $64 million settlement with the latter two defendants in January. The settlement with Baxter was reached in December and approved April 17 by U.S. District Judge Joan Gottschall.
The plaintiffs alleged that Baxter and CSL agreed in the early 2000s to limit production of therapies derived from human plasma, the liquid component of blood. Such products are used to treat ailments like hemophilia and immune deficiencies.
“The case is now over,” said one of the lead plaintiff lawyers, Charles Tompkins, a Chicago-based partner at Williams Montgomery & John. “We spent many years litigating the case, and we feel confident that the settle is a favorable result for all involved.”
Money from the combined $128 million settlement fund will be distributed on a pro-rata basis to the roughly 2,000-member class, none of whom has raised objections to the agreement. The settlement covers sales activity from 2005 and 2009.
Baxter in 2013 booked $2.01 billion in net income on $15.26 billion in revenue. The company raked in $5.56 billion in combined sales from its hemophilia and biotherapeutics lines, both of which fall within its bioscience segment, which took in $6.56 billion.
The company said in March it plans to split into two firms, with the medical products segment — an $8.70 billion business in 2013 — retaining the Baxter name and headed by current CEO Robert Parkinson, and the as-yet unnamed bioscience segment led by Ludwig Hantson, its current president.
The spinoff likely will occur in mid-2015.
Baxter earned $556 million in the first quarter, or $1.01 per share, on $3.95 billion in sales. Excluding extraordinary items, it earned $1.19 a share, beating out the consensus of eight analysts polled by Bloomberg.
The stock was trading at about $73.18 at midday today."Baxter settles class-action suit for $64 million, denies wrongdoing" originally appeared in Crain's Chicago Business.