An unlikely alliance of hospitals, insurers and a drug wholesaler made good on their threat to file a class-action federal antitrust lawsuit against Mylan Laboratories of Pittsburgh, the nation's second-largest generic drugmaker.
The group filed its lawsuit April 5 in U.S. District Court in Chicago, claiming that Mylan and its suppliers conspired to monopolize the markets for two generic anti-anxiety drugs and entered unlawful contracts to restrain trade.
The plaintiffs allege they were overcharged by the defendants as a result of the allegedly unlawful conduct.
The plaintiffs include eight-hospital Advocate Health Care system, based in Oak Brook, Ill.; pharmaceutical purchaser Dik Drug Co., of Burr Ridge, Ill.; Harvard Pilgrim Health Care, a Brookline, Mass.-based HMO; and Oxford Health Plans, a Norwalk, Conn.-based managed-care company.
Other defendants include Cambrex Corp. of East Rutherford, N.J.; Gyma Laboratories of America, of Westbury, N.Y.; Profarmaco of Italy; and SST Corp. of Clifton, N.J., all of which supplied the raw materials to Mylan to make the two drugs.
The drugs in question are clorazepate and lorazepam.
Mylan already is the subject of a pending federal antitrust action filed by the Federal Trade Commission and 32 state attorneys general alleging restraint of trade, monopolization and conspiracy to monopolize the markets for clorazepate and lorazepam. The FTC is seeking $120 million for what it claims were Medicaid and Medicare overpayments.
The private-payer suit doesn't specify how much the plaintiffs allegedly overpaid Mylan.
"But under antitrust laws, if the overcharge can be proven, the damages can be three times that amount," said Thomas Campbell, an antitrust attorney with Gardner, Carton & Douglas in Chicago, who represents the plaintiffs. "That (triple the amount) is what we're asking."
Campbell said the suits brought by state attorneys general and the FTC have attracted widespread interest for attempting to recoup Medicare and Medicaid overcharges.
In the fiscal year ended March 31, 1998, Mylan earned $100.7 million on total revenues of about $555.4 million.
Mylan denies both the FTC and the private complaint charges, said Mylan's attorney, Kevin Arquit, who heads the antitrust division of the international law firm Rogers & Wells.
"These private complaints don't add much because they're basically copycat complaints and only add a lot more lawyers to the mix," said Arquit, who left the Federal Trade Commission's Bureau of Competition, which he headed, in 1992.
Arquit said Mylan's position is that other suppliers of raw ingredients were available elsewhere.