Record Settlement in Drug Price Fixing

N E W   Y O R K, Nov. 29, 2000 -- The Federal Trade Commission approved a $100 million settlement with Mylan Laboratories, the largest monetary settlement in the commission’s history.

The agency had charged Mylan, of Pittsburgh, Pa., with conspiring to deny four competitors ingredients necessary to manufacture widely prescribed generic versions of anti-anxiety drugs. The practice resulted in a 3,000 percent boost in the price of the drugs, according to the FTC.

“Anti-competitive acts in the pharmaceutical industry potentially cost consumers millions of dollars in higher prescription prices,” says Richard Parker, director of the commissions’ bureau of competition.

Injured Consumers Could Collect

If the settlement is approved by the federal district court, Mylan will pay the money into a fund for distribution to state agencies and injured consumers who can prove they had to pay higher prices.

The commission’s complaint charged that Mylan, Cambrex Corp., Profarmaco, S.R.L. and Gyma Laboratories, carried out a plan intended to give Mylan the power to raise the price of two generic anti-anxiety drugs, lorazepam (Ativan) and clorazepate (Traxene), by depriving competitors of the active pharmaceutical ingredient necessary to manufacture the pills.

Generic drugs are identical versions of branded drugs that typically sell at a discounted price.

According to the commission, the four companies entered into an exclusive license that deprived Mylan’s competitors of the key ingredient for the manufacture of the two drugs.

Pill Prices Rose 3,000 Percent

Without access to this important ingredient, Mylan’s competitors could not compete for the sales of the product. As a result Mylan raised the price of the two drugs approximately 2,000 to 3,000 percent, depending on the bottle size and strength.

In January 1998, for example, Mylan raised the wholesale price of clorazepate from $11.36 to $377 for a 500-count bottle of 7.5 milligram tablets, the commission says. Mylan earned an additional $120 million as a result.

To compensate injured consumers and state agencies, which purchase the drug for its Medicaid programs, the company will pay $100 million into a fund.

The agreement also bars the company from engaging in similar anti-competitive behavior in the future.

ABCNEWS’ Robin Eisner contributed to this story.