by MICHAEL F. CONLAN
Individual pharmacist lawsuits against brand-name drug manufacturers, moving along without the publicity of the Chicago class action case now winding down, are quietly being settled for millions of dollars. And they seem on track for jury trials that potentially could benefit all of community pharmacy. "Some people think the discriminatory-pricing cases are all over, and the last hurrah has been sung," said Larry Braden, former head of the Georgia Pharmacy Association. "But that is not the case at all."
In 1994, Braden and about 3,800 other pharmacy owners opted out of the class action. Several large chains and supermarkets also decided to go down their own legal avenues, and none of the opt-outs will get a share of the $700 million in class action settlements now ready for initial distribution.
Braden serves as chairman of the national litigation steering committee of what is commonly called the Boies/Gravante group after two of the more than 40 law firms involved. Initially, each owner pledged to pay up to $250 per quarter to cover the expenses of pursuing lawsuits alleging price-discrimination violations of the Robinson-Patman Act. Pharmacy association executives not involved in the litigation serve as an audit committee that rules on expense payments.
The class action suit took a different legal route, using the Sherman Act to charge manufacturers and wholesalers with a conspiracy to fix prices. U.S. District Judge Charles P. Kocoras in 1998 ruled that the class action attorneys hadn't proved their case and ended the trial of the four manufacturer defendants that decided to face a jury instead of settling out of court.
Out-of-court settlements have been negotiated with five of the 27 manufacturers and three mail-order firms the independent opt-outs filed suit against, Braden told Drug Topics. (Several wholesalers have been added to the suit since then.) "The amount and specific terms of our settlements are confidential … at this point and cannot even be released" beyond the 14-member steering committee yet, he said, for strategic reasons. But Braden did say that all the initial expense money put up quarterly for three to four years had been repaid. (If all 3,800 plaintiffs had put in the $250/quarter maximum for three years, that would amount to more than $11 million.) The plaintiffs also have divided "several millions of dollars" based on the amount of brand-name Rxs they had purchased, the same distribution formula being used in the class action.
The settlements also were enough "to create a war chest of several millions of dollars, sufficient in most likelihood to cover operating expenses and carry us to trial," Braden said. And trial is the ultimate goal of the litigation. "We anticipate more settlements," he continued, "but we are in the enviable position of not having to settle with anyone now because we have covered our [initial] goals, and our primary objective is to get to trial."
At trial, the group will seek "injunctive relief" to end discriminatory pricing as well as treble damages and attorneys' fees. Just what the details of that proposed remedy might be "of necessity must remain confidential at this moment," Braden said. But it apparently won't follow the market-share movement provisions that were part of the class action settlements. Braden described the manufacturers' response to the agreements as a "sham" that has not helped community pharmacies or patients. While technically any injunctive relief contained in a favorable ruling for the opt-outs would apply only to them, as a practical matter it most likely would have to be extended to all community pharmacies, or manufacturers would face a new round of litigation.
More legal maneuvering remains, and just when and where any trials will take place is not clear yet. Attorneys for the manufacturers and the pharmacists have agreed to try "test cases" against five manufacturers first. American Home Products, Glaxo Wellcome, and SmithKline Beecham are believed to be among them. The opt-outs are seeking to have Kocoras send the cases back to their originating courts. The wholesalers are expected to file motions with Kocoras soon for a summary judgment that would drop them from the cases.
"We certainly feel we are over the hump and much closer to a trial date than ever before," said Braden. "But we still have hurdles to go over." He noted that the manufacturers' lawyers rallied after the class action case was dismissed, and they have become much more aggressive. Still he remains optimistic. "We are due our day in court," he said. "Our cases stand alone."
