Wexler Wallace LLP Files Class Actions against Major Drug Manufacturers
On March 7, 2012, Wexler Wallace, with co-counsel Hagens Berman Sobol Shapiro and Spector Roseman Kodroff & Willis, filed seven class actions against major drug manufacturers. These actions, which were brought on behalf of four health benefit funds and are pending in federal courts in Illinois, New York, New Jersey, and Pennsylvania, allege that major drug manufacturers have paid, and continue to pay, undisclosed kickbacks to privately-insured individuals so that those health plan members choose the drug manufacturers’ expensive branded drugs instead of less expensive therapeutic alternatives. Each plaintiff health plan seeks to represent a class of third-party payors that were overcharged for prescription drugs taken by their members as a result of these illegal kickbacks.
The Complaints allege that 10 major drug manufacturers (Merck & Co., Inc., Pfizer, Inc., Amgen Inc., AstraZeneca, Inc., GlaxoSmithKline, Novartis Pharmaceuticals Corp., Bristol-Meyers Squibb Co., Otsuka America Pharmaceutical, Inc., Gilead Sciences, Inc., and Abbott Laboratories) designed and implemented unlawful prescription co-payment (“co-pay”) subsidy programs that subsidize privately-insured individuals’ co-pays for the manufacturers’ key brand name drugs. They include the blockbuster drugs Nexium (AstraZeneca), Lipitor (Pfizer), and Crestor (AstraZeneca). Requiring health plan members to pay a small portion of the high cost of a branded prescription drug — either a co-pay or co-insurance — provides a reasonable, personal incentive for privately-insured individuals to choose less-costly, usually generic, medications, and drives down the cost of the much larger residual portion paid by the health benefit providers. Each of the co-pay subsidy programs implemented by defendant drug manufacturers alters the carefully calibrated co-payment system negotiated by health benefit providers and their members, and each is intended to steer unsuspecting members toward more expensive brand name drugs when less expensive therapeutic alternatives are available in generic form. The complaints allege that these co-pay subsidy programs, which are estimated to increase health benefit providers’ prescription drug costs by $32 billion over the next 10 years, violate federal racketeering and federal antitrust laws.
For a Washington Post Article on these class actions, click here.