EAST HANOVER, N.J. - Sandoz Pharmaceuticals Corp. and the attorneys general of all 50 states have reached a $21 million settlement in an antitrust case involving the company's medication for schizophrenia.
The agreement announced today ends a lawsuit brought in December 1990 by attorneys general in New Jersey, New York, Washington and 30 other states over the marketing of a Sandoz drug called Clozaril. The drug was sold only to patients who subscribed to a monitoring service that pushed costs of the treatment to about $9,000 a year.
Washington Attorney General Ken Eikenberry said that while the cash settlement - about $447,000 of it destined for agencies and individuals in the state - is "certainly important, the settlement is probably more important for the message it sends to the pharmaceutical industry."
He said the case "tells the industry that society will not tolerate abuse" of the temporary monopolies granted to encourage development of new drugs. In addition to the damages, Washington state will receive about $196,000 to cover court costs, Eikenberry said.
Until 1991, Clozaril was distributed only if patients also purchased an expensive blood-monitoring service from Caremark Inc. of Lincolnshire, Ill., with which Sandoz had an exclusive contract.
Dr. David Winter, Sandoz's vice president of scientific and external affairs, said the monitoring was necessary because of side effects had caused at least 50 deaths in Europe. But that arrangement pushed the average cost of the drug and blood monitoring to $172 a week, prompting the lawsuits.
"Our lawsuit stopped Sandoz from continuing a rip-off policy that denied millions of Americans the chance for normal lives," Attorney General Robert Abrams of New York said.
Under the settlement, Sandoz and Caremark will pay about $10 million to Clozaril users as rebates. Another $3 million will go to state mental-health agencies in the 33 states as credits toward Clozaril purchases, and $3 million will go to supply the drug to those who cannot afford it. The companies also will pay the states about $4 million in fees and costs.
Winter said the company ended the monitoring arrangement in June 1991, instead requiring dispensing physicians and pharmacists to ensure that patients had a weekly blood test. The drug alone now costs the average patient $4,160 a year, the company said, but Medicaid and other government programs pick up part of the cost for many patients.
In some patients, Clozaril causes a sharp decrease in the white blood cells that fight infection, leaving patients open to serious infection unless their blood is checked weekly.
Schizophrenia is a mental disorder that can be characterized by a distortion of reality, delusions, hallucinations, a fragmentation of the personality and bizarre behavior.