Names In the News

My Oh Mylan: The Price Fix

Attorneys from 33 U.S. states and the Federal Trade Commission in July settled in principle a lawsuit for $100 million against pharmaceutical giant Mylan Laboratories and three other defendants for an illegal astronomical price increase for two drugs used to treat Alzheimer's disease and other afflictions. The lawsuits leading to the settlement alleged that Mylan developed a plan late in 1997 to drastically increase prices on two of the 91 generic drugs it manufactured by cutting off its competitors' supply of the drugs' active ingredients. Mylan accomplished this by entering into long-term profit sharing agreements with industry suppliers and distributors that gave Mylan the only reliable sources of the active ingredients.

Having excluded all real and potential competitors, Mylan then promptly increased its prices on the two widely prescribed sedatives by more than 2,500 percent.

In January 1998, Mylan raised the price of clorazepate by 3,218 percent. Clorazepate is a generic version of Abbott Laboratories' Tranxene that is prescribed nearly three million times each year in the United States. The price jump translated to an increase from $22.72 to $754 for a 1,000 tablet supply of the drug.

Two months later, Mylan raised the price of lorazepam, a generic version of Wyeth-Ayerst's Ativan, by 2,679 percent, from $13.60 to $378 for a 1,000 tablet bottle of the drug.

Revenues from sales of lorazepam reportedly rose from $9 million in 1997 to $133 million in 1998.

"What makes this behavior even more unconscionable," says Ohio Attorney General Betty Montgomery, "is that these drugs, especially lorazepam, are anti-anxiety medications frequently prescribed for nursing home and hospice patients, including those suffering from long-term debilitating conditions such as Alzheimer's disease." Ohio took the lead role in the states' litigation.

The $100 million settlement in principle includes both recovery of damages by the states and the forfeiture of ill-gotten profits sought by the Federal Trade Commission.

Cruising for More Trouble

Federal officials have launched an investigation of Royal Caribbean Cruise Lines for allegedly dumping illegal wastes into San Francisco Bay. A special agent from the Environmental Protection Agency's (EPA's) Office of Criminal Enforcement contacted the environmental group Bluewater Network in July upon hearing that the group had notified the company of intent to sue for illegally dumping pollutants into San Francisco Bay by its cruise ship Mercury.

Bluewater shared its evidence with government officials, leading the EPA and the U.S. Attorney's Office to open an investigation.

"The cruise ship industry claims they never dump in California waters," says Kira Schmidt, director of Bluewater Network's Cruise Ship Campaign. "This is obviously a farce, since they've once again been caught red-handed. We're thrilled that EPA and the U.S. Attorney have stepped in to investigate."

Schmidt says the dumping was witnessed on September 21, 1999, when the Mercury was disembarking its passengers after an 11-day voyage.

The witnesses, passengers on the ship, were on the veranda watching a family of sea lions playing nearby when they smelled a very strong, noxious chemical odor emanating from below. They looked down at the water and the saw the source of the odor - a white, frothy liquid being discharged from the ship, accompanied by the unmistakable rainbow sheen of an oil slick.

The discharge continued for approximately 30 minutes and was so caustic that the sea lions left the area at once as it spread out. The witnesses said they recognized the chemical odor as perchloroethylene, Perc, the acutely hazardous chemical used by the ship's onboard dry cleaning facility.

Book 'em

The leading U.S. supplier of books to public schools and libraries will pay $15.5 million to settle charges that it unlawfully overcharged those customers.

Eighteen states and the U.S. Department of Justice filed civil complaints in 1998 against Baker & Taylor, Inc. and its former owner, W.R. Grace and Co., alleging that they overcharged public sector customers.

"In contracts with public schools and libraries, Baker & Taylor promised to pass along most of the discounts it received from book publishers," says Florida Attorney General Bob Butterworth. "Instead, the company adopted a so-called 'profit enhancement' scheme to remove thousands of books from the deep discount category. The result was higher prices for taxpayers, who ultimately footed the bill."

The $15.5 million payment comes in addition to $3 million already paid to settle the federal government's complaint.

The lawsuit, brought under the federal False Claims Act, sought damages and penalties against Baker & Taylor's contracts with institutional customers, in which the company agreed to provide trade discounts of approximately 40 percent on trade books, but then failed to provide the full discounts by misclassifying trade titles into non-trade categories.

Meanwhile, Baker & Taylor, which was a division of W.R. Grace until 1993, provided full trade discounts on the same books to retailers.

- Russell Mokhiber