2nd UPDATE: Calif Supreme Court Reinstates Suit Vs Drug Cos

13th Jul 2010 22:19

(Adds comment from Pfizer in the last paragraph.) By Peter Loftus Of DOW JONES NEWSWIRES The California Supreme Court has reinstated a lawsuit in which retail pharmacies accused Pfizer Inc. (PFE), AstraZeneca PLC (AZN, AZN.LN) and other major drug makers of conspiring to set prices at artificially high levels. The independent pharmacies' lawsuit alleged that drug makers acted in concert to restrain importation into the U.S. of their lower-priced foreign drugs and to restrict price competition from cheaper generic drugs, resulting in drug prices 50% to 400% higher than for the same drugs sold outside the U.S. The antitrust lawsuit had previously been dismissed after a trial court and appeals court concluded that the pharmacies lacked standing because they had passed on the alleged overcharges to consumers and thus sustained no damages. But in a ruling Monday, the California Supreme Court decided that drug makers couldn't use this defense and remanded the suit to lower court for further proceedings. The higher court essentially concluded that the retail pharmacies would still be able to argue they were harmed even if they passed along manufacturers' alleged overcharges. "That a party may ultimately be unable to prove a right to damages (or, here, restitution) does not demonstrate that it lacks standing to argue for its entitlement to them," the California Supreme Court justices wrote in their ruling. The court didn't rule on the underlying merits of the case. That will be hashed out in the trial court to which the suit is being remanded. "The reasoning the court utilized was that, even if plaintiffs did increase prices to customers, if you were to allow that as a defense, then those guilty of fixing prices would be able to skirt the law and flee liability with all of the money that they stole," said Joseph M. Alioto Jr., the attorney representing the retail pharmacies. Alioto said he believes evidence shows that the heads of the drug makers met often and had conversations about pricing that resulted in keeping U.S. drug prices artificially high. The pharmacies are seeking several hundred million dollars from the drug companies, Alioto said, declining to be more specific. But the drug makers have disputed these claims. "We are disappointed with the result, but we continue to believe strongly, as we have since the beginning of the case, that the plaintiffs' underlying claims lack merit," said William J. Fenrich, an attorney for AstraZeneca who argued the drug makers' side before the California Supreme Court. "There is no conspiracy here, and we will be making those arguments as the case moves forward." In addition to Pfizer and AstraZeneca, other defendants in the suit include Merck & Co. (MRK) and GlaxoSmithKline PLC (GSK, GSK.LN). "Merck is very disappointed by the decision of the California Supreme Court in the Clayworth antitrust litigation," said Merck spokesman Ron Rogers. "We intend to continue to vigorously defend the case." GlaxoSmithKline spokeswoman Sarah Alspach said the company is disappointed by the ruling but believes the lawsuit's allegations have no merit. The company is confident the trial court will dismiss the case on the merits, she said. Pfizer spokesman Chris Loder said the company adhered to all relevant laws and regulations, and it will mount a vigorous defense in trial court. -By Peter Loftus, Dow Jones Newswires; 215-656-8289; [email protected] (END) Dow Jones Newswires July 13, 2010 17:19 ET (21:19 GMT)