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Attorney General Lockyer Sends Refund Checks to California Consumers of Anti-Cancer Drug Taxol

Patients Will Receive Total Of More Than $400,000 As Part Of Multi-State Settlement
Tuesday, June 1, 2004
Contact: (415) 703-5837

(SACRAMENTO) – Attorney General Bill Lockyer today announced the distribution of $407,454 in refund checks to 701 California cancer patients who overpaid for the Bristol-Myers Squibb (Bristol) drug Taxol.

"These California consumers paid artificially-inflated prices for potentially life-saving treatment because Bristol abused the patent process, stifled competition and kept cheaper generic versions off the market," said Lockyer. "This kind of conduct by drug companies has contributed to exorbitant prescription prices that have caused so much anger and frustration among consumers. It cannot be tolerated, and we will continue to fight it to protect consumers' health and pocketbooks."

The payments sent today to 12,723 consumers nationwide are part of a $49.74 million settlement that resolves an antitrust lawsuit filed by states against Bristol. The signatories include Bristol, California, 45 other states, Puerto Rico, the Virgin Islands, American Samoa, the Northern Mariana Islands and Washington D.C.

The $49.74 million includes: $7.24 million in refunds for individual consumers who paid all or part of the costs to buy Taxol or its generic equivalent, paclitaxel, between January 1, 1999 and February 28, 2003; $37 million in restitution for government entities; and $5.5 million to administer the claims process and reimburse litigating states for their costs.

The $37 million for government entities includes $3.7 million for California. The money will be disbursed in the near future. In California, the $3.7 million will reimburse Taxol or paclitaxel expenditures by the Medi-Cal program, state institutions and the California Public Employees' Retirement System.

Paclitaxel – the actual pharmaceutical ingredient in Taxol – is used to treat ovarian, breast, lung and AIDS-related cancer. It was discovered by the National Cancer Institute, and developed and tested at taxpayer expense.

In 1992, the U.S. Food and Drug Administration (FDA) gave Bristol exclusive rights to market Taxol for five years. In 1993, Bristol told a congressional committee that "near-term generic competition for Taxol is a certainty."

The states' antitrust complaint, however, alleged Bristol delayed market entry of a generic version of Taxol until 2000 by fraudulently securing and listing in the FDA's Orange Book patents that had no legal validity. When patents are listed in the Orange Book, manufacturers of generic drugs must certify to the FDA that their products will not infringe on any listed patent.

By securing an Orange Book listing through fraud, the complaint alleged, Bristol unlawfully prevented competitors from marketing generic versions of Taxol. Bristol's sales of Taxol have totaled more than $5.4 billion since 1998.

Aside from restitution, the settlement prohibits Bristol from filing a patent infringement claim related to Taxol, and from collecting royalties pursuant to a Taxol license, for 10 years. During the same period, the settlement bars Bristol from making fraudulent or baseless claims related to any patent, and from enforcing or seeking to enforce any patent it knows to be invalid. For the first five years of the settlement, Bristol must file annual compliance reports with the court.

The Taxol case is one of a series of actions taken by Lockyer and other Attorneys General against drug companies for market manipulation, patent abuse, price fixing and other unlawful conduct that has artificially inflated prices paid by consumers. Companies targeted by the enforcement actions include Bristol, Mylan Laboratories, Aventis Pharmaceuticals, Inc., and Andryx.

Lockyer also is taking action against drug companies that defraud taxpayers. In January 2003, he sued Abbott Laboratories and Wyeth for allegedly cheating taxpayers out of millions of dollars by reporting false pricing data to the Medi-Cal program. Medi-Cal used the fraudulent data to pay the companies inflated prices for drugs. Lockyer is investigating similar conduct by other pharmaceutical firms.

Lockyer and other state Attorneys General also are investigating possible collusion by drug companies to limit the supply of pharmaceuticals to Canada. Additionally, Lockyer is investigating a 400 percent price increase for the AIDS drug Norvir.

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