CHICAGO -- Some of the nation's largest drug manufacturers will stop two-tiered pricing practices if a tentative settlement is approved. Federal Court Judge Charles Korcoras gave the proposal preliminary approval on May 8. It will be discussed at a June 11 fairness hearing here in federal court. If approved, it would go into effect 90 days later and will remain binding for three years. The tentative deal came a month after Korcoras struck down a proposed $408.9 million settlement of an antitrust lawsuit by about 40,000 of independent drug stores against 13 big drug manufacturers. The lawsuit claims that the companies give discounts to managed care and other bulk-buying customers -- sometimes as high as 15% -- but not to independent pharmacies.
One of the reasons the initial tentative settlement was rejected was because it failed to require changes in drug makers' pricing practices.
Under the new pact, the companies will stop class-of-trade pricing, and also pay the pharmacies the $408.9 million.
At issue now is whether drug firms will offer pharmacies the discount prices or stop discounting all together. Some industry observers reportedly don't think discounts will be eliminated. Drug makers will have 60 days from the approval to implement a marketing plan. Companies that have joined the negotiations reportedly include Pfizer, Merck & Co., Bristol-Myers Squibb, Glaxo Wellcome, Warner-Lambert, SmithKline Beecham and Schering-Plough. Ciba-Geigy and Abbott have chosen not to participate. They and seven others -- reportedly Forest, Searle, Johnson & Johnson, Hoechst Marion Roussel, Pharmacia & Upjohn, Rhone-Poulenc Rorer and Sandoz -- have opted to go to court. A court date has not been set.