Crime & Justice

California, 23 other states reach $22.5 million settlement against drug companies

Twenty-four state attorneys general, including California's Jerry Brown, announced a $22.5 million settlement against pharmaceutical companies Abbott and Fournier after the companies "illegally blocked" cheaper generic substitutes for the cholesterol-reducing drug Tricor.

"Abbott and Fournier devised a complex scheme that illegally blocked cheaper generic drugs from entering the market, said Brown. "They used minor reformulations of the drug to delay competition and filed frivolous patent lawsuits. This scheme cost California and other states millions of dollars."

The practice of making small changes to the formulation of a drug to block competition from generic drugs is known as "product hopping."

Today's settlement requires the companies to stop illegal efforts to block generic competition to Tricor and to pay the states approximately $22.5 million. In California, the Department of General Services, Medi-Cal and the Department of Corrections will be reimbursed for overcharges.

Abbott and Fournier partnered together to manufacture and distribute cholesterol-reducing drug Tricor in 1998, with annual sales exceeding $750 million.

Tricor's patents were set to expire in 2002, but Abbott and Fournier delayed approval of generics by the FDA by making minor changes in the form and dosage strength of Tricor that did not provide any significant health benefits, according to the state attorney general's office.

Abbott and Fournier also filed over a dozen lawsuits against generic drug manufacturers. The law prohibits the FDA from approving a generic drug for 30 months after patent-infringement lawsuits have been filed. The suits were all eventually dismissed, after the automatic 30-month stays.