April 24, 2014—The nation’s No. 1 and 2 producers of intravenous immune globulin, together with the Plasma Protein Therapeutics Association, are paying a combined $128 million to settle charges that they conspired to fix the prices of IVIG and the blood plasma derivative albumin that the companies sold directly to hospitals and other buyers between 2003 and 2009. [ms-protect-content id=”2799″]
Although the December 2009 lawsuit charged the drugmakers and the trade group only with violating federal antitrust laws, the complaint stated that one “element of [their] conspiracy involved the systematic refusal to sell plasma-derivative protein therapies at federally mandated discounted prices” under the 340B statute.
U.S. District Judge Joan B. Gottschall of the Northern District of Illinois gave final approval on April 21 to Baxter International’s $64 million settlement with the University of Utah Hospital and more than 2,000 other hospitals, drug distributors, and other direct purchasers in the nationwide antitrust class action.
Baxter is the largest producer of plasma-derived protein therapies in the United States and the world. It is also member of the Alliance for Integrity and Reform of 340B, the drug-industry led group seeking a significant rollback of the 340B program.
On Jan. 29, Judge Gottschall approved a separate $64 million settlement between the plaintiffs and CSL Limited (the second-largest IVIG and albumin manufacturer), its U.S. subsidiary CSL Behring, and the PPTA.
Copies of the settlement agreements and other information about the lawsuit are available on the court-authorized website www.plasmatherapysettlement.com.
Safety-net hospitals have long complained about being unable to obtain sufficient supplies of IVIG at 340B pricing. In its 2011 report on the 340B program, the Government Accountability Office noted that the U.S. Justice Department was examining the IVIG market in the United States, in part, “due to concerns about the distribution of these drugs at 340B prices.”
The GAO said it learned during its investigation that “manufacturers’ restricted distribution of IVIG at 340B prices resulted in 340B hospitals having to purchase some IVIG at higher, non-340B prices in order to meet their demand for the drug.” It said five of the seven disproportionate share hospitals it interviewed reported that because of the restricted distribution of IVIG at 340B prices, they “often must purchase some IVIG at higher, non-340B prices to meet their patients’ needs.”
The GAO said one IVIG manufacturer “reported that it restricted its distribution of IVIG by allocating its supply based on the amount of the drug purchased by providers in 2004—allocating 95 percent of its projected monthly sales to non-340B providers and the remaining 5 percent to covered entities at the 340B price.”
“This manufacturer stated that its distribution was fair, and that changing distribution plans to increase the amount of IVIG drugs available at 340B prices could negatively affect non-340B providers’ access to the drugs,” the GAO continued. “However, [Health Resources and Services Administration] officials told us that the allocation of IVIG in this way is not sufficient or fair…. [I]f other manufacturers similarly restrict the distribution of IVIG at 340B prices, it is unlikely that covered entities’ demands will be met at the 340B price.”
In 2011, the U.S. Supreme Court ruled in a separate lawsuit that 340B hospitals and other covered entities do not have a right to sue drugmakers for alleged 340B overcharges on their own behalf. Congress, it said, vested authority in HRSA to oversee manufacturer compliance with the 340B program. HRSA recently announced that it has commenced its first audit of a drug manufacturer. It also has said it will propose regulations to impose fines on drugmakers for knowing and intentional overcharges and to create a mandatory administrative dispute resolution process for 340B. It also said it is spot checking 340B sales transactions; it is going to begin verifying the accuracy of 340B ceiling prices and making those prices available to providers; and it is going to begin running 340B pricing discrepancy reports.
Commenting on the settlement of the antitrust lawsuit, CSL’s Chief Executive Officer and Managing Director Paul Perreault said, “While we continue to strongly reject any allegation of wrongdoing, we have negotiated a settlement of the litigation which we believe is in the best interests of the company and our shareholders. To pursue the case further would have required several more years of management time and focus as well as substantial additional legal costs with no absolute certainty of the outcome.”
The newspaper Crain’s Business Chicago quoted Baxter spokeswoman Deborah Spak as saying, “The company’s decision to settle the litigation is not an admission of liability, but rather a reflection of the costs involved in defending this matter. The company has previously reserved for the costs associated with the litigation and therefore this settlement does not have additional impact on the company.” [/ms-protect-content]