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Seniors file suit to stop latest drug industry abuse, 'Authorized Generics' used to confuse consumers, prevent competition

SACRAMENTO, Calif., March 11,  2004 -- The Congress of California Seniors filed suit Tuesday against British drug manufacturer GlaxoSmithKline to stop marketing practices that allegedly force consumers to pay higher prices for Paxil, a popular anxiety medication.

"This suit will stop the latest tactic drug companies use to harm generic drug makers and prevent access to lower-cost versions of their products," stated Gary Passmore of the Congress of California Seniors. "Consumers are waking up to this new abuse and will demand action by the courts and regulators to stop it."

The suit alleges that GSK arranged to sell some of its Paxil as a "generic" drug while also selling Paxil in brand-name packages at a much higher price. The suit also alleges that GSK made the arrangement only after the true generic version of Paxil was approved by the U.S. Food & Drug Administration. According to the suit, the tactic results in deceiving consumers and other purchasers into paying more than necessary for Paxil.

Under the arrangement, GSK is allegedly repackaging Paxil as a generic for Pharmaceutical Resources, Inc., to undermine sales of the approved generic product. According to the suit, the deal was struck to confuse consumers and other purchasers -- including state Medicaid programs -- and maintain high prices for GSK's Paxil brand. The confusion may have prevented MediCal and private plans from allowing purchases of lower-cost generic Paxil.

"We have no patience for abusive marketing practices that force seniors and taxpayers to pay more than necessary for critical medicine," stated Joan Lee of the Sacramento Gray Panthers.

In April, GSK paid $87 million to settle a suit by 49 states and the Centers for Medicare and Medicaid that involved similar marketing practices for Paxil.

Federal law requires drug makers to sell their products to Medicaid at the lowest price, which the suit alleges could not have happened if MediCal continued to purchase Paxil directly from GSK. Health plans typically wait for notice that FDA has approved a generic before adding it to their formularies. GSK avoided the FDA generic approval process by packaging its brand product as a generic and selling it through a generic company.

A number of brand drug companies have struck similar deals with generic manufacturers to sell their products as "authorized generics." The practice undermines incentives for other generic manufacturers to bring their competing products to market and "could reduce consumer access to cheaper copies of pharmaceuticals," according to the Wall Street Journal (Jan. 27, 2004).

The suit was filed on behalf of all Californians in San Francisco Superior Court, and seeks protection under the California Unfair Competition Act from GSK's marketing practice.

Source: Coalition for Pharmaceutical Reform