ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, February 15, 1996 TAG: 9602150087
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
DATELINE: CHICAGO
SOURCE: Associated Press
Some independent drugstores on Wednesday blasted a proposed settlement in a lawsuit that accuses drug manufacturers of overcharging them by giving unfair discounts to health maintenance organizations and hospitals.
Attorneys for the drug stores were in federal court for a hearing on the $409 million proposed settlement, which would cover 40,000 of the nation's 56,000 pharmacies.
Fifteen drug manufacturers have agreed to settle the class-action lawsuit that claimed they illegally conspired to offer discounts averaging 40 percent or more to HMOs and hospitals while denying price breaks to the pharmacies.
If the pact is approved by U.S. District Judge Charles Kocoras, it would rank among the biggest antitrust settlements ever. Kocoras is expected to make a preliminary ruling today.
But the proposal, filed late last week, has sent up a howl from some of the independent pharmacists, who say it amounts to little more than a slap on the wrist to manufacturers.
Under terms of the settlement, the independent pharmacies would drop their claim in exchange for the payment. Several big retail chains, however, are continuing with separate lawsuits against the drug makers.
Attorneys for some of the independent pharmacies that object to the deal told Kocoras that the settlement was too low and would drive small drugstores out of business by allowing the pricing practice to continue.
``It's an industry that's at stake,'' attorney Fay Clayton said. If the settlement is approved and overcharging continues, ``There is no future for the mom-and-pop drugstores.''
The drug companies argue that the favorable pricing is justified because HMOs and others are better able to predict what drugs they will need, giving companies a better grip on sales. Retailers, they say, must stock a wide variety of drugs and have less control over what moves off their shelves.
Fifteen drug companies, including Merck & Co., Glaxo Inc., Ciba-Geigy Corp. and Bristol-Myers Squibb Co., agreed to the proposed $408.9 million settlement without acknowledging any wrongdoing.
Seven drug manufactures and six drug wholesalers opted not to settle, and their case is tentatively set for trial in May. Several retail drugstore chains also have opted out of the settlement.
LENGTH: Short : 49 linesby CNB