WASHINGTON (CN) - California and 33 other states settled an antitrust lawsuit that charged Barr Pharmaceuticals with taking $20 million from Warner Chilcott to keep off the market a cheaper, generic form of Warner Chilcott's oral contraceptive, Ovcon. Under the 10-year consent agreement, Bar agreed not to enter non-competition agreements with companies that sell brand-name drugs, and will provide the states with copies of any agreements it does make.
Barr also will pay California $500,000 in penalties and fees, Attorney General Jerry Brown said in a news release that did not address payments, if any, to other states.
Thirty-four states sued Barr and Warner Chilcott in 2005 after Barr took $20 million from Warner Chilcott and agreed not to sell generic Ovcon for five years. The states claimed the deal violated antitrust law and jacked up the price of Ovcon.
Brown said such non-competition agreements, and pharmaceutical companies' steering consumers to higher-priced drugs, have increased the price of prescription drugs at triple the rate of inflation, or 8.3 percent a year.
Warner Chilcott made $61 million from Ovcon in 2003; in 2005 it reported a 16 percent increase in annual revenue, Brown said. After the 34 states sued, Warner Chilcott canceled its deal with Barr, and the price of Ovcon dropped by 18 percent that year, and by nearly half by May 2007.
Americans spent $275 billion on prescription drugs in 2006 - more than the Gross Domestic Product of South Africa and about equal to the GDP of Denmark, which has the 28th largest GDP in the world.
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