Attorney General Jerry Brown announced yesterday that California and 23 other states reached a $22.5 million settlement with two big pharmaceutical companies over a practice they call “product hopping.”
Essentially, the states claim that the companies Abbott and Fournier tweaked the formula of Tricor, a blockbuster cholesterol-reducing drug, for the primary purpose of riding out a patent longer, keeping a monopoly on the drug and, in turn, running up the costs to state Medicaid program.
Attorney General Jerry Brown
What’s more, the attorneys general accused the companies of filing frivolous patent lawsuits against generic drug companies to keep them from going to market with a rival. Abbott denied the allegations in an interview with Reuters.
The case didn't appear to shake the foundations of the pharmaceutical industry, if one considers that Abbott's stock went up in spite of headlines about the case from Florida to New York.
So what does this mean for California? California’s slice of the settlement was just over $2 million, a spokeswoman said. That’s not vast, considering that Medi-Cal data shows that the state spent about $600,000 per month last year on the drug in question. If other months were like May and October last year, that's about $7 million per year.
But California’s Medi-Cal program spent more money in October on 79 drugs other than Tricor, the drug subject to the settlement.