City to get $2.5 million in settlement over overpriced drugs
BY FRAN SPIELMAN City Hall Reporter August 12, 2013 12:20PM
(FILES) A 22 December 2004 photo taken in New York City showing 200mg Celebrex capsules next to a prescription bottle. US health officials 07 April, 2005 asked Pfizer to withdraw the arthritis drug Bextra from the market due to potential health risks, and ordered new warning labels for others in a similar class of drugs, including Pfizer's Celebrex. The Food and Drug Administration announced the changes on rules for the so-called COX-2 medications used for pain and arthritis, requiring warnings for a risk of heart problems and gastrointestinal bleeding. Additional warning labels will be required for other painkilling medications sold by prescription or over the counter warning of potential risks, the FDA said in a statement. Pfizer said in a statement it would work with the FDA on new warning labels for Celebrex. AFP PHOTO/FILES/Mandel NGAN (Photo credit should read MANDEL NGAN/AFP/Getty Images)
Updated: September 14, 2013 6:12AM
Chicago taxpayers have shelled out at least $64 million this year just to settle police abuse and misconduct cases.
On Monday, the tables turned in the taxpayers’ favor for a change, courtesy of Big Pharma.
Chicago is in line to receive $2.5 million to resolve claims against a pharmaceutical giant accused of marking up the wholesale price of more than 400 brand-name prescription drugs purchased by city employees and retirees insured by the city.
The city contends that San Francisco-based McKesson Corporation and First DataBank conspired to “inflate the mark-up factor” used by First DataBank to determine the Average Wholesale Price for prescription drugs from 2001 to 2006.
First DataBank is a publisher of pharmaceutical industry market information owned by Hearst Corp. that touts its ability to “transform drug data into drug knowledge used by millions of healthcare decision makers worldwide.”
Public assistance programs and public employee benefit plans with prescription drug benefits use the Average Wholesale Price to determine how much pharmacies will be reimbursed for dispensing brand name drugs including Ambien, Allegra, Celebrex, Lipitor and Zantac.
Officials at McKesson and First DataBank could not be reached for comment on the settlement.
Corporation Counsel Stephen Patton said Monday he’s “constantly on the lookout for situations where the city may have been over-charged” by a vendor or contractor.
Sometimes, that involves playing a more active role as lead plaintiff investigating claims. Other times, as in the case against McKesson, it involves piggy-backing on class-action lawsuits filed by others.
“The plaintiffs claimed the extent of the overcharge was 4 percent. We were able to make a claim and get a recovery of 5.2 percent,” Patton said.
“The beauty of this is, it didn’t cost us anything. We didn’t have to hire lawyers or experts. We were able to monitor the litigation and make a claim that we were likewise impacted by the wrongdoing by aggressively pulling together our invoices.”
Even as Mayor Rahm Emanuel struggles to close a $383.7 million shortfall that will balloon to $1 billion in 2015 without pension reform, Chicago taxpayers have spent tens of millions of dollars to settle police abuse cases, many of them stemming from torture allegations against convicted former Area 2 Commander Jon Burge.
But the Emanuel administration has been equally aggressive in attempting to resolve cases in the city’s favor:
◆ In January 2012, Allied Waste Transportation — a company with ties to Bridgeport trucking magnate Fred Barbara and the Hispanic Democratic Organization at the center of the city hiring scandal — agreed to pay the city $11 million to cover “substantial shortfalls” in minority contracting.
◆ Ten months later, GlaxoSmithKlein agreed to pay the city $2.2 million to resolve allegations that the pharmaceutical giant unlawfully marketed brand-name drugs purchased by the city as “off-label,” made false representations regarding safety and effectiveness of drugs, offered kickbacks to medical professionals and underpaid rebates owed to government programs.
◆ In November 2012, a clout-heavy joint that bills itself as “Chicago’s only full liquor & topless bar” agreed to pay the city $2.5 million in disputed back taxes and legal fees in exchange for the right to remain open.
For 19 years, City Hall had tried to shut down VIP’s A Gentlemen’s Club, 1531 N. Kingsbury, on grounds that the club’s dancers expose too much of the female anatomy. The $2.5 million was used to open a 40-bed shelter for victims of domestic violence.
◆ In March of this year, Chicago taxpayers got $21 million to settle years of litigation stemming from faulty design and construction of an O’Hare Airport terminal facade.
Walsh Construction, one of Chicago’s most prominent and clout-heavy firms, agreed to cover $10 million of the settlement. That’s in addition to the $26 million in repairs the company has made to remedy defective steel and welds integral to the project that enlarged Terminals 2 and 3.
Murphy/Jahn, the firm that includes legendary Chicago architect Helmut Jahn, paid $1.9 million.