Community health centers to coordinate distribution of $64.3 million
The working poor in 10 states and the District of Columbia will receive a portion of the settlement from a $64.3 million price-fixing suit against brand-name pharmaceutical firms.
The National Association of Community Health Centers (NACHC) is coordinating the distribution of the settlement through community health centers and similar entities in Arizona, the District of Columbia, Florida, Kansas, Maine, Michigan, Minnesota, New York, North Carolina, Tennessee, and Wisconsin. The federal centers are open to all residents, but use a sliding scale fee schedule and other mechanisms to target their services to the poor. The jurisdictions in the suit are home to 300 of the nation’s 654 federal centers.
"It’s a wonderful approach with respect to money to be distributed," said plaintiffs’ attorney Bernard Persky, a partner in the New York City law firm of Goodkind, Labaton, Rudoff & Sucharow LLP. "We’re concentrating the benefit to the people who need it most."
The agreement has been approved by courts in eight states and the District of Columbia. Settlement agreements are scheduled in January for North Carolina and in February for Tennessee. Net awards among the states range from about $700,000 to $7.1 million (see chart below).
The suits—which are virtually identical but separate in each jurisdiction—charge that about 30 drug manufacturers have fixed drug prices for retail pharmacies higher than those offered to hospitals, health maintenance organizations, and mail-order drug companies. The burden of those higher prices, the suits say, fell largely on those who buy prescriptions directly from pharmacies and the uninsured.
Community health centers in individual states will apply for funds to the NACHC and will be restricted in how they distribute the settlement by a few broad guidelines. Settlement cash is available only to non-Medicaid patients. Centers will not be able to supplant existing subsidies for pharmaceuticals. The benefit, like all services at community health centers, must be available to all people regardless of income, including those who are well-off.
In all jurisdictions but the District of Columbia, anyone receiving the benefit must be a patient of the participating health center. The limited number of health centers in the District of Columbia prompted the court there to require only that a person contact the center but not necessarily enroll as a patient. In the District of Columbia and Kansas, the courts added a small number of clinics other than federally qualified health centers to those eligible to distribute funds.
Community health centers in Arizona, Michigan, and Wisconsin have gotten together to develop methodologies for distribution of the settlement in their respective states. In Arizona, for example, 13 organizations will apply separately for a predetermined figure based on their level of non-Medicaid care. For the remaining areas, NACHC will evaluate individual applications, and, if requested amounts exceed what is available, allocate the settlement on a pro rata basis, says NACHC executive vice president Claudia Gibson.
While association and community health center officials applaud the award, it pales in comparison to what pharmaceutical firms already are able to donate to community health centers. Pfizer, one of the defendants named in the suit, contributed $145.4 million in drugs to community health center patients between 1993 and November 1998. Through its Sharing the Care program with the NACHC and the National Governors’ Association, Pfizer estimates that it donated 2.9 prescriptions each to 890,000 people though more than 360 health centers.
Ms. Gibson estimates that federally qualified health centers serve about 10 million people nationally, 70% of whom are women and children. About two-thirds of the centers’ patients are not on Medicaid and therefore are eligible for the settlement benefit. About half of the centers’ patients—or three-fourths of those eligible for the settlement benefit—are uninsured, Ms. Gibson says.
The jurisdictions in the class-action suit were chosen because laws in these areas allow individual purchasers to receive compensation in a price-fixing suit of this nature, Mr. Persky explains. In other areas, prevailing law gives that right to the so-called "direct consumer," the retail pharmacy.
Contact Mr. Persky at (212) 907-0868 and Ms. Gibson at (202) 659-8008. Details of the progress of the settlement in each jurisdiction are described on the Internet at www.rxconsumerlit.com. When distributions of the settlement begin, technical assistance will be available at (800) 790-8476.
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