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Executive Summary

Sandoz is modifying the restrictions on the providers of blood testing associated with its antischizophrenia drug Clozaril (clozapine) but maintaining the requirement that blood testing be performed with use of the drug. In a Dec. 17 press release, Sandoz announced that it has completed discussions of relabeling with FDA. The relabeling, the company said, will "make possible the development of alternative means of distribution for Clozaril." Previously, the company has had a restrictive system, the Clozaril Patient Management System, which required the product to be distributed through Baxter's Caremark subsidiary. While the company will apparently no longer specify the sole source of acceptable blood monitoring, Sandoz stressed "most emphatically" that the blood monitoring requirement for Clozaril patients will not be dropped. "Our goals remain to improve access to Clozaril and significantly reduce its price," said Sandoz VP-Scientific and External Affairs David Winter, MD. "However, the requirement for weekly blood monitoring is not in discussion" because of "the unprecedented risks Clozaril therapy presents." One day after Sandoz announced the resolution of an agreement with FDA, 22 states filed an antitrust suit against the company in New York federal court. The suit seeks to ensure the "elimination altogether of the monitoring system," New Jersey Attorney General Robert Del Tufo said. In an announcement of the legal action, Del Tufo alleged that "Sandoz uses a clozapine side effect, agranulocytosis, to attempt to justify...anticompetitive acts." The states are seeking to prohibit Sandoz from linking sales of Clozaril "to the purchase of blood drawing, case administration, database, dispensing, and/or laboratory services." The suit seeks treble damages and civil penalties "which could exceed $100 mil.," Del Tufo's office said. Damages are being calculated by the state attorneys general based on estimates of what the drug should have cost the states if its sales had not been linked to blood monitoring. The suit also asks for compulsory licensing of the product, requesting the court to "order Sandoz to license its right to manufacture clozapine to third parties." Citing a Sandoz document, "The CPMS Partnership Evaluation," the suit claims that the drug costs only about 5% of the total cost of Clozaril therapy under the CPMS (Clozaril Patient Management System). The evaluation document is quoted as stating that "Clozaril drug cost [is] $500/year [per patient]." Sandoz has refused to discuss the cost of Clozaril separate from the price of overall therapy. The therapy currently costs approximately $9,000 per year. The antitrust suit claims that Sandoz intends for 1991 and 1992 to "maintain or increase Sandoz profitability under CPMS." The suit again quotes an internal Sandoz document which allegedly says that the company plans for "50% of CPMS revenue to [go to] Sandoz." Sandoz said that it receives no profits from CPMS. "We do not feel that our existing distribution system violates the antitrust system," Sandoz said in a Dec. 18 statement. "In any event the proposed modifications clearly resolve that issue. We deeply regret that in spite of our willingness to resolve the matter amicably, these states have apparently felt the need to pursue this matter in court." The company believes the product has a much larger market potential than it is currently reaching. Estimates by the company indicate that the product is not getting to the large majority of schizophrenics. Of a potential market of 200,000 schizophrenics who are refractory to other treatments, Sandoz reported that Clozaril has been used by only 7,000 so far. However, Sandoz added, 173 patients suffered "serious side effects" and were removed from therapy through CPMS. The company noted that there has yet to be a fatality. New Jersey is joined in the suit by California, Colorado, Connecticut, Florida, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Ohio, Oregon, Pennsylvania, Tennessee, Texas, Vermont, Virginia, Washington, West Virginia, and Wisconsin. North Carolina may enter soon.

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