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MYLAN SETTLES UNFAIR PRACTICES SUIT v. PHARMACEUTICAL RESOURCES

Executive Summary

MYLAN SETTLES UNFAIR PRACTICES SUIT v. PHARMACEUTICAL RESOURCES for $3 mil., the companies announced Nov. 29. Under the agreement, Par parent Pharmaceutical Resources, Inc. will pay Mylan Labs $1 mil. in cash and issue $2 mil. in common stock to the company. PRI said that it will take a $3 mil. charge in its financial statements for the fiscal year ended Oct. 31. Par and its former subsidiary Quad were among the targets of a $200 mil. antitrust lawsuit filed by Mylan in June 1989 against companies, individual company officers, consultants to the firms and ex-FDA officials that Mylan alleged had broken antitrust and racketeering (RICO) laws in scheming to obtain unfair advantages in FDA's ANDA approval process. During the generics investigation, both Par and Quad pleaded guilty to submission of fraudulent data to FDA. The two companies agreed to settle after a D.C. federal appeals court ruled that the case should go to trial. The circuit court's decision overturned a December 1992 Baltimore federal court decision by Judge Frederic Smalkin that dismissed the Mylan complaint with prejudice ("The Pink Sheet" Dec. 14,1992, T&G-7). Mylan CEO Milan Puskar called the settlement "fair and equitable." PRI CEO Kenneth Sawyer commented that "the successful resolution of this case will allow us to devote our energies and resources to operation of the company." Other generic companies named in the 1989 lawsuit were Pharmaceutical Basics, Inc., Vitarine, American Therapeutics, Quantum and its parent firm American Home Products. Former FDAers being sued by Mylan include Charles Chang, David Brancato, Walter Kletch, Jan Sturm and Salvatore Pinella, all of whom pleaded guilty to receiving illegal gratuities from executives of some of the aforementioned companies. Mylan said that it "intends to pursue litigation vigorously" against the remaining defendants.

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