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Baltimore sues drugmaker as pharmaceutical spending rises

Suzanne Sangree, now chief of police legal affairs, says the police commissioner and deputy commissioner ‘are really invested in the kinds of reforms that would reduce liability.’ (The Daily Record/Maximilian Franz)

Suzanne Sangree, director of affirmative litigation in the City of Baltimore Law Department. (The Daily Record/Maximilian Franz)

Frustration over the rising cost of prescription drugs may be reaching a tipping point for Maryland stakeholders.

Last week, Baltimore, which runs a self-funded health plan for its employees, filed a federal lawsuit alleging a pharmaceutical company had engaged in anti-competitive practices that kept a generic version of one of its products from coming to the market.

And Monday, CareFirst BlueCross BlueShield, the state’s largest health insurer, said drug costs have become its largest health care expenditure and it was looking for ways to bring those costs down.

“This is going to be one of the most substantial issues that we are going to take up nationally over the next two years in advance of the next presidential election,” Brian Pieninck, CareFirst’s president and CEO, said. “I think we have an opportunity as a state to be the tip of the spear and to really begin to take up this conversation locally in Maryland and the District as well as Virginia.”

Cohen Milstein, Baltimore’s outside counsel in its case, approached the city about suing pharmaceutical company Actelion over its drug Tracleer. The firm had already been representing the city in a similar class-action lawsuit over Lipitor.

“We’ve told Cohen Milstein that this is their niche practice and they should be on the lookout for other drugs where we might be overcharged and to let us know,” said Suzanne Sangree, director of affirmative litigation in the city’s law department.

The city alleges that Actelion engaged in anti-competitive practices to keep generic drug manufacturers from bringing a form of Tracleer, bosentan, to market.

Bosentan can be used to treat pulmonary arterial hypertension, a relatively rare form of hypertension. But the medicine is very expensive and can cost $100,000 – $200,000 a year. The city said it could have saved an unknown amount of money if generic competition had been available, something it alleges Actelion suppressed.

“During the relevant period, Plaintiff and the class purchased substantial amounts of bosentan,” the lawsuit said. “Because of Defendants’ illegal conduct, Plaintiff and the class were compelled to pay artificially inflated prices for their bosentan requirements. These prices were substantially higher than they would have been absent the illegal conduct alleged in this complaint.”

The lawsuit details how four generic drug companies approached Actelion about purchasing samples of Tracleer so they could test their versions. The goal was to get a generic version to the market by fall 2015. But so far their efforts have been rebuffed, the lawsuit said.

The city hopes it can be on the leading edge of cases like this to bring down prescription drug prices.

“Once it’s exposed through the light of litigation that, yes, there have been antitrust violations and anti-competitive pricing for a particular drug, then others will file suit as well,” Sangree said. “That’s one of the theories behind damages actions.”

The lawsuit is in the early stages, with hopes of attracting enough plaintiffs to form a class.

Issues with high prescription drug costs range beyond self-funded municipal health plans.

CareFirst CEO Brian Pieninck.

CareFirst CEO Brian Pieninck.

Pieninck said rising drug prices are one of the most significant challenges CareFirst faces. Pharmaceutical spending is the insurer’s largest health care expense, representing about 30 percent of its expenditures, he said.

“It’s larger than inpatient hospital services. And it’s rising at the greatest rate over time,” Pieninck said. “It’s also, I think, from a supply perspective, areas where providers and insurance companies share an interest in more effectively managing and satisfying patient needs at a better price point.”

Changes to prescription drug prices will have to come from a federal and local level, he said. Pieninck sees a lot happening nationally over the next two years, especially with a presidential election in 2020.

But at a state level, Maryland could be a leader in bringing down prices.

“I think we have to go to the source and address pharmaceutical affordability more fundamentally than we have at this point,” Pieninck said. “I think we have got an opportunity to balance the competing interest of incredibly compelling research and development that is resulting in groundbreaking and life-changing treatments with the cost to deliver those drugs into the marketplace as they pass through multiple channels on their way to a retail setting or to a physician’s office.”

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