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Last year, Ruth Ann Smith, a Fort Lauderdale, Fla., legal secretary who is in remission from breast cancer, began taking a drug called tamoxifen, at the recommendation of her oncologist, to prevent a recurrence of her illness. When she started taking the drug in April 2000, she was paying an $8 co-payment per prescription, the rate for generic drugs under her UnitedHealthcare Group policy. But last fall, when the insurer began to use Merck-Medco Managed Care and its subsidiary, PAID Prescriptions, as its prescription benefits manager, her co-pay share shot up to $20, the rate for brand-name drugs. Smith claims that when she contacted Merck-Medco to complain about the new rate, the company told her it had no intention of changing its classification of tamoxifen as a brand-name drug, and that Smith would have to continue paying $20. “There never was a real effort to justify it,” says Eric Lee, a partner at Atlas Pearlman in Fort Lauderdale who is representing her along with attorneys at Niles Dobbins Meeks Raleigh & Dover in Fort Lauderdale, Gold & Coulson in Chicago, and Phillips & Garcia in North Dartmouth, Mass. In April, Smith filed suit in U.S. District Court in Miami against Merck-Medco and PAID Prescriptions, alleging that they engaged in racketeering and fraud, and asking that thousands of other women be allowed to join her in a class action lawsuit. Smith’s complaint is one more salvo in the battle among consumers, health insurers and pharmaceutical companies over the pricing of prescription drugs in general and tamoxifen in particular. Last year, a Massachusetts woman sued her health insurer, Bankers Life & Casualty, and pharmacy benefits management company, PCS, in U.S. District Court in Chicago after she was charged the brand-name co-payment for tamoxifen. Judge Joan P. Gottschall certified the case as a class action and denied the defendants’ attempts to have the RICO claims dismissed. The defendants later settled the claims for $401,000, while admitting to no wrongdoing. According to Smith’s suit, Merck-Medco and PAID Prescriptions defrauded Smith and hundreds of thousands of other women by misclassifying tamoxifen as a brand-name drug. Smith also alleges that the defendants violated the Racketeer Influenced and Corrupt Organizations Act by using interstate wire transmissions in the course of misclassifying the medication. In addition, she claims that the defendants engaged in extortion, because she and other women were forced to pay more to obtain a drug that was essential to their survival. Smith is seeking a jury trial, compensatory and punitive damages and an injunction stopping the defendants from classifying tamoxifen as a brand-name medication and charging accordingly. The case is before U.S. District Judge K. Michael Moore. But Ann Smith, Merck-Medco’s director of public affairs in the company’s Franklin Lakes, N.J., office, says Merck-Medco classifies tamoxifen as a brand-name drug because that is how it is classified by First DataBank, a respected, independent source on drug classifications. “We feel the evidence supports our belief that the complaint is without merit and that our policy is appropriate in this particular case,” the spokeswoman says. “We’ll be defending that vigorously.” Lead attorney for the defendants is Christine Miller, a partner at Husch & Eppenberger in St. Louis. Tamoxifen is manufactured under the brand name Nolvadex by Wilmington, Del.-based AstraZeneca Pharmaceuticals. The drug is prescribed to treat early and advanced-stage breast cancer and to prevent breast cancer recurrences. After Barr Laboratories Inc. challenged AstraZeneca’s patent on tamoxifen in 1992, the companies entered into a confidential settlement agreement and Barr began distributing AstraZeneca-manufactured tamoxifen for slightly cheaper resale as a “generic” rather than producing a true generic version of the drug on its own, according to Community Catalyst, a Boston-based health care advocacy group. In December 1998 the U.S. Department of Justice announced an investigation into whether the companies’ settlement resulted in higher prices for tamoxifen. Last month, Community Catalyst’s Prescription Access Litigation project announced that it plans to sue AstraZeneca and Barr in seven states, including Florida, alleging that the companies conspired to overcharge patients for tamoxifen and demanding they refund the women thousands of dollars each. Barr’s Internet site says that generic drugs typically sell for 30 percent to 80 percent less than their brand-name counterparts. Yet its price for tamoxifen is only slighter cheaper than AstraZeneca’s price for Nolvadex. On the Internet pharmacy site drugstore.com, 60 tablets of 10-milligram tamoxifen sell for $98.98 — just 5.6 percent less than Nolvadex. The high price of the generic version is why Merck-Medco and PAID Prescriptions classify it as a brand-name drug, Lee says. “The more that it costs them to provide the drug, the less of a profit they’re able to obtain,” Lee says. Merck-Medco contracts with employers, labor unions and health insurance plans to administer their prescription drug claims. Its subsidiary, PAID Prescriptions, manages hundreds of millions of prescriptions through its coordinated care network on behalf of Merck-Medco clients. Lee says the prescription benefit companies’ labeling of the product as a brand-name drug compounds the injustice of Barr’s decision to charge such a high price for a generic. “These [prescription management] companies are ripping off people a second time by misclassifying the drugs in order to recoup whatever they can as far as the co-pays,” he contends. His firm has filed a similar class action suit against another prescription management company in Massachusetts, and is considering filing one in California as well.

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