Secondary wholesaler charges illegal boycott

August 21, 2006

RxUSA Wholesale has filed a $1.8 billion lawsuit against 16 drug manufacturers, five drug wholesalers, and the Healthcare Distribution Management Association (HDMA). The New York-based distributor charged a conspiracy to boycott secondary wholesalers, eliminate competition, and maintain artificially high prices.

"I have no choice but to file a lawsuit," said pharmacist Robert Drucker, president and CEO of RxUSA Wholesale. "We built RxUSA from nothing in 1996 to $295 million in sales last year. Now our wholesale business is dead."

"We can't buy product anywhere in the United States, not even a bottle of aspirin," Drucker said. "We have documentation to support allegations of a complete boycott against us and against other secondary wholesalers."

The RxUSA suit asks for $500 million in damages for unfilled product orders. The suit also asks for $1.5 billion in treble damages under RICO, the Racketeer Influenced & Corrupt Organizations Act.

Drugmakers were named in the suit because they also declined to sell to RxUSA. Drucker told Drug Topics that manufacturers said major wholesalers had sufficient capacity to supply all buyers. Even after RxUSA showed them proof that wholesalers were consistently refusing to fill RxUSA orders, it did not change their decision to refuse direct sales.

In addition, drugmakers refused to appoint RxUSA as an authorized distributor (AD) because the company is not a member of HDMA. Drucker said RxUSA joined the wholesale trade association but was expelled in 2005 when the group changed its membership requirements.

"There is concern raised over the AD relationship and manufacturers' ability to regulate that status," said Susan Winckler, VP for policy and communications and staff counsel for the American Pharmacists Association. "I wouldn't try to predict the outcome."

HDMA said it is aware that a complaint has been filed, but declined to comment because it had not yet been served with a copy of the suit.

McKesson spokesman James Larkin said in a written statement, "We believe the lawsuit is completely without merit, and we intend to vigorously fight the claims."

Cardinal spokeswoman Angela Gardner Meleca said the company does not comment on litigation. None of the other firms contacted responded to requests for comment.

Manufacturers named in the suit include Alcon, AstraZeneca, Boehringer Ingelheim, Bristol-Myers Squibb, Eisai, Forest, GlaxoSmithKline, Kos, Merck, Novartis, Organon, Pfizer, Sanofi-Aventis, Schering-Plough, Takeda, and Wyeth.

Secondary wholesalers could take another hit in December, when federal legislation requiring pedigrees for pharmaceutical products takes effect. "Pedigree requirements are wonderful," Drucker said. "They guarantee the safety of the supply chain-but only if everyone in the supply chain has to comply."