The $175 Million Rx

For an unknown number of citizens who used Aureomycin or other broad-spectrum antibiotics between 1954 and 1966, Federal Judge Miles Lord has some advice: check your records, take notes, read about one of the longest, largest and most complex series of civil cases in history. People who pay attention to the judge may be able to collect some small share of several million dollars.

The litigation that has now finally reached a climax began 20 years ago when the Federal Government noticed that wholesale prices for tetracycline-based antibiotics were not only surprisingly high but identical at various drug companies. Eventually, the Justice Department charged Pfizer, American Cyanamid and Bristol with fraudulently monopolizing patents and conspiring to fix prices. Upjohn and Squibb were named as coconspirators. A jury's criminal conviction was overturned, and the case was ultimately dismissed. But droves of antibiotic users, including the U.S. Army, the governments of Iran and South Viet Nam and the various state governments, brought civil suits and class actions against the five drug companies seeking the treble damages awarded in antitrust cases.

Lazy Judges.

Because there were literally tens of millions of potential plaintiffs, the defendant drug companies hoped that the courts would turn their backs on the whole morass on the ground that it was "unmanageable." But they did not reckon with Judge Lord, a former Minnesota attorney general who is the latest jurist to rule on the matter. "There are no unmanageable cases," he said. "There are only lazy judges." This week Lord will okay the last major settlement for American consumers. So far, the cases figure to cost the companies a total of $175 million in damages.

Four years ago, the milling plaintiffs were broken down into somewhat more comprehensible classes, such as farm wholesalers and veterinarians. (The antibiotics are also widely used in animal feed and medications.) The consumers who bought antibiotics in drugstores made up the largest group and were represented by the state governments.

Eventually, all but seven states decided to settle on behalf of their citizens for a total of $85 million. Now, in Judge Lord's court, California, Hawaii, Kansas, Oregon, Utah and Washington have agreed to take $35 million. (North Carolina has been litigating on its own.) The farm and veterinarian groups and other plaintiffs are getting the rest of the $175 million.

The catch in all this is that consumers will find it hard to get back the few dollars that they were beaten out of. An average bottle of 100 tetracycline pills cost $51 in the late '50s. No one knows precisely the amount that a customer could now claim; by one rough estimate, the per-bottle refund might be $6. But after the first 43-state settlement, fewer than 40,000 persons made individual claims. Others who were entitled to a share of the payoff were apparently ignorant of the suit or bothered by the bureaucracy of state offices and the forms requiring old purchase records. Consequently, the bulk of the funds distributed so far has gone into state treasuries.

Judge Lord will now set up ad campaigns, mailings and even computers to figure out who is entitled to how much of the award in the latest six states to settle. "You have to come back at the companies with the same techniques and technology they used to get there in the first place," said the feisty judge. Once before, he mailed preliminary information on the case to everyone on the states' tax rolls, at a cost of $500,000, which is being paid out of the $35 million award. Whatever the price, the judge thinks it is worth making sure that plaintiffs with small claims are found and paid off. His persistence defies a recent trend: in many large class actions, claims have been thrown out because of the difficulty of contacting potential beneficiaries.

However long it takes to distribute the pot, a kind of legal era has already passed. In the course of the litigation, several hundred lawyers were employed; on one memorable occasion, 161 attorneys gathered in one courtroom. All told, plaintiffs' and defendants' legal fees for the suits will amount to more than $20 million.

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