Just several months later, in August 1997, Knoll agreed to proposed settlement of the class action lawsuit, claiming that it "denies all liability in the litigation" and company has entered into the agreement "to avoid burdensome and expensive litigation which would drain the resources needed to continue building upon our leadership position in thyroid disease treatment."
According to BASF/Knoll, "The settlement fund shall be used to pay each class member a payment in the amount of $19.60, less a proportionate share of court-awarded attorneys' fees and related costs, calculated as if there were a total of five million claimants [this translates to a total of $98 million.] If the number of eligible claimants exceeds five million, Knoll will contribute additional payments to the settlement fund up to a maximum of $135 million."
August 1997
On August 14, the Food and Drug Administration announced in the
Federal Register that levothyroxine sodium products are "new drugs" and
will require new drug application. Federal Register notice cited stability,
potency and reliability problems with all manufacturers of levothyroxine
sodium. (To read the complete Federal Register Notice, "Food and Drug
Administration Notice of Requirement for New Drug Applications for
Manufacturers of Levothyroxine Sodium," see Databases Online via GPO Access" -- select
"Federal Register Volume 62 (1997)" from Database List and enter
"Levothyroxine Sodium" as your search term.)
How Much Did Patients Overpay?
The research study published in JAMA estimated that the annual overpayment by patients totaled as much as $356 million a year.
Specifically, one hundred tablets of a typical daily dose cost about $28, compared with about $7 to $11 for the same amount of competitor Levoxyl. This overpayment of an estimated $17 per hundred tablets translates to $62.05 per year per patient overpayment. According to a Thyroid Society for Research & Education survey, the national average wholesale price for 100mcg/0.1 mg levothyroxine 100 tablets is, for Synthroid, $22.70 and Levoxyl $12.17. An $11 per 100 tablets overpayment translates to $40.15 per year per patient.
Each patient, therefore, will receive less than $19.00 in the settlement, despite evidence of overpayment in the range of $40 to $60 per year -- or $264 to $408 per patient for each patient who was on Synthroid the full 6.5 years that results were not published.
For the estimate of five million patients, that represents overpayment to Knoll of $200 to $310 million per year, or a total of $1.3 to $2 billion over the 1990-1997 period that the bioequivalence research study results were not published. For the estimated 8 million patients, the overpayment estimate is $321 to $496 million per year overpayment, or a total of $2.1 to $3.2 billion in the 1990-1997 period.
Knoll's total exposure of a maximum of $135 million does not represent even one year of the most conservative estimate of overpayment by the patients taking Synthroid.
Class action law firms involved in this unusually rapid class action settlement, will, however, earn their typical millions of dollars in fees out of the $98-$135 million settlement fund set aside by Knoll/BASF, before patients are paid.
Questions to Ponder
This whole scenario as described raised a number of questions in my mind, including:
- Why did this proposed settlement take place so quickly?
- Why are patients being compensated such a minimal amount for their far greater overpayment?
- Are the law firms inappropriately rushing to settle with Knoll too quickly, to the advantage of the law firms and Knoll, and the detriment of the patients, who have no voice and representation in this issue?
- Why aren't patient-oriented organizations speaking out on behalf of the patients in regard to this rapid settlement?
- Could/should individual patients file suit and settle separately from the class action suit? If so, how much could these patients stand to win in their settlements, versus the less than $19 potential payment from the class action suit.
- Who, if anyone, will represent patients at the fairness hearing on the class action suit?
