Dateline: 1/27/98
This is Part One of a Two-Part article on the Synthroid lawsuit settlement.
When I first heard about the publication of the manufacturer's efforts to block publication of the results of the Synthroid Bioequivalence study, I joined organizations such as Ralph Nader's Public Citizen in having concern that the American public was overpaying for a drug shown to be equivalent to less expensive versions of levothyroxine sodium. After publication of the study this past Spring, and the immediate filing of a class action lawsuit on behalf of patients, my concern only increased.
Why? Because no sooner than the lawsuit was filed a lawyer, who wished to remain anonymous, contacted me and indicated that he was fearful that the major class action lawfirm attorneys were being unusually quick to accept a possible deal being offered. The deal meant that the law firms would make millions, the manufacturer would pay far less than the original suit called for, and patients who'd overpaid for Synthroid? Well, they wouldn't get even enough money to buy one bottle of Synthroid when it was all over.
Currently, Synthroid is one of the top ten drugs sold in America, according to most pharmaceutical rankings, and is the #1 drug prescribed for thyroid disease. Synthroid is estimated to control 85% of the total market for levothyroxine sodium. With this sort of control of the market, and millions of patients paying money every month for their Synthroid, is the proposed settlement of the lawsuit fair to patients? First, let's take a look at the chronology and a summary of the issue.
| 1958 | In 1958, the drug Synthroid -- a brand name of the thyroid hormone levothyroxine sodium -- was introduced as the first synthetic thyroid drug. The F.D.A. approved it without asking for trial data, essentially leaving it unregulated. Levothyroxine sodium is used to treat hypothyroidism in people whose thyroid glands have been damaged by disease or have been surgically removed. |
| 1988 | In 1988, a Synthroid Bioequivalence Study was commissioned by Boots/Knoll Pharmaceutical. The objective was to demonstrate that Synthroid was superior to competitive brands of levothyroxine sodium, and that competitors' products were not bioequivalent to Synthroid. |
| 1990 | In 1990, the Synthroid Bioequivalence Study was completed. Results showed that Synthroid was not superior to the competitive brands of levothyroxine sodium, and the drugs were in fact bioequivalent. |
| 1990-1995 | From 1990 to 1995, German-based BASF Corp. was in process of acquiring Boots/Knoll Pharmaceutical operations. |
| 1990-1995 | During the same period, Boots/Knoll refused to consent to publication of the Bioequivalence Study findings, claiming that the study has "gross errors." (Press release: "BASF Comments on the Lawsuits in the United States," May 22, 1997 |
| 1995 | In 1995, BASF acquired Boots/Knoll Pharmaceutical operations for more than $1 billion, making Knoll Pharmaceutical Co., a Mount Olive, New Jersey-based subsidiary of BASF. |
| May 1996 | In May 1996, Public Citizen's Health Research Group wrote FDA Commissioner David Kessler alleging that FDA regulations were preventing generic drug companies from making bioequivalent copies of the thyroid drug levothyroxine (Synthroid), and asking the agency to review safety and efficacy data on Synthroid as this product was basically unregulated. (May 29, 1997 Letter to Food and Drug Administration Commissioner David Kessler from Dr. Peter Lurie and Dr. Sidney Wolfe of Public Citizen's Health Research Group) |
| April 1997 | In April of 1997, the Journal of the American Medical Association (JAMA) published a study, commissioned by Knoll, that concluded that Synthroid -- a synthetic thyroid hormone -- is no better than two generic alternatives or the brand-name drug Levoxyl. Knoll disagreed with the study, and considered suing to stop its publication. Betty Dong, the researcher at the University of California at San Francisco who conducted the study, told the journal that Knoll had suppressed her findings for more than six years. (JAMA Online citation) |
| April 1997 | Two weeks after the publication of the research findings, class action lawsuits were filed for $8.5 billion against Knoll and BASF in San Francisco, California on behalf of patients who purchased Synthroid during the period of January 1, 1990 to August 1, 1997. This is considered the period during which study results were allegedly suppressed. |
| August 1997 | 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." (Press release, "Knoll Settles Thyroid Medication Class Action Lawsuit," August 4, 1997). |
| 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 my online copy of the report or go to 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?
Coming In the Next Issue
We'll take a look at these questions, along with other in the next article in this series.In addition, I'll tell you about the results of my contacts with the Thyroid Foundation, the Thyroid Society, the American Women's Medical Association, Senator Tom Harkin, and others, in pursuit of the answers to these questions.
We'll also look at how to file for you less than $19 Synthroid payoff, or how to opt out of the settlement and pursue compensation separately.
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