As we’ve previously reported on the PAL blog, GlaxoSmithKline agreed to pay $40 million to settle a national class action lawsuit brought against it on behalf of “third party payors” (health plans, union benefit funds and others). The case alleged that GlaxoSmithKline (NYSE:GSK) defrauded third party payors by failing to disclose the increased risk of suicidal thoughts and behavior among children and adolescents taking the prescription antidepressants Paxil® and Paxil CR®.
On September 30, the U.S. District Court for the District of Minnesota held a “Final Approval” hearing in the case. Lawyers for the plaintiffs, defendant and objectors all made presentations to the Court about why the settlement is “fair, reasonable and adequate” and why it should be approved. The Court issued its order granting final approval to the settlement shortly after the hearing ended.
Now that the settlement has received Final Approval, payments can be made to Third Party Payors that paid for Paxil for pediatric patients between 1998 and 2004. The deadline to submit claims forms is December 12, 2008. A letter will go out shortly to 42,000 third party payors that had previously received a notice by mail of the settlement. The letter will apprise them of the changes to the settlement that the objectors were able to negotiate, and let them know about changes to the claims form. As of this writing, the claims form had not yet been updated on the settlement website – www.pediatricpaxiltppsettlement.com. We urge third party payors to check back soon at pediatricpaxiltppsettlement.com to see if the new form has been posted, or to call the Settlement Administrator at 1-800-396-5655.
The lawsuit alleged that GlaxoSmithKline (NYSE:GSK) defrauded health plans, union benefit funds and other “third party payors” by failing to disclose the increased risk of suicidal thoughts and behavior among children and adolescents taking the prescription antidepressants Paxil® and Paxil CR®.
The three union benefit funds objected to a number of provisions in the settlement, including an extremely burdensome, if not impossible, process to file claims for a refund of 40% Paxil expenditures. The objectors argued that this process would have unfairly favored larger health plans that have easy access to diagnosis information related to individual prescriptions. Without this information, only a 15% refund was possible. Other terms of the settlement that these funds objected to included limitations on class members’ rights to object to the settlement, opt out of it, speak at the fairness hearing, or appeal approval of the settlement.
The objectors were able to negotiate significant changes to the settlement that addressed their primary concerns regarding fairness and burdensome claims filing:
In order to ensure that the settlement funds go first and foremost to health plans and union funds that paid for pediatric Paxil prescriptions, the revised settlement caps any cy pres award to a maximum of $1 million. Previously, any funds in the settlement that went unclaimed would be distributed a one or more organizations addressing children’s mental health issues.
Cy pres awards are frequently granted by Courts when there are unclaimed funds left in a class action settlement. Such awards are supposed to benefit class members who did not file claims. However, the cy pres award in this settlement will not go to benefit the health plans that paid for Paxil, but rather to children’s mental health organizations. While those organizations no doubt do invaluable work, the benefit to the class members here is indirect at best.
Class members’ claims will be calculated in two “stages.” In the first stage, class members that are able to document individual prescriptions that were for Major Depressive Disorder will get refunds of 40% for those prescriptions. All other prescriptions will be refunded at 15%. In the second stage, the remaining settlement funds (after the $1 million cy pres award) will be distributed to all class members who file claims, based on their proportions of the total Paxil purchases claimed by all class members.
Class members will not be required to include rebates and discounts in their calculations of the net cost of each prescription. The objectors had argued that it would be impossible for many, if not most, class members to make the calculation with rebates and discounts included. This is because in most cases, manufacturers give rebates to a health for all of their purchases of all of that company’s drugs – it’s not possible to separate what rebates were for Paxil, for instance, as opposed to for another GlaxoSmithKline drug.
Lastly, the revised settlement gets rid of the provisions that attempted to limit the rights of class members to opt out or appeal the approval of the settlement.
Because these changes addressed their most pressing concerns, the objectors withdrew their objection. The objectors and PAL thus now support the revised settlement and will argue in favor of the Court approving it at the Final Approval hearing scheduled for September 30, 2008 in the U.S. District Court in Minneapolis, Minnesota.
The objection by PAL’s members underscores the important role that PAL plays in monitoring pharmaceutical class action settlements to ensure that they adequately protect the rights of consumers and smaller third party payors, health plans and union funds. To find out more about PAL’s coalition of consumer advocates and union benefit funds, and how to join, click here.
How to file a claim for reimbursement from the settlement:
Any private insurers, employee welfare benefit plans, union health and welfare funds, employer-sponsored health plans, and other third-party payors (“TPPs”) that reimbursed, purchased, or paid for Paxil® (in both tablet and suspended form) and Paxil CR® prescribed to persons under 18 years of age, from January 1, 1998 through December 31, 2004 are eligible to submit claims forms for payment from the settlement. The deadline to submit claims for payment from the settlement is December 12, 2008.
More information about the settlement, including claims forms, can be found at www.pediatricpaxiltppsettlement.com. The objection to the settlement filed by the 3 PAL members can be found here.
Below is a press release that we here at Prescription Access Litigation (PAL) issued today. Three members of the PAL coalition filed a formal objection to a settlement proposed in the class action lawsuit, Carpenters & Joiners Welfare Fund et. al. v. SmithKline Beecham, (U.S. District Court, Minnesota, Case #04-cv-3500). Details of the settlement are at www.pediatricpaxiltppsettlement.com.
A key component of PAL’s mission is to ensure that settlements of pharmaceutical class action lawsuits genuinely benefit the consumers, health plans and union benefit funds on whose behalf they are brought. When we learn of a settlement that does not benefit them, that makes it harder for them to derive a benefit, or that undermines their rights, we work with our coalition members to object to the settlement. And that is what our members Sergeants Benevolent Association Health and Welfare Fund, AFSCME District Council 37 Health and Security Plan and IUOE Local 4 Health and Welfare Fund did yesterday. Here is the press release:
Labor Unions File Objection to Paxil Pediatric Class Action Settlement Union Benefit Funds Criticize Settlement as Unfair, Call on Court to Reject it
Boston, MA – Three labor union benefit funds filed a formal objection yesterday to the proposed $40 million nationwide settlement of a class action lawsuit against GlaxoSmithKline (NYSE:GSK). The lawsuit alleged that Glaxo defrauded health plans, union benefit funds and other “third party payors” by failing to disclose the increased risk of suicidal thoughts and behavior among children and adolescents taking the prescription antidepressants Paxil® and Paxil CR®. The $40M settlement is to reimburse third party payors for payments they made to pharmacies for Paxil prescribed to children and adolescents from 1998 to 2004.
Under the terms of the proposed settlement, TPPs can be reimbursed up to 40% of their costs for Paxil prescribed for Major Depressive Disorder, while all other prescriptions for Paxil for other conditions will only be reimbursed at 15%. This requires TPPs to list a diagnostic code for each and every pediatric prescription for Paxil that they paid for during the seven year period. The objectors challenged this distinction, arguing that almost no one will really get a 40% refund, because almost no TPPs have diagnostic codes for the prescriptions they pay for.
In addition, millions of prescriptions for Paxil were written during the seven years covered by the lawsuit (1998-2004), yet the settlement requires any claim for more than $1,000 in reimbursement to include exhaustive details regarding every individual prescription of Paxil paid for during that seven-year period.
The funds also objected to other requirements, including the way that TPPs are required to calculate the net cost of the payments they made, and to misleading and inaccurate statements in the settlement notice about class members’ rights to object, appear at the hearing, or appeal final approval of the settlement.
“A $40 million settlement may sound very positive, but the devil is very much in the details,” said Gina Alongi, Administrator of IUOE Local 4 Health and Welfare Fund. “The way the settlement is currently structured will prevent many health plans and union benefit funds like ours from getting any real compensation from it.”
The three union funds objecting to the settlement are all members of Prescription Access Litigation (PAL), a national coalition of more than 130 unions and consumer advocacy groups that works to challenge illegal practices by the pharmaceutical industry.
“TPPs will have to comb through mountains of medical records and bury themselves in paperwork before they ever see a penny from this settlement,” said Alex Sugerman-Brozan, director of PAL. “Class action settlements are only as good as their claims process, and this one fails at a very fundamental level.”
Last year, Prescription Access Litigation objected to an earlier Paxil class action settlement (Hoorman et. al. v. SmithKline Beecham). That $63M settlement was of a class action brought on behalf of consumers who paid for Paxil prescriptions for children and adolescents. As a result of that objection, important changes protecting consumers’ rights were made to the settlement.
A settlement of a class action must be approved by the Court where the case is brought. Because class actions affect the rights of people and entities that aren’t even aware of the lawsuit, the Court reviews settlements to make sure they are “fair, reasonable and adequate.” Members of the class may object to the settlement, and request to speak at a hearing before the Court.
The case is Carpenters and Joiners Welfare Fund et. al. v. SmithKline Beecham Corp. (U.S. District Court for Minnesota, Case #04-CV-3500). The Final Approval hearing in the case is scheduled for September 30, 2008 in the U.S. District Court in Minneapolis, Minnesota. The deadline for third party payors to submit claims for payment from the settlement is December 12, 2008. More information about the settlement, including claims forms, can be found at www.pediatricpaxiltppsettlement.com. A full copy of the funds’ objection to the settlement can be found at www.prescriptionaccess.org/docs/pediatric-paxil-objection.pdf
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About AFSCME District Council 37 Health & Security Plan
AFSCME District Council 37 Health & Security Plan is a union benefit fund that provides supplemental health and welfare benefits, including a prescription drug benefit, to over 300,000 individuals, consisting of active municipal employees, their spouses and dependants, as well as retirees, who work or worked for New York City, the New York State Court System, various authorities, cultural institutions and the NYC Health and Hospital Corporation.
About Sergeants Benevolent Association Health and Welfare Fund
Sergeants Benevolent Association Health and Welfare Fund provides supplemental health and welfare benefits, including a prescription drug benefit, to 10,000 active and retired sergeants of the New York City Police Department.
About IUOE Local 4 Health and Welfare Fund
IUOE (International Union of Operating Engineers) Local 4 Health and Welfare Fund provides a health and welfare plan, including a prescription drug benefit, to 10,000 covered members of IUOE Local 4 and their families. IUOE Local 4 represents heavy equipment operators, apprentices, mechanics, surveyors, equipment house employees, as well as waste water technician and some public sector employees in Eastern Massachusetts, Eastern New Hampshire and Maine.
About Prescription Access Litigation Prescription Access Litigation (PAL) is a nationwide coalition of over 130 state, local, and national senior, labor and consumer health advocacy groups fighting to make prescription drugs affordable. The organizations in the PAL coalition have a combined membership of over 13 million people. PAL, a project of the national nonprofit health care advocacy group Community Catalyst, works to end illegal drug industry practices that increase the price of prescription drugs beyond the reach of the American consumer, using class action litigation and public education. PAL members have filed more than 30 lawsuits targeting such practices. News about PAL’s cases and public education efforts is published regularly on the PAL Blog.
Our friends at Public Citizen recently posted this YouTube video on the Paxil Pediatric settlement, and the upcoming deadline for parents or guardians of children who took Paxil to file claims to receive refunds from this $63.8 million settlement fund. (See “Deadline Approaching for Paxil Pediatric Settlement”)
Please help spread the word about this settlement and the upcoming deadline for filing claims (August 31, 2007). Visit paxilpayback.org.
Back in February, PAL and Public Citizen filed an objection to a $63.8 Million class action settlement in Illinois state court in a case alleging that GlaxoSmithKline, the maker of Paxil, knew the drug was dangerous and ineffective when taken by children under the age of 18, but failed to inform parents and guardians of children who were prescribed it.
As a result of our objection, the parties agreed to make a number of important changes to the settlement. We felt these changes were beneficial and addressed most of our concerns, and so we withdrew our objection.
Now we are working to get the word out about this settlement, and to encourage parents and guardians who paid for any of the cost of Paxil prescribed to a child under 18 to submit a claim to receive a payment from this settlement.
If you (or anyone you know) has ever purchased Paxil or Paxil CR for a child or ward, you are entitled to recover 100% of your documented out-of-pocket expenses. Even if you didn’t keep receipts or other documentation of your Paxil purchases, you can still recover the amount you spent, up to $100. If you do have receipts or other documentation, you may be able to recover the entire amount that you spent.
You are a class member and eligible to submit a claim for payment if:
• You live in the United States
• You purchased Paxil or Paxil CR for someone under the age of 18
To receive compensation, you MUST submit a claim. If you do not submit a claim form by the deadline, August 31, 2007, you will forever lose your chance to receive a payment from this settlement.
To get full information about the settlement, including how to submit a claim, and a downloadable claim form, visit paxilpediatricsettlement.com Make sure to follow the claim form instructions carefully and attach copies of your receipts or records.
You can also call 1-866-494-8404 for more information.
PAL wants to ensure that all eligible class members are notified of the settlement. Please help us do so by adding a link on your own website or blog to this entry and to the settlement website, http://www.paxilpediatricsettlement.com/. Please also forward this information to relevant email lists, online forums, advocacy groups, support groups, and medical providers.
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