Pharmaceuticals: Corporations Battle International Price-Fixing Legisaltion

Five giant pharmaceutical companies have reached a tentative settlement with the governments of West Germany, the Philippines, India and Colombia in a seven year old price fixing suit initiated by these countries. Announcement of the agreement came on June 3, three weeks after the U.S. Senate Judiciary Committee passed a measure which, if enacted into law, could destroy the basis for the longstanding suit.

The foreign governments had charged Pfizer, Upjohn, Bristol Myers, American Cyanamid, and Squibb with violating U.S. antitrust law by conspiring to fix the price of certain antibiotics marketed worldwide during the 1950s. The charges followed an investigation by the U.S. Federal Trade Commission and a number of private suits against' the corporations that were settled out of court.

The drug companies originally maintained that U.S. antitrust law did not protect foreign governments from the anticompetitive practices of U.S. companies. This defense, however, was rejected by the Supreme Court in a landmark 1978 decision, Pfizer v. India. The court held that foreign sovereigns had the same rights under law as other persons to recover three times the actual damage caused by the companies' illegal conduct.

The bill passed by the Senate Judiciary Committee would allow a foreign government to sue under U.S. antitrust law only if similar anticompetitive conduct was banned in that foreign state. The laws of the foreign state must also be enforced at the time the government was injured, and the country's court system must be open to the U.S. government and U.S. citizens. The bill would also restrict recovery to actual damages.

Attorneys for West Germany fear the Senate bill will nullify their claims against the drug companies. A paper circulated , by the German embassy states, "Retroactive elimination of the German claims would, under international law, have to be regarded as an illegal case of expropriation without compensation."

Legislation to overturn the Pfizer decision has been introduced in every session of Congress since the decision was handed down. In 1978, supporters of the drug companies rushed a bill through the House Judiciary Committee that would have banned all antitrust suits by foreign governments. Liberal members of the Committee on International Relations kept that proposal from reaching the House floor. Last year a bill similar to the current proposal passed the Senate committee but never came up for a vote in the Senate.

The pending bill, S. 816, was considered in hearings in a recent session attended only by the committee chairman and bill sponsor, Senator Strom Thurmond (R-S.C.). The witnesses-three industry representatives and assistant U.S. attorney general William Baxter-testified in favor of the bill.

The hearings were "offensive in the extreme to fairness and smack of blatant special interests, "complained Alan Sprenger, an attorney for (the West German government in written comments to the committee. Hearings on the House version of S. 816 were postponed when the settlement was announced. (The details of the settlement have not been disclosed.) Members of the House committee staff suggest that the bill will not move out of committee without pressure from the companies.

According to files at the Federal Election Commission, the political action committees of four of the companies, American Cyanamid, Upjohn, Bristol Myers, and Pfizer, have made $15,800 in political contributions to members of the Senate Judiciary Committee since 1977. Senator Thurmond received $2,750 from Pfizer and $900 from Bristol Myers. The legal ceiling for such contributions is $5;000. Aides to Thurmond refused to comment on the propriety of these contributions. -George Riley