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    AstraZeneca versus the People

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    Beginning in the 1990s, with their research pipelines drying up, the major players in the pharmaceutical industry moved to sustain profits by fighting to extend patent periods, by advertising direct-to-consumers, and by raising drug prices. The facts of a case filed recently in California reflect a blend of these strategies: As the patent for AstraZeneca-buster drug for acid reflux, Prilosec, ran out, the company spent millions to persuade consumers that their new and eight-times-more-expensive product, Nexium, was more effective in treating acid reflux than Prilosec in its generic, over-the-counter form.

    As of late 2004, Nexium was AstraZeneca's best selling product, ranked seventh among all prescription drug sales in the United States. With a $ 257 million blitz to promote Nexium, the purple pill, in 2003, the company outspent all other pharmaceutical drug campaigns that year. AstraZeneca was sued by a coalition including senior citizens groups and the AFLâ?"CIO. (This was the first time the union joined litigation aimed at controlling health care costs.) The plaintiffs argued that the Nexium ads were deceptive.

    What law would be the basis for their claim? What would they have to prove to win?

    What actions might the government have taken?

    What happened in the actual case?

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    Solution Preview

    The laws that were the basis for the claim against AstraZeneca-Nexium, as filed in the California Superior Court in 2004, were violations of unfair competition law and unfair advertising law (www.hbsslaw.com). The plaintiffs would have to prove that AstraZeneca used flawed clinical trial results of their new product Nexium to show that it was a superior product than their expiring (losing their patent) product of Prilosec in order to help AstraZeneca objective of profit making (www.hbsslaw.com). The plaintiffs also had to prove that AstraZeneca used these flawed clinical trial results in a massive advertising (to doctors and direct to consumer advertising) campaign to get consumers and professionals to switch from Prilosec use to Nexium use (AstraZeneca increased their price of Nexium after winning the customer market for this type of drug) (www.hbsslaw.com). The plaintiffs also wanted a class action suit in order to seek restitution and equitable relief arising out of ...

    Solution Summary

    The expert examines the case for AstraZeneca versus the people.