The dispute involves Californian sales of Zantac worth about dollars 20m ( pounds 13m) a year. Total sales of Zantac in America were dollars 1.7bn last year, of which an estimated 15 per cent were through the publicly-funded Medicaid system.
Glaxo's US subsidiary was told in January that Zantac would be removed from California's 'Medi-Cal' list of approved drugs when the current supply contract expires on 30 June. Medi-Cal patients have unrestricted access to drugs on the contract list, but other prescription medicines are available only if pharmacists obtain prior authorisation.
The change would affect new patients from the end of next month, and the estimated 30,000 patients already taking Zantac would be able to continue to do so for three or 12 months depending on the nature of their treatment.
The drug company said yesterday it would ask the Californian Superior Court to order the state to allow all patients to receive the drug indefinitely while it attempts to open negotiations on whether the medicine should remain on the list. It also wants the court to insist that California makes its criteria for selection clear.
Glaxo has built itself into one of the world's biggest drug companies on the back of Zantac, which provides more than half its profits. It has been angered because officials have refused to detail the basis on which contract medicines were selected.
The suit contends that the state failed to negotiate with Glaxo as required by law and improperly used undisclosed regulations in deciding to delete Zantac, one of the more expensive anti-ulcer drugs, from its list. The company said the selection process 'suffers significantly if the rules governing the process are kept secret'.
The decision to sue comes at a sensitive time for the US drugs industry, which is expecting the healthcare review committee, headed by Hillary Clinton, to report within the next few weeks. The committee has been widely expected to target drug companies for the cost of their products.
Analysts said the move reflected Glaxo's irritation at the attitude taken by Californian officials. BZW's Jonathan de Pass said: 'They were clearly aggrieved that they weren't properly consulted about this. (But) the healthcare review is clearly becoming a bit of a red herring anyway. The reforms are going ahead anyway.'Reuse content