By Eli Greenblat
America's Mayo Clinic claims to have lost millions of dollars at the hands of a damaging and illegal blood-plasma cartel run by Australia's biggest healthcare company, CSL, alleging in court documents that a conspiracy existed to drive down supply, inflate prices and snuff out competition.
Mayo Clinic claims CSL's US-based business CSL Behring, rival Baxter International and the industry's peak body, the Plasma Protein Therapeutics Association, used the pretext of avoiding supply shortages to justify meetings where information was exchanged and a cartel was formed.
A 62-page complaint lodged by Mayo Clinic's lawyers in a US District Court and obtained by BusinessDay says the alleged conspiracy may have begun as early as the 1990s. Company executives swapped data at bars and restaurants ''away from the watchful eyes of association attorneys and other outsiders'', it says.
''In an effort to ward off government intervention once the conspiracy began to produce results, Baxter and CSL, in co-ordination with the PPTA, publicly denied supply shortages, significantly over-reported industry supply figures and misleadingly blamed Medicare reimbursement rates for patients' difficulties in obtaining these crucial therapies,'' the complaint claims.
Mayo Clinic, the largest integrated, not-for-profit group practice in the world, has also outed itself as a key source of assistance and support to the US government's competition regulator last year when it investigated CSL's failed $US3.1 billion takeover bid of competitor Talecris Biotherapeutics.
It was the Federal Trade Commission's decision to block the takeover that uncovered a string of anti-competitive allegations against CSL and the PPTA.
Mayo Clinic's claims - which are yet to be proven in court - are based on the work by the FTC and form the thrust of a multimillion-dollar class action lawsuit launched in July and being supported by almost 20 US hospitals which allege they suffered from the price-fixing of blood plasma therapies.
Mayo Clinic claims that supply restrictions forced some patients to go without plasma-derived therapies, causing some to suffer side effects from alternative treatments or infections caused by delays and others to reportedly die.
CSL has argued that the claims are without merit, unsupported by fact and that it would defend the civil
action. No document linked to the class action has named any senior CSL executive as having involvement in or knowledge of the alleged cartel and anti-competitive behaviour.
Industry sources have argued that an initial increase in supply earlier this decade was triggered by the behaviour of uneconomic players selling plasma at a loss. There was then some cut back in supply, but companies like CSL greatly increased capacity of their plasma plants to meet demand.
In the complaint lodged with the Northern District of Illinois, Eastern Division, Mayo Clinic sets out its case against the alleged cartel headed by CSL and Baxter, claiming it formed no later than 2003 and perhaps in the late 1990s, when safety-related plant closures led to supply shortages in the industry.
It claims CSL and Baxter developed data monitoring systems that enabled them to know each other's distribution and inventory levels. Later in 1999 government intervention boosted supply, which caused CSL and Baxter to suffer severe drops in profitability.
''These sinking profits spurred Baxter and CSL to unlawfully agree to reduce supply and fix prices of plasma-derivative protein therapies,'' the court documents claim. ''The alleged conspiracy artificially inflated the cost of delivering high-quality healthcare to patients in need of blood plasma protein therapy, and was undertaken with utter disregard for the likely adverse effects on patients of restricting the availability of blood plasma protein therapy.''
CSL and Baxter allegedly: gained market share by buying up competitors; worked with the PPTA to refine data monitoring systems; signalled to each other the desirability of restricting supply; engaged in anti-competitive discussions involving supply and price issues; and misled public debate on supply levels.
''The PPTA's efforts to gather and monitor supply data facilitated anti-competitive information exchange among manufacturers and ultimately assisted defendants in concealing their conspiracy by providing a ready mechanism with which to report inflated supply numbers.''
It adds that according to an Immune Deficiency Foundation survey of physicians conducted in 2005, 33 per cent of doctors had significant difficulty obtaining immune globulin, one of the therapies at issue.
These doctors also reported that 40 per cent of those patients denied access to their immune globulin therapy had suffered adverse health effects.
The complaint claims, but offers no proof, of patients who reportedly died because of a lack of blood plasma therapies.
Mayo Clinic, which has an annual revenue of $US7.22 billion ($8 billion) and assets of $US8.33 billion, claims price signals were issued through analysts, investor calls, the press and at industry conferences where company executives would meet privately for dinner.
It claims the alleged conspiracy went so far as to mislead CSL staff about the nature of the supply shortage.
''In the summer of 2004, CSL informed one of its salespeople that it did not foresee a shortage of IVIG [intravenous immunoglobulin] or albumin. But less than two months later, and shortly after a similar announcement from Baxter, CSL announced a shortage of IVIG and albumin. CSL gave its employees no advance warning of the shortage, which, upon information and belief, CSL and Baxter had intentionally precipitated, and provided pre-textual explanations for the shortage.''
Mayo Clinic claims it was so concerned about supply that it decided to act when CSL launched its takeover bid of Talecris.
It claims the alleged conspiracy inflated profits of CSL, CSL Behring and Baxter at the expense of others in the industry.
Mayo Clinic is seeking a jury trial and has not specified damages.