Court upholds Dana-Farber windfall from drug-overcharging settlement

A federal appeals court ruled today that Dana-Farber can keep the $11.4 million a federal judge awarded it from a settlement pool for consumers overcharged for the cost of a prescription drug in the 1990s.

The money comes from a $40-million pool meant to reimburse consumers for the cost of Lupron, which is used to treat everything from prostate cancer to premature puberty and endometriosis.

Despite a national ad campaign, only about 11,000 consumers applied for payments, leaving it up to a federal judge in Boston to decide what to do with the rest of the money. The judge rejected simply splitting the money among consumers who had applied, because the settlement meant they were already reimbursed 167% of their estimated overcharges and decided instead to turn to a "next best" use, in this case giving the money for medical research that could one day benefit people who suffer from the conditions Lupron is meant to treat.

Some of the consumers, however, appealed, saying that they should get treble damages, that Dana-Farber was an improper recipient because it is based only in Boston and because it focuses on cancer, not the other conditions for which Lupron is prescribed.

The US Court of Appeals for the First Circuit in Boston, however, disagreed and rejected the appeal. It said the Dana-Farber program will fund research efforts around the world, through a grant program that could result in even more money from other sources for the research.

Still, the court added the judge probably should never have gotten involved in choosing a recipient for the unused money. Instead, the court said, the parties on either side should have negotiated a recipient for the money and then submitted their choice to the court.

• Complete ruling