Settlement over generic drug deals gets judge's approval

U.S. District Judge William H. Alsup gave final approval for a $453.85 million settlement to resolve claims of anticompetitive actions and overcharging by pharmaceutical companies.

According to Alsup's order Thursday, this settlement is "the third-largest absolute dollar recovery for a direct-purchaser class in a generic delay pharmaceutical antitrust action" and "the highest percentage recovery of any settlement of a generic delay pharmaceutical antitrust action" at 50% to 90% of the class's claimed aggregate single damages of $500 to $900 million.

Lauren G. Barnes of Hagens Berman Sobol Shapiro LLP is one of the plaintiffs' lawyers.

"We are extraordinarily proud of the result we secured for the class," she emailed Friday. "Without the efforts that the team of talented, creative, dedicated trial lawyers I was honored to work with in this case, and our joint willingness to bear the risk, there would have been no remedy for the fraud we alleged was committed on these purchasers and the healthcare system in general: no one else was pursuing this case. ... I think Judge Alsup recognizes that we litigated the case well, aided by a firm trial date, and we drove an incredible result. I couldn't be happier with our team."

This was one of several antitrust cases alleging a pharmaceutical company dealt in pay-to-delay or quid pro quo settlements with another pharmaceutical company to stall the release of generic versions of a drug into the marketplace.

Alsup's order states that in this case, Depomed Inc., now named Assertio Therapeutics Inc., had a lawful monopoly on its product Glumetza, which is an extended-release drug that controls blood sugar levels for people with type 2 diabetes, and Lupin Pharmaceuticals Inc. with its various corporate forms sought to release the first generic version of Glumetza. In re: Glumetza Antitrust Litigation, 3:19-cv-05822, (N.D. Cal., filed Sept. 18, 2019).

The two companies entered an agreement in 2012 in which "Lupin would delay market entry of its generic for four years (until February 2016) and, in return, Depomed paid Lupin $3 million and promised it would not launch an authorized generic to compete with Lupin for one year (until February 2017, atop an FDA-granted 180- day period of market exclusivity) and would also protect Lupin from other generic competition," Alsup wrote.

California attempted to outlaw this practice by passing Assembly Bill 824 in 2019, but in December, a federal judge in Sacramento granted a preliminary injunction, blocking the law as unconstitutional. Association for Accessible Medicines v. Becerra, 2:20-cv-01708, (E.D. Cal., filed Aug. 25, 2020).

Initially plaintiffs were made up of direct and indirect purchasers, including Walgreen Co., The Kroger Co., CVS Pharmacy Inc., Rite Aid Corp., Hy-Vee Inc., Albertsons Companies Inc. and H-E-B L.P. The indirect purchasers entered confidential settlement agreements with defendants and exited the case. Remaining are Meijer Inc., Bi-Lo LLC, Winn-Dixies Logistics Inc., KPH Healthcare Services Inc. and other direct purchasers.

According to Alsup, the rights for Glumetza passed from company to company, ending up with Valeant Pharmaceuticals, currently named Bausch Health Companies Inc., in April 2015. Shortly after, Valeant hiked the price of Glumetza by 800 percent, from $5.72 to $51.48 for the 500 mg pill and $12.37 to $113.36 for the 1000 mg pill. When Lupin entered the market the generic was priced at around $45 for 500 mg tablets.

Plaintiffs alleged in their consolidated class action complaint that Lupin's generic would have been four dollars or less had it launched in 2012. When generic versions of a drug enter the market the price of the drug usually falls around 10 to 25 percent, dropping even more as more generics are introduced until after a year generics make up around 90% of sales at 10% of the brand's price, they said.

"The price hikes that the defendants' pay-for-delay deal enabled amounted to a $280-million-dollar reverse payment to Lupin, billions of dollars in extra sales for Bausch, and $2.8 billion in overcharges suffered by direct purchasers," according to the complaint.

Attorneys from Arnold & Porter Kaye Scholer LLP, Cravath Swaine Moore LLP, Arnold and Porter Kaye Scholer LLP, Gibson Dunn and Crutcher LLP, Lowenstein Sandler LLP, Kirkland and Ellis LLP represent the defendants and did not respond to requests seeking comment.