A settlement agreement between AstraZeneca and Ranbaxy Laboratories that allegedly stalled sales of a generic version of a prescription heartburn drug did not violate antitrust laws, a federal jury in Boston decided Friday.
Lawyers say it's the first jury decision in a so-called pay-for-delay case since a U.S. Supreme Court decision in 2013 made it easier to challenge such settlements under federal antitrust law. These cases involve claims that makers of brand-name drugs inhibit competition by reaching settlements with generic-drug makers in patent disputes to keep cheaper versions of drugs off the market, thus raising prices to consumers.
A number of drug-buying organizations, retailers and insurers, including the Kroger Co., Safeway and Humana Insurance Company of New York, plus a class of possible individual consumers, sued AstraZeneca and Ranbaxy saying their 2008 settlement agreement on patent issues kept generic versions of the prescription drug Nexium off the market. That, in turn, meant higher prices, the plaintiffs alleged.
The plaintiffs alleged that AstraZeneca paid Ranbaxy more than $1 billion. The defendants could have faced treble damages, which in this case could have totaled nearly $10 billion, based on the allegedly higher costs paid by the drug buyers.
“Defendants' unlawful concerted action has delayed or prevented the sale of generic Nexium in the United States, and unlawfully enabled AstraZeneca to sell Nexium at artificially inflated, supra-competitive prices,” the plaintiffs argued in court documents.
Attempts to reach lawyers for the plaintiffs were unsuccessful Friday.
The drugmakers, however, argued that no generic version of Nexium has received even tentative approval from the FDA, so the settlement alone did not keep generics off the market.
“The drug buyer groups were living in a fantasy world during the trial,” Douglas Baldridge, an attorney for Ranbaxy, said during closing arguments, according to a news release from his law firm Venable. “No company could have produced generic Nexium sooner because none of the generics makers had FDA approval.”
Baldridge said in an interview Friday that such settlements are important for drug companies because “people have patents on these products and these patent laws and Hatch Waxman exclusivity are a reward for spending an enormous amount of money and time for developing drugs that change all of our lives.”
In a prepared statement Friday, AstraZeneca said it was pleased with the jury's verdict and “has always maintained that the plaintiffs' allegations were without merit.” The company also noted that two cases making similar allegations are pending in Pennsylvania state court.
The Federal Trade Commission has made blocking pay-for-delay settlements by drug companies one of its highest priorities. “By eliminating the potential for competition by a generic product, the parties can share the monopoly profits preserved by the delayed entry, appropriating for themselves the consumer savings that would have resulted if the firms had instead competed,” FTC Chairwoman Edith Ramirez said to a Senate panel in July.
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