GlaxoSmithKline Settles Flonase Antitrust Suit
(CN) - GlaxoSmithKline can pay $150 million to settle claims that it inflated the Flonase prices and delayed the release of a generic nasal spray, a federal judge ruled.
American Sales Co. Inc., a Lancaster, N.Y.-based distributor of health and beauty items and general merchandise for U.S. supermarkets, had filed the suit with regional hypermarket chain Meijer Inc. and its distribution company, headquartered in Walker, Mich.
Their 2008 class action sought to represent 33 companies that purchase Flonase and its generic counterpart directly from the manufacturers: SmithKline Beecham dba GlaxoSmithKline and Roxane Laboratories.
They claimed that GSK improperly delayed the entry of the less expensive, generic fluticasone propionate to rake in multimillion-dollar profits.
The delay allegedly let GSK maintain the price of the brand-name drug at above-competitive levels and block unrestricted competition.
Extensive discovery, which lasted from late 2008 through mid-2010, included 30 depositions of current and former GSK and Roxane employees and millions of pages of documents, including at least a dozen expert reports and rebuttals.
U.S. District Judge Anita Brody had certified a class of 33 direct purchasers in November 2010, and twice refused to grant GSK summary judgment in 2011.
Heading off a trial set for early 2013, the parties reached a settlement agreement in November 2012 that set aside $150 for direct purchasers.
Brody preliminarily approved the settlement on Jan. 14, and the direct purchasers moved for final approval, attorneys' fees, reimbursement of expenses and payment of incentive awards to class representatives.
The judge approved the final settlement agreement and allocation plan Friday, citing the 3rd Circuit's decision in 1998, In re Prudential Ins. Co. of Am. Sales Practice Litig.
"Here, the relevant Prudential factors counsel in favor of approving the settlement," Brody wrote. "First, as has been explained above, the case was settled only after extensive discovery and trial preparation. The underlying substantive issues were therefore well-developed, supporting approval of the settlement. Second, as to the results achieved for the individual class members compared to those achieved for other claimants, there are no direct purchaser class members who have filed a separate lawsuit against GSK. Therefore, the settlement creates the only award for class members. Third, class members were given the chance to opt out when I originally certified the class in 2010. No class member requested exclusion. While I declined to allow class members an additional opportunity to opt out of the class after receiving notice of the settlement, not a single class member objected to the settlement for any reason, including on the basis that no opt-out right was given. Therefore, the absence of a second opt-out right was of no consequence here. As to attorneys' fees, as I will discuss in the next section, the provisions for attorneys' fees are reasonable. Sixth, the procedure for processing individual claims under the settlement is fair and reasonable."
The judge awarded $50 million in attorneys' fees, as well as nearly $2.1 million in litigation costs and expenses. American Sales will collect a $50,000 incentive award, and Meijer will collect $40,000.
GlaxoSmithKline, a U.K. company, reported a total operating profit of 7.4 billion pounds in 2012.