Antitrust Drug Dispute Ends With Settlements

(CN) – Three pharmaceutical companies are poised to shell out a total of $270 million to settle antitrust claims related to their alleged collusion to prevent a generic form of an expensive pain medication from reaching market, according to documents released Wednesday.

Plaintiffs in the Lidoderm Antitrust case requested U.S. District Court Judge William Orrick grant preliminary approval to the multimillion dollar settlement between purchasers of Lidoderm — a pain alleviation patch that numbs tissue in the area where it is applied —and the drug makers Endo, Teikoku and Watson.

Endo and Teikoku manufacture Lidoderm. In 2013, Watson was in process of bringing a generic version of the drug to market when it struck a $266 million deal to delay the introduction of that product in exchange for assurances Endo would wait 7 and a half months after Watson released its product to introduce its generic version of the drug. Watson also agreed to drop its patent dispute against Endo and Teikoku as part of the arrangement.

Plaintiffs claimed the deal violated antitrust laws, harming consumers by artificially inflating Lidoderm’s cost.

Last February, Judge Orrick certified two separate classes of plaintiffs — one consisting of direct purchasers of the drug and another group called end-payer plaintiffs, whose financial harm as a result of the scheme was more indirect.

The various parties have agreed the direct purchasers will be awarded $166 million, according to Wednesday’s motion. Endo will pay $60 million, Watson is on the hook for $71 million and Teikoku is slated to disburse $35 million.

A separate settlement stipulates defendants pay end-payer plaintiffs about $104 million, with Watson paying $41 million, Endo $40 million and Teikoku paying a smaller share of approximately $23 million.

“The settlements were negotiated by counsel experienced in antitrust class actions and the negotiations were overseen by Chief Magistrate Judge (Joseph) Spero,” wrote Dena Sharp, attorney for the plaintiffs in the motion. “The settlements have no obvious deficiencies and are well within the range of final approval.”

The primary purchasers settlement is about 55 to 79 percent of the damages calculated by an independent expert. For end-payer plaintiffs, the settlement was about 40 percent of damages.

The plaintiffs for both classes argued the settlements are fair, with end-payer attorneys saying their clients’ burden of proof was such that it made agreeing to a settlement a welcome conclusion to the dispute.

“This case involved numerous complex issues of law on which courts have diverged and the Ninth Circuit has not yet spoken,” Sharp wrote.

Orrick must approve each settlement before they become final and the payments get disbursed.

A hearing on the preliminary approval is slated for April 25.



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