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Insurer’s antitrust suit against HIV drug makers advances

Major insurers and retailers filed a series of lawsuits last year accusing pharmaceutical firms of using anticompetitive deals to delay generic versions of essential HIV drugs and inflate costs for consumers.

SAN FRANCISCO (CN) — The nation’s largest health insurer can sue two pharmaceutical giants over claims that they colluded to drive up the price of life-saving HIV drugs in violation of multiple state laws, a federal judge ruled Tuesday.

United HealthCare Services, which insures 70 million people in the U.S. through its affiliates and subsidiaries, sued Gilead Sciences and Teva Pharmaceuticals in federal court last year. The insurer, owned by parent company UnitedHealth Group, claims the drug makers entered into a series of unfair patent settlements that delayed generic versions of HIV drugs from hitting the market and shot up prices for consumers.

Teva and Gilead had asked U.S. District Judge Edward Chen to dismiss claims that the companies violated antitrust and consumer protection laws in Indiana, Louisiana, Mississippi, Pennsylvania and Utah.

The two drugmakers argued laws in those states only allow a consumer who buys drugs for their own personal use to file suit. Chen rejected that argument in a 16-page ruling Tuesday, but he dismissed some claims for other reasons.

“Although an insurer who purchases a pharmaceutical product does not make that purchase for its own use, its role is located on the retail side of the transaction given that it is essentially acting as a proxy for its insured,” Chen wrote.

During a court hearing last week, Teva attorney Jordan Bock of Goodwin Procter said state lawmakers carefully crafted their statutes to ensure that consumers, and not corporate entities like insurers, are allowed to recover damages.

“That’s not the scope of the consumer protection law those state legislatures had in mind,” Bock said.

Most of the laws allow any “person," including corporate and legal entities, to recover damages. Bock said the test to determine if a corporate entity can sue hinges on whether a purchase is made for a company’s personal use, for resale or for someone else’s use.

He gave the example of a restaurant buying washing machines for cleaning linens. If those machines turn out to be defective, the restaurant could sue because it bought the machines to use them, not to resell them, he said.

“The flipside of describing corporations as persons in the statute is ‘person’ means for personal use rather than retail transactions,” Bock said.

Judge Chen resolved a similar dispute back in March 2020 when he ruled that labor union insurers could sue drug makers for antitrust under the same state laws, even though those insurers were third-party payors.

Gilead and Teva argued that situation was different because the plaintiffs were union health and welfare funds, not for-profit corporations like UnitedHealth. Chen found the argument unavailing.

“Even though a union health and welfare fund is a nonprofit entity by nature, it functions like an insurer,” Chen wrote.

The judge denied Teva and Gilead’s motions to dismiss claims under Indiana, Louisiana and Pennsylvania consumer laws.

He dismissed a claim under Mississippi law without prejudice because UnitedHealth did not try to resolve the dispute through required settlement process first.

The judge refused to advance Utah state law claims on behalf of UnitedHealth’s insureds because only state residents can sue, but he allowed UnitedHealth to sue on behalf of its Utah-based subsidiary, finding the parent company would be "standing in the shoes” of its affiliate.

Chen also dismissed Massachusetts, Kansas and Vermont state law claims based on his prior analysis of those laws in a separate March 2020 ruling.

Additionally, Chen forbade claims against Teva based on purchases made before Oct. 19, 2017, finding those claims are barred by a four-year statute of limitations.

Attorneys for Teva, Gilead and UnitedHealth did not immediately return emails requesting comment Tuesday.

UnitedHealth’s complaint against the pharma firms is part of a flurry of federal antitrust suits filed last year against the makers of HIV antiretroviral drugs. Major retailers and insurers, including Humana and Blue Cross Blue Shield, have also sued the pharmaceutical giants.

About 1.2 million people living in the U.S. have human immunodeficiency virus, or HIV, an incurable virus that attacks the body’s immune system and can lead to AIDS if untreated. Antiretroviral drugs can reduce an HIV patient’s viral load to undetectable levels, allowing them to live longer and effectively eliminating the risk of transmitting HIV to partners through sex.

Gilead makes three of the four top-selling HIV medications in addition to other drugs used in HIV combination antiretroviral therapy, or "cART." More than 80% of U.S. patients starting HIV treatment take one or more of Gilead's products each day, according to lawsuits filed by retailers.

The lawsuits claim Teva struck deals to settle patent suits with Gilead that delayed the introduction of a generic form of Viread until December 2017 and generic forms of Truvada and Atripla until September 2020. They say those deals enabled the drugmakers to charge hundreds of millions of dollars in higher prices for necessary medications that would have otherwise been cheaper in a truly competitive market.

A separate suit filed against Gilead by Humana last year claims that most of the company’s HIV medications cost $10 to produce, but for nearly 20 years Gilead charged health plans thousands of dollars for a 30-day supply. HIV drugs earned Gilead nearly $17 billion in sales in 2020.

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