Recent Case Developments

Abstract

First Circuit Certifies Class for Third Party Payors and Individual Consumers in Pharmaceutical Pay-For-Delay Case - In re Nexium Antitrust Litigation1 - On January 21, 2015, the U.S. Court of Appeals for the First Circuit certified a action brought by third party payors (TPPs) and individual consumers against pharmaceutical companies engaging in reverse payment settlement agreements.2 Under a reverse payment settlement agreement, a patentee compensates an alleged infringing party for refraining from entering the patentee's market.3 In re Nexium is the first reverse-payment-settlement-agreement action that has been certified and has survived on appeal since the landmark Supreme Court decision in FTC v. Actavis, Inc.4In 2001, AstraZeneca received FDA approval for Nexium, a heartburn drug.5 AstraZeneca also received approval for a total of fourteen patents related Nexium.6 In 2005, Ranbaxy Pharmaceuticals filed an Abbreviated New Drug Application (ANDA) for a generic form of Nexium along with a Paragraph IV certification claiming that either AstraZeneca's Nexium patents were invalid, or they were valid, Ranbaxy's ANDA was not infringing.7 Thereafter, AstraZeneca sued Ranbaxy claiming that Ranbaxy's generic product infringed AstraZeneca's patents.8 Teva Pharmaceuticals and Dr. Reddy's Laboratories (DRL) filed similar ANDAs and Paragraph IV certifications for their Nexium generics.9 AstraZeneca sued Teva and DRL separately, alleging that Teva and DRL had also infringed AstraZeneca's patents.10Under the Hatch-Waxman Act,11 if the branded drug manufacturer sues [for infringement], the [Food and Drug Administration (FDA)] may not approve the ANDA until 30 months pass or an appellate court finds the patent invalid or not infringed.12 Thus, Ranbaxy could have entered the market on April 14, 2008-thirty months after AstraZeneca sued-even though the court had not yet ruled on the patent invalidity or infringement matter.13 Ranbaxy, however, settled its litigation with AstraZeneca and agreed to delay the launch of its product until May 27, 2014, which was also the date AstraZeneca's two main Nexium patents were set expire. 14 In return, AstraZeneca paid Ranbaxy over one billion dollars.15AstraZeneca entered into similar settlement agreements with Teva and DRL, in which Teva and DRL also agreed stay offthe market until May 27, 2014 in return for substantial monetary compensation.16Thereafter, union health and welfare funds filed six separate suits in three separate judicial districts against AstraZeneca and the three generic companies.17 On December 6, 2012, the United States Judicial Panel on Multidistrict Litigation granted a motion consolidate the six suits in order centralize the multi-district litigation.18 The plaintiffclass contended that the settlement agreements between AstraZeneca and the generic defendants violated antitrust regulations because the Nexium patents were likely invalid, AstraZeneca's payments under the settlement agreements were very large, and the nature of the agreements between AstraZeneca and the generic defendants had anticompetitive effects.19 More specifically, the plaintiffclass alleged that but for AstraZeneca's anti-competitive conduct, a generic substitute for Nexium would have been available for consumers as early as April 2008.20 Since generics are cheaper than brand name drugs, the plaintiffclass claimed that it was overcharged for Nexium between April 14, 2008 and May 27, 2014 (the class period). As of the date of the opinion-January 21, 2015-no generic substitute for Nexium had been released.21At trial, the named plaintiffs sought certify a including TPPs (such as insurance companies) and individual consumers who purchased brand name Nexium.22 On November 14, 2013, the United States District Court for the District of Massachusetts certified the class.23 The defendants appealed, claiming that the certification was improper because some of the plaintiffclass members were not harmed. …