By Gregory Kane, J.D., M.B.A.
Direct purchasers of the testosterone replacement drug AndroGel challenging a purported reverse payment settlement as illegally anticompetitive were denied class certification due to the number and sophistication of the potential plaintiffs by the federal district court in Atlanta. The drug wholesalers claimed that they paid substantially more money for brand and generic AndroGel due to a coordinated delay of generic versions of AndroGel. However, the purchasers failed to show that joinder would be impracticable, especially considering the class size of 33. The court also rejected the wholesalers’ claims that some proposed class members’ claims would cost substantially more than any potential damages they would receive if they won, and that those with smaller claims would likely be too worried over their relationships with suppliers to pursue their claims outside of a class action (In re AndroGel Antitrust Litigation, July 16, 2018, Thrash, T.).
Litigation on this matter began in February 2000, when the Food and Drug Administration (FDA) approved Solvay’s new drug application for AndroGel, giving the company three years of market exclusivity, during which time it also was issued a patent on the drug. AndroGel quickly became the most popular form of testosterone replacement therapy, with over $1.8 billion in sales from 2000 to 2007. After the exclusivity period ended in 2003, Actavis and soon thereafter Paddock filed abbreviated new drug applications (ANDAs) with the FDA, seeking to sell generic versions of the drug. Solvay then asserted its patent rights, bringing a patent infringement suit against both would-be generic competitors. While that suit was pending, the FDA approved Actavis’ ANDA, though it continued to stay Paddock’s. Before the infringement actions were decided, and before any generic version entered the market, however, Solvay entered into one settlement agreement with Actavis and another with Paddock and Par, which had partnered with Paddock to market and share profits on the drug.
The settlements resolved the infringement actions in exchange for each prospective generic seller’s agreement not to market generic AndroGel until August 2015 or later unless another company brought a generic to market earlier. At the same time, Solvay entered into separate profit sharing agreements with Actavis, Par, and Paddock, under which each of the companies agreed to a share of AndroGel’s profits for promoting or serving as a backup supplier of the branded drug.
The settlements prompted an FTC investigation in 2008 that culminated in the filing of antitrust actions by the FTC and a number of private parties in 2009. After the cases were consolidated and transferred to the present court, the court in 2010 dismissed the FTC’s action for failure to state a claim. That ruling was eventually reversed and remanded by the Supreme Court in FTC v. Actavis, 570 U.S. 136 (2013), and litigation resumed.
Class certification. Direct purchaser class plaintiffs are drug wholesalers or their assignees who claim substantially higher payments for brand and generic AndroGel as a result of the settlements. These plaintiffs sought certification of the class of others similarly situated. The proposed class of 33 members could be accommodated via joinder, rather than class certification. The potential plaintiffs are already known and are all large, domestic and sophisticated companies with large claims against defendants. The vast majority of plaintiffs have revenue of at least tens of millions of dollars per year and have alleged treble damages over $1 million. Most of these companies have litigated similar actions in the past. While the companies are widely distributed across the country, they have the means and motivation to join the present action. Plaintiffs were unable to show how the use of joinder rather than class certification would restrict potential claims. As a result, class certification was denied.
The case is MDL No. 2084.
Attorneys: Andrew C. Curley (Berger & Montague, PC) for Rochester Drug Co-Operative Inc. Andrew Kelly (Odom & Des Roches, LLC) and Bruce E. Gerstein (Garwin Gerstein & Fisher, LLP) for Louisiana Wholesale Drug Co Inc. Adam Steinfeld (Grant & Eisenhofer, P.A.) for Meijer Inc. Kelly A. Welchans (Arnold & Porter, LLP) for Unimed Pharmaceuticals Inc. Justin P. Raphael (Munger, Tolles & Olson, LLP) for Solvay Pharmaceuticals Inc. Julia K. York (Skadden Arps Slate Meagher & Flom LLP) for Actavis, Inc.
Companies: Rochester Drug Co-Operative Inc.; Louisiana Wholesale Drug Co Inc.; Meijer Inc.; Unimed Pharmaceuticals Inc.; Solvay Pharmaceuticals Inc.; Actavis, Inc.
MainStory: TopStory Antitrust GeorgiaNews
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