By Dorothy Atkins Law360 (August 17, 2020, 7:04 PM EDT) — A California federal judge on Friday certified a proposed class of diabetes drug buyers who accuse drugmakers of violating antitrust laws by blocking a generic version of Glumetza, saying it will be “most engaging” to see how counsel argues that a 800% price hike served competition.
In a 23-page order, U.S. District Judge William Alsup certified all Glumetza or generic Glumetza buyers in the U.S. who purchased the drug from May 6, 2012, until the date of the order, and he appointed Hagens Berman Sobol Shapiro LLP, Hilliard & Shadowen LLC and Sperling & Slater PC as co-lead counsel for the class.
“Though complexities will surely arise, including some individualized questions, no inability to manage a class action manifests here,” the order says.
He also noted that the case “arises from a perversion of the patent and pharmaceutical regulatory framework,” in which brand-name drugmakers purportedly pay off generics makers that are the first to challenge their patents and the generics companies then agree to stay off the market for a few years.
“We have excellent counsel on both sides in this case and it will be most engaging to see how counsel argue that the 800 percent price hike served competition,” he said.
The ruling is the latest development in an antitrust lawsuit that a group of direct and indirect buyers filed last fall after the price of diabetes medication allegedly jumped by nearly 800% in 2015 from $5.72 per pill to more than $51 each.
The buyers allege that Bausch Health Co., its subsidiary Santarus Inc., Lupin Pharmaceuticals Inc. and Assertio Therapeutics Inc. violated the Sherman Act by entering into a corrupt settlement in 2012 to resolve patent infringement litigation that involved a promise not to compete, as well as market allocation.
The agreement allegedly resulted in the expansion of Assertio’s monopoly for diabetes drug Glumetza and the creation of a monopoly for Lupin’s generic version, the buyers claim. The buyers’ expert estimates that as a result, they were overcharged by roughly $2.3 billion.
In the spring, Judge Alsup tossed claims by indirect buyers, and in April, the direct buyers, who are primarily retailers, asked Judge Alsup to certify a class.
But the drugmakers fought the bid, arguing that a class can’t be certified for a number of reasons, including that individual damages and injury theories favor individual litigation. The companies also argued that Lupin would have lost its challenge to the brand-name drug patent, so its generic would have never stayed on the market for long and calculating damages would be too individualized.
During a hearing on the motion earlier this month, Judge Alsup appeared skeptical on the certification bid and noted that he can’t “kick the can down the road” and ignore potential proof of harm differences. He also said he disagrees that the court can “wait and see” how certain issues play out before a jury.
But in his order Friday, Judge Alsup agreed to certify the class and said “it remains to be seen how deep into the patent weeds” they will have to delve later in litigation. In reaching his decision, he cited the U.S. Supreme Court’s 2013 FTC v. Actavis ruling, which held that parties don’t necessarily have to litigate patent validity to determine an antitrust violation.
Judge Alsup also concluded that the drugmakers’ challenges to the buyer’s damages theory is premature, and that the parties can “quibble” about the particular inputs of the proposed damages models later.
“It will be for the jury to determine what exactly happened absent defendants’ conduct,” the order says.
Judge Alsup also noted that the direct buyers do not have different goals, just because they might have entered the market at different times. Additionally, he rejected the drugmakers’ arguments that the class didn’t purchase a large chunk of the Glumetza market, because three big wholesalers account for over 71% of direct brand and generic purchases and they haven’t sued.
“If defendants mean to imply their lawful conduct from this fact, they read too much from the large wholesalers’ absence,” the order says. “Many factors drive a decision not to sue, including, as the Supreme Court has recognized, a wholesaler’s ‘fear of disrupting relations with their suppliers.’ More importantly, that the remaining class members possess noticeably smaller recovery interests actually weighs in favor of the economies of class treatment, not against it.”
Steve Shadowen of Hilliard & Shadowen said Monday that the plaintiffs are pleased that the court has certified the class, and they “very much look forward to the trial of our claims in January.”
Counsel and representatives for the pharmaceutical companies didn’t immediately respond Monday to requests for comment.
The buyers are represented by Shana E. Scarlett, Lauren G. Barnes, Thomas M. Sobol, David S. Nalven, Kristen A. Johnson, Jessica R. MacAuley and Rochella T. Davis of Hagens Berman Sobol Shapiro LLP; Steve Shadowen, Matthew C. Weiner and Nicholas Shadowen of Hilliard & Shadowen LLP; and Joseph M. Vanek, David P. Germaine, Eamon P. Kelly, Alberto Rodriguez and John P. Bjork of Sperling & Slater PC.
The pharmaceutical companies are represented by Daniel B. Asimow, Laura S. Shores and Jennifer B. Patterson of Arnold & Porter; Leiv Blad and Jeffrey Blumenfeld of Lowenstein Sandler LLP; and Victoria L. Weatherford and Eric J. Stock of Gibson Dunn & Crutcher LLP.
The case is In re: Glumetza Antitrust Litigation, case number 3:19-cv-05822, in the U.S. District Court for the Northern District of California.
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–Additional reporting by Julia Arciga. Editing by Gemma Horowitz.