BOSTON (Legal Newsline) -- An appeals court ruling in favor of two drug companies accused of hurting insurance plans, wholesalers and consumers by blocking the entry of a generic product to market will provide some framework for deciding future similar cases, according to an attorney.
But the suit against Ranbaxy and AstraZeneca over a “reverse payment,” or a pay-for-delay, worth hundreds of millions of dollars, has to be evaluated in the shadow of a U.S. Supreme Court ruling that these disputes must be approached on a case-by-case basis.
The U.S. Court of Appeals of the First Circuit in November upheld a jury verdict that the actions of the two drug companies did not amount to stifling competition to the point where it was financially damaging to the insurance plans, wholesalers, and consumers.
AstraZeneca initially sued Ranbaxy after the latter signaled its intent to manufacture a generic equivalent of the best-selling heartburn and acid relief drug, Nexium.
The two companies reached a settlement in 2008 in which Ranbaxy was granted manufacturing, marketing and distribution privileges worth an estimated $700 million.
Purchasers of Nexium sued, alleging the “large and unjustified” payment was directly linked to blocking the introduction of a cheaper, generic drug, and therefore injured competition and hurt consumers. Billions in damages were claimed.
Although the jury sitting in Boston in late 2014 agreed the in-kind payment was “large and unjustified,” it decided consumers were not hurt because Ranbaxy did not have a generic drug ready for market at the time of the settlement, said Caleb Bates, an attorney with the Irvine, California-based Knobbe Martens law firm, specialists in intellectual property.
This was the first time a jury was asked to judge pay-for-delay payments in the aftermath of the Supreme Court decision in the case of the Federal Trade Commission v Actavis, Bates told Legal Newsline.
The Supreme Court ruled that reverse payments can violate antitrust laws, and that some can be viewed as “large and unjustified,” but each case must be adjudicated on its own separate merits.
The AstraZeneca-Ranbaxy case does provide some framework for future juries when considering whether a reverse payment does violate antitrust laws, Bates said.
But this was an “unusual factual scenario” because no generic was ready for manufacturing, and that was the reason the jury concluded the plaintiffs were not hurt by the agreement, Bates said.
Still, the attorney added, the jury verdict did not draw any “bright line” and uncertainty remains when considering future cases.
Drug wholesalers and health plans argued before the appeals court that the jury was prevented from hearing certain arguments and evidence, and was given improper instructions. The plaintiffs estimated the potential damages at $4 billion to $20 billion or even more.
In initial court filings ahead of the jury trial, the plaintiffs alleged that it was clear AstraZeneca paid Ranbaxy in-kind provisions worth hundreds of millions of dollars to defer the entry date for the first generic competition to Nexium.