Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Pa.: 42 states' bid to intervene in generic drug pricing antitrust settlement with Sandoz denied, (Aug 20, 2025)

By Martin A. Steinberg, J.D.

The court, however, considered the states’ objections raised in their motion as an amicus curiae brief.

The federal district court in Philadelphia denied a motion by 42 states, territories, and the District of Columbia to intervene in the Generic Pharmaceuticals Pricing Antitrust Litigation multidistrict litigation to object to a proposed class action settlement between End-Payer Plaintiffs (EPPs) and defendants Sandoz Inc. and Fougera Pharmaceuticals Inc. The states argued that the settlement implicated their sovereign interests in recovering damages for consumers under parens patriae authority and sought intervention as of right or permissively under Fed. R. Civ. P. 24, citing potential prejudice to their separate antitrust claims. Adopting the Special Master's Report and Recommendation (R&R) after de novo review, the court found that the states lacked Article III standing, as their interests were nominal and derivative of individual consumers rather than quasi-sovereign, and that permissive intervention would cause undue delay. However, the court allowed the states' objections to proceed as an amicus curiae brief, granting them equal weight in the settlement approval process, while also approving Florida's separate amicus brief in support of the settlement and allocating Special Master fees accordingly (In Re Generic Pharmaceuticals Pricing Antitrust Litigation, No. 2:16-md-02724-CMR (E.D. Pa. Aug. 19, 2025)).

Background. In December 2024, the EPPs and Sandoz agreed to the largest settlement to date in this MDL. Fougera is also a party to the settlement agreement, but all parties have generally referred to the proposed settlement as the EPP/Sandoz settlement. The end payer class comprised "end-purchasers" including consumers who bought Sandoz drugs from pharmacies and institutions such as the City of Providence and a New York City police benefits plan. The proposed settlement, preliminarily approved by the court on February 19, 2025, defines the class as "[a]ll persons and entities in each of the 50 United States (except Indiana and Ohio), as well as the District of Columbia, Puerto Rico and the U.S. Virgin Islands, that indirectly purchased, paid and/or provided reimbursement for some or all of the purchase price for any Drugs at Issue, other than for resale, from May 1, 2009, through December 31, 2019."

Specifically, the end payer plaintiffs class includes the following entities: 1199SEIU Greater New York Benefit Fund; 1199SEIU Licensed Practical Nurses Welfare Fund; 1199SEIU National Benefit Fund; 1199SEIU National Benefit Fund for Home Care Workers; American Federation of State, County and Municipal Employees District Council 37 Health & Security Plan; American Federation of State, County and Municipal Employees District Council 47 Health & Welfare Fund; City of Providence, Rhode Island; Detectives Endowment Association of the City of New York; Hennepin County; Louisiana Health Service & Indemnity Company d/b/a Blue Cross and Blue Shield of Louisiana; Philadelphia Federation of Teachers Health and Welfare Fund; Self-Insured Schools of California; Sergeants Benevolent Association of the Police Department of the City of New York Health and Welfare Fund; UFCW Local 1500 Welfare Fund; Uniformed Fire Officers Association Family Production Plan Local 854; and United Food & Commercial Workers and Employers Arizona Health & Welfare Trust.

The District Court granted preliminary approval, and a fairness hearing under Rule 23 was scheduled for July 23, 2025. The first EPP trial, which would have included Sandoz but for the settlement, was set to begin on August 4, 2025.

On May 9, 2025, the Movant States moved to intervene by specifically objecting to the settlement insofar as it resolves claims on behalf of consumers, arguing that it implicates their "ever-present interest in obtaining a fair recovery for consumers" and "additional sovereign interests" related to their claims against Sandoz. They sought intervention as of right under Rule 24(a)(2) or permissive intervention under Rule 24(b), contending that the settlement could prejudice their separate parens patriae damages claims pending in Connecticut by potentially releasing or impacting those state claims. In the alternative, they requested that their objections be considered as amici curiae under the Class Action Fairness Act (CAFA), 28 U.S.C. § 1715. The Movant States offered to withdraw their motion if the court clarified that the release does not include their state claims, no dismissal order would issue according to the settlement, or if the EPPs and Sandoz amended the settlement to avoid impacting those claims. The EPPs and Sandoz opposed the motion, asserting that the Movant States lack Article III standing to intervene.

The movant states had previously been part of the MDL but were remanded to the District of Connecticut following a 2024 amendment to 28 U.S.C. § 1407(g), which exempts state antitrust enforcement actions under federal law from MDL consolidation. The State of Florida, not among the Movant States, separately filed a motion for leave to file an amicus curiae brief in support of the settlement, which the court granted.

The motion was referred to Special Master Lawrence Stengel, who issued a Report and Recommendation (R&R) recommending denial of intervention but allowing the Movant States to proceed as amici curiae. The R&R concluded that intervention as of right requires Article III standing, which the Movant States lacked because their parens patriae authority did not create a quasi-sovereign interest here, the settlement does not release claims implicating regulatory or law-enforcement powers, and the states otherwise "failed to articulate a cognizable interest that extends beyond simply standing in the shoes of individual consumers." Thus, the real parties in interest were deemed the individual citizen consumers, whose interests are not sovereign in nature. For permissive intervention, the R&R found that it would "unduly delay or prejudice the adjudication of the original parties' rights," regardless of standing.

The Movant States filed objections to the R&R, arguing that it "fundamentally misapprehends the nature of the States' statutory parens patriae damages claims by conflating the statutory label of 'parens' with the constitutional standard for Article III standing." They asserted that their claims, based on state statutes authorizing sovereign recovery of damages for consumers, constitute a "sovereign exercise of authority" rather than merely nominal or derivative interests. They further contended that their survival of motions to dismiss in the Connecticut litigation should settle the standing issue and that the settlement would cause legal prejudice by denying them a cause of action.

Upon de novo review, the court overruled the objections and adopted the R&R. The court analyzed the distinction between nominal, quasi-sovereign, and sovereign interests under Supreme Court precedent in Alfred L. Snapp & Son, Inc. v. Puerto Rico, 458 U.S. 592 (1982), noting that a quasi-sovereign interest involves the state's well-being of its populace in general, while a sovereign interest pertains to exercising power over individuals and entities through legal codes. Nominal interests, however, arise when the state merely aids private parties without asserting broader sovereign concerns.

The court determined that the Movant States' parens patriae authority, whether statutory or common law, does not supplant consumers' ability to pursue damages claims, which is the core issue in the settlement. Thus, their interest in this MDL is nominal and insufficient for Article III standing to intervene, as they are not asserting affirmative claims here but rather arguing interference with their remanded Connecticut litigation. The court emphasized that it was not ruling on the substance of the objections or issues like offsetting, which would be addressed in the final settlement approval determination. Regarding permissive intervention, the court approved the R&R's conclusion without objection from the Movant States, finding it would cause undue delay.

Amicus curiae. The court denied the motion to intervene but granted it insofar as the objections would be considered as an amicus curiae brief, affording them equal weight in the settlement approval process, whether as intervenors or amici. However, the court noted that the Movant States must establish Article III standing to appeal any ruling, per Chapman v. Tristar Prods., Inc., 940 F.3d 299 (6th Cir. 2019). The Movant States were heard as amici at the July 29, 2025, fairness hearing without prejudice to the intervention resolution.

Florida's unopposed motion for leave to file an amicus brief in support of the settlement was granted, and the court indicated it would consider both amicus briefs in deciding final approval. Additionally, the court ordered that Special Master fees associated with the motion be allocated as follows: 50% by the Movant States, 25% by the EPPs, and 25% by Sandoz.

The Case is No. 2:16-md-02724-CMR.

Judge: Rufe, C.

Attorneys: Jessica Lynn Kuehn, Office of the Attorney General, for Commonwealth of Pennsylvania. Jason H. Kim (Schneider Wallace Cottrell Kim LLP) for Health Care Service Corp. Abram J. Ellis (Simpson Thacher & Bartlett LLP) for McKesson Medical-Surgical, Inc.

Companies: Health Care Service Corp.; McKesson Medical-Surgical, Inc.

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