Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Pa.: Preliminary approval granted to settlement in action over delayed generic competition of antibiotic, (Feb 21, 2014)

By Linda O’Brien, J.D., LL.M.

The federal district court in Philadelphia has granted class certification and preliminary approval to a proposed settlement in an antitrust action by direct purchasers against pharmaceutical manufacturers of a prescription antibiotic (Mylan Pharmaceuticals, Inc. v. Warner Chilcott Public Limited Company, February 18, 2014, Diamond, P.). Thus, the plaintiffs’ proposed class satisfied the prerequisites of Federal Rule of Civil Procedure 23(a), and (b) and the proposed settlement was within the range of reasonableness.

Generic drug manufacturers, pharmaceutical wholesalers, and retail pharmacies that purchased a prescription antibiotic (doxycycline hyclate) sold under the brand name Doryx, filed a class action against pharmaceutical manufacturers of Doryx, including Warner Chilcott Public Limited, for anticompetitive conduct and monopolization by delaying generic competition to Doryx in violation Sections 1 and 2 of the Sherman Act. The plaintiffs alleged the manufacturers conspired to protect their monopoly by implementing product changes to exempt Doryx from state laws that would otherwise allow pharmacies to substitute generic drugs for Doryx prescriptions, without providing any real benefits to patients. The plaintiffs moved for class certification and preliminary approval of the proposed settlement.

Direct purchaser class. The court found that the plaintiffs demonstrated that the joinder of proposed class members was impractical due to the dispersion of class members throughout the United States. The commonality and typicality requirements were also satisfied, since the purported class members’ claims depended upon the common contention that overcharges were paid for Doryx as a result of the defendants’ restraint of trade and were typical of the class. Since the issues were subject to generalized proof, common questions of law and fact predominate over questions affecting only individual class members.

Proposed settlement. The court also determined that the proposed settlement did not disclose any grounds to doubt its fairness and appeared to fall within the range of possible approval. The proposed settlement, which includes a cash payment of $15 million into an escrow account for the benefit of the class, was the product of negotiations that were at arm’s length, conducted by experienced counsel, and followed adequate discovery and years of litigation. The amount of the settlement fell within the range of approved settlements, the court concluded.

The case is No. 12:3824.

Attorneys: Christopher A. Williams (Wilson Sonsini Goodrich & Rosati) and Joseph M. Donley (Clark Hill Thorp Reed) for Mylan Pharmaceuticals Inc. Anne K. Fornecker (Hilliard & Shadowen LLC), David P. Germaine (Vanek Vickers & Masini PC) and David F. Sorensen (Berger & Montague, PC) for Rochester Drug Co-Operative, Inc. Adam Steinfeld (Grant & Eisenhofer PA) for Meijer, Inc. Anne L. Box (Scott & Scott LLP) for International Brotherhood of Electrical Workers Local 38, Health and Welfare Fund. Scott E. Perwin (Kenny Nachwalter, PA) for Walgreen Co. Bryn Resser Pallesen (White & Case LLP) for Warner Chilcott Public Ltd Comp., Warner Chilcott Comp, LLC., Warner Chilcott US, LLC., and Warner Chilcott Laboratories Ireland Ltd. John E. Flaherty (McCarter & English LLP) for Mayne Pharma Group Ltd.

Companies: Mylan Pharmaceuticals Inc.; Rochester Drug Co-Operative, Inc.; Meijer, Inc.; International Brotherhood of Electrical Workers Local 38, Health and Welfare Fund; Walgreen Co.; Warner Chilcott Public Ltd Comp.; Warner Chilcott Comp, LLC.; Warner Chilcott US, LLC.; Warner Chilcott Laboratories Ireland Ltd.; Mayne Pharma Group Ltd.

Cases: Antitrust PennsylvaniaNews