IP Law Daily, ANTITRUST—N.D. Cal.: Dexilant® ‘pay-for-delay’ suit survives Takeda and TWi motion to dismiss., (Feb 10, 2026)

By Justin Marcus Smith, J.D.

Retailers and DPPs alleged plausible continuing antitrust violations and reverse payment claims.

In “pay-for-delay” antitrust litigation about prescription drug Dexilant®, retailers and direct purchaser plaintiffs (DPPs) plausibly alleged that Takeda Pharmaceutical Company Limited and TWi Pharmaceuticals, Inc. engaged in continuing antitrust violations; therefore, the limitations period did not bar the claims for injuries within four years of their first complaints, held the federal district court in San Francisco. The court also found the plaintiffs plausibly alleged a reverse payment claim under FTC v. Actavis, 570 U.S. 136 (2013). The court declined to exclude per se analysis of the market allocation claim, as a matter of law, at this early stage of the proceedings. The plaintiffs also plausibly alleged antitrust injury flowing from antitrust violations, albeit the plaintiffs would have to prove causation. The court also denied the defendants’ motion to dismiss end payer plaintiff (EPP) state law claims as moot in light of EPP voluntary dismissal (In Re Dexilant (Dexlansoprazole) Antitrust Litigation, No. 3:25-cv-02785-JSC (N.D. Cal. Feb. 6, 2026)).

Background. Japan-based Takeda Pharmaceutical Company Limited (Takeda) brought patent litigation to block TWi Pharmaceuticals, Inc. (TWi) and other generic manufacturers from marketing generic versions of Takeda’s prescription drug Dexilant®, otherwise known as dexlansoprazole (see Antitrust Law Daily, Mar. 26, 2025). The drug is used to treat esophagitis and gastroesophageal reflux. Takeda's annual revenues from Dexilant® between 2015 and 2022 exceeded one billion dollars.

Trial court judgments resulted in TWi not being able to introduce its generic dexlansoprazole until at least June 15, 2020, and the other generic manufacturers on later dates. Takeda settled its cases with the generic manufacturers while it appealed the rulings. Until November 22, 2022, TWi's AG version was the only generic dexlansoprazole on the market to compete with Dexilant®.

In March, 2025, drug retailers filed a complaint against Takeda and TWi, alleging that their patent litigation settlement agreement was an illegal “pay-for-delay” restraint upon competition raising the cost of dexlansoprazole. The plaintiffs alleged that (1) between June 15, 2020 and January 1, 2022, TWi agreed not to sell its generic, so Takeda retained and exercised its market power to sell them its brand dexlansoprazole at supracompetitive prices; and (2) after January 1, 2022, because Takeda agreed not to launch its own generic, TWi and Takeda exercised their market power to sell generic and brand dexlansoprazole, respectively, at supracompetitive prices.

After consolidation, the plaintiffs included retailers Walgreen Co.; The Kroger Co.; Albertsons Companies, Inc.; H-E-B, L.P., Supervalu, Inc.; CVS Pharmacy, Inc.; a putative class of direct purchaser plaintiffs (DPPs); and a putative class of end payer plaintiffs (EPPs).

The retailer plaintiffs’ amended complaint asserted (1) Takeda and TWi unreasonably restrained trade in violation of Section 1 of the Sherman Act; (2) Takeda and TWi allocated the market in per se violation of Section 1 of the Sherman Act; and (3) Takeda monopolized in violation of Section 2 of the Sherman Act. DPPs asserted the same claims under Sections 1, 2 and 3 of the Sherman Act. EPPs, who withdrew, had asserted various claims for conspiracy to restrain trade, monopolization, violations of state consumer protection laws, and unjust enrichment.

In October 2025, the federal district court in San Francisco denied a TWi and Takeda motion to stay all discovery while their motion to dismiss was pending. The court held TWi and Takeda did not show “good cause” for halting the early discovery phase of this non-PSLRA (Private Securities Litigation Reform Act) antitrust litigation. The drug retailer plaintiffs sought production of a narrow set of core “go get” documents necessary to move the case forward (see Antitrust Law Daily, Oct. 20, 2025).

Most recently, the court granted in part a TWi and Takeda motion to dismiss. The court dismissed claims based on (1) the retailers’ alleged injuries before March 25, 2021; (2) DPPs’ alleged injuries before March 31, 2021; and (3) claims against Bora and Upsher. The court otherwise denied the defendants’ motion to dismiss.

Limitations period. The court found the plaintiffs plausibly alleged that sales at supracompetitive prices amounted to overt acts that were continuing violations. Accordingly, the court did not grant the defendants’ motion to dismiss on limitations grounds in its entirety.

The defendants argued the plaintiffs’ antitrust claims accrued as of the Takeda and TWi settlement on April 27, 2015, nearly six years before the plaintiffs filed their first complaint on March 25, 2025; however, the defendants did not meet their burden of proving accrual in 2015. There could not have been any injury in 2015 because the plaintiffs alleged that, without the challenged agreement, TWi’s generic would not have entered the market until expiration of Takeda’s ‘282 Patent on June 15, 2020. Per the complaint, no cause of action could occur before 2020.

Patent expiration in 2020 was still more than four years before March 25, 2025, and the plaintiffs did not plausibly allege affirmatively misleading acts to toll the limitations period for fraudulent concealment. The plaintiffs only alleged failure to disclose information about the alleged $9.5 million reverse payment TWi received from Takeda. As for constructive notice, the plaintiffs did not plead due diligence with particularity, so they did not plausibly allege fraudulent concealment to justify tolling the limitations period.

However, the plaintiffs did show continuing antitrust violations in the ongoing sale of a price-fixed product beginning as of June 15, 2020 and each time Takeda and TWi chose to sell their brand and AG Dexilant, respectively, at a supracompetitive price after January 1, 2022. The court reasoned the 2015 settlement agreement did not include an agreement to sell Dexilant at supracompetitive prices, so antitrust injury did not begin at that time.

The defendants argued the plaintiffs’ allegations were insufficient because sales at supracompetitive prices are overt acts only in price-fixing conspiracies. However, drawing all inferences in the plaintiffs’ favor, the 2015 agreement gave Takeda and TWi market power to bring about a series of unlawfully high prices over a period of years. The agreement was at least analogous to a price-fixing conspiracy in which each sale starts the statutory period anew. The court also noted the Ninth Circuit has held, outside the price fixing context, that non-legal actions taken pursuant to a pre-limitations period contract can be overt acts as long as the defendant had the ability to not take the challenged action, even if that would have required breaching the allegedly anti-competitive contract.

In this matter, Takeda maintained the ability to charge competitive prices for Dexilant and to introduce its own generic, while TWi maintained the ability to charge competitive prices for its generic. TWi also maintained its ability, notwithstanding the settlement, to push its patent litigation and seek ANDA approval to introduce its own generic earlier. The plaintiffs plausibly alleged sales after June 15, 2020 constituted overt acts. Tying and monopolization cases the defendants relied on were not persuasively analogous, and the defendants failed to cite any case in which a court rejected a continuing violation argument in the context of a reverse-payment claim.

Section 1. The court held the plaintiffs plausibly alleged a large and unjustified reverse payment supporting an inference of significant anticompetitive effects in accord with Actavis. The plaintiffs alleged a reverse payment because Takeda and TWi, before Takeda’s patent infringement claims against TWi were finally resolved, entered into a settlement in which patentee Takeda paid alleged infringer TWi. The plaintiffs also said the $9.5 payment was too large to be justified as any reasonable estimate of Takeda savings of future litigation expenses.

The defendants contested whether a license to a second-filer like TWi could violate the antitrust laws, but the court analyzed that Actavis involved settlements with later generic filers. In any event, the plaintiffs plausibly alleged, without the settlement, there would have been no first-filer exclusivities stopping TWi from launching its own generic in June 2020. The plaintiffs’ allegations also plausibly supported an inference that the settlement led TWi to delay its launch from June 15, 2020 until January 1, 2022, and therefore delayed market entry for the first generic.

The court considered and rejected the defendants’ various other arguments here and ultimately denied their motion to dismiss the reverse payment claim as insufficiently pleaded.

Per se allocation. Whether the per se rule was appropriate depended on the facts of the horizontal agreement the plaintiffs alleged, and for this reason, the court said it would decline to determine the applicability of per se treatment on a motion to dismiss. Moreover, the plaintiffs confirmed at oral argument they may try to prove market allocation under either the per se rule or the rule of reason, so the court did not need to decide now which rule applies.

Antitrust injury. Drawing inferences in the plaintiffs’ favor, the defendants’ ability and choice to sell at supracompetitive prices were expected consequences of their agreement. Plaintiffs therefore plausibly alleged antitrust injury to withstand a motion to dismiss. The defendants countered that two links in the plaintiffs’ chain of causation, pertinent to the outcome of the patent litigation, were too speculative to support a plausible inference that plaintiffs’ injuries flowed from the defendants’ anticompetitive acts. The court opined that even if the plaintiffs might need more evidence to prove causation, Actavis indicated a large an unjustified payment is ordinarily enough to allege plausible causation to survive a motion to dismiss.

As for the timeline for ANDA approval, the defendants argued the plaintiffs did not plausibly allege their injuries flowed from the defendants’ agreement because TWi did not have FDA authorization to launch its own ANDA until September 2022; consequently, TWi could not have launched its own generic by June 15, 2020. The court disagreed with this argument because the plaintiffs alleged facts supporting a plausible inference that TWi would have, hypothetically, obtained ANDA approval by June 2020. The court said dismissal based on speculation at such an early stage would be premature.

Bora, Upsher. The court found the plaintiffs did not plausibly allege that Bora and Upsher participated in choices to sell the AG Dexilant at supracompetitive prices. The court also noted a parent corporation is ordinarily not liable for the acts of subsidiaries, and the plaintiffs failed to allege facts plausibly supporting an inference that Bora or Upsher assumed TWi liabilities as a result of merger or that there was a mere continuation. The court dismissed Bora and Upsher with leave to amend.

Sealing motion. The court granted Takeda’s administrative motion to seal discrete financial terms in the 2015 settlement.

The Case is No. 3:25-cv-02785-JSC.

Judge: Corley, J.

Attorneys: Joseph M. Vanek (Sperling Kenny Nachwalter, LLC) for Walgreen Co. Andrew David Lazerow (Howrey LLP) for Takeda Pharmaceutical Co Ltd., Takeda Pharmaceuticals U.S.A., Inc. and Takeda Pharmaceuticals America, Inc.

Companies: Walgreen Co.; Takeda Pharmaceutical Co Ltd.; Takeda Pharmaceuticals U.S.A., Inc.; Takeda Pharmaceuticals America, Inc.

Cases: Antitrust CaliforniaNews