Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal.: Most claims in Xyrem antitrust litigation will go to trial, (Aug 29, 2024)

By Martin A. Steinberg, J.D.

Insurance providers accused Jazz Pharma entered into reverse payment settlements with generic drug companies.

The federal district court in San Jose, California ruled on three complex motions for summary judgment in the antitrust class action suit claiming various drug manufacturers engaged in a course of conduct to prevent or delay generic competition and maintain a monopoly with respect to brand name prescription drug Xyrem. Plaintiffs include labor union health plans, health insurers, government entities, and a single individual. In addition to the Plaintiffs’ motion, Jazz Pharmaceuticals, Inc., Jazz Pharma Ireland, Ltd., and Jazz Pharmaceuticals PLC (Jazz) filed a separate motion and Jazz along with Defendants Hikma Labs, Inc., Hikma Pharmaceuticals USA Inc., Eurohealth (USA) Inc., and Hikma Pharmaceuticals plc (Hikma) (collectively, “Defendants”) filed a consolidated motion. Two of the defendants, Amneal Pharmaceuticals LLC (Amneal) and Lupin Ltd. and Lupin Ltd., Lupin Pharmaceuticals Inc., and Lupin, Inc. (collectively “Lupin”) had previously settled with Plaintiffs (In Re: Xyrem (Sodium Oxybate) Antitrust Litigation, No. 3:20-md-02966-RS (N.D. Cal. Aug. 26, 2024)).

Background. Sodium oxybate is a drug that has been used to treat narcolepsy since the 1960s. A company named Orphan Medical (acquired by Jazz in 2005) won FDA approval to sell the drug under the brand name Xyrem in 2002. Though Jazz’s financial position immediately after this acquisition was precarious, Plaintiffs alleged it was able to raise prices by more than 800% between 2007 and 2014, which led to a corresponding rise in Jazz’s stock price. Plaintiffs further alleged that Jazz engaged in a number of anticompetitive practices, including entering into reverse payment settlements with generic drug companies to delay the entry of generic competition; making false and misleading statements about Xyrem to doctors and patients; and engaging in unfair and deceptive trade practices.

Nine potential competitors indicated an intent to enter this market between July 2010 and November 2017. Despite this, to date, no Jazz competitor has brought a bioequivalent (AB-rated or generic) drug onto the market. Hikma finally entered the sodium oxybate in January 2023 with an authorized generic (AG) version of Xyrem. Amneal launched its AG Xyrem in July 2023.

In April 2024, final approval was granted for a settlement between Class Representative Plaintiffs, Amneal, and Lupin, where they agreed to pay a combined $3,400,00.00 to Class Representative Plaintiffs to be used for continued litigation against the non-settling defendants. The other Plaintiffs in this MDL settled their claims against Amneal and Lupin separately. The remaining Defendants are Jazz, Hikma, and Par Pharmaceutical, Inc. (“Par”), though Plaintiffs’ claims against Par are currently stayed due to Par’s bankruptcy proceedings.

The parties were initially directed to select ten of the original seventeen claims for relief included in the complaint to proceed through initial litigation. Of these ten, three have been dismissed. The current phase of litigation involves seven claims for relief. Claims 7–11 of the Consolidated Amended Class Action Complaint (CAC) alleged claims involving conspiracy and combination in restraint of trade under state law; Claim 12 alleged a claim of monopolization and monopolistic scheme under state law; and Claim 17 seeks declaratory and injunctive relief for violations of the Sherman Act.

Jazz’ motion. Jazz sought summary judgment on (1) the sham litigation claims, (2) claims concerning Jazz’s REMS-related conduct, (3) whether the Opt-Out Plaintiffs are entitled to damages for Jazz’s Xywav launch, and (4) whether the laws of California, Kansas, New York, and Tennessee recognize the theory of unilateral monopolization against Jazz.

The court dismissed Plaintiffs’ sham litigation allegations because Plaintiffs agreed no longer to pursue them. Regarding Plaintiffs’ REMS-related claims, the court denied the motion because factual disputes existed. Regarding Xywav damages, because Opt-Out Plaintiffs were not entitled to damages where they were reimbursed for a different drug for which no anticompetitive conduct was alleged, Defendants were entitled to summary judgment on that claim. Finally, regarding unilateral monopolization, the court granted summary judgment under the laws of California, Kansas, New York, and Tennessee because Plaintiffs did not explain how the fact Jazz used an entity to dispense Xyrem changed the unilateral nature of its petitioning conduct.

Defendants’ motion. Defendants collectively sought summary judgment on (1) the alleged reverse payments in Jazz’s patent litigation settlements with Hikma, Par, Lupin, and Amneal, (2) Defendants’ alleged conspiracy to allocate the market, (3) causation due to a lack of evidence any ANDA filer could have launched a generic before 2024, (4) Humana’s and HCSC’s claims for damages on behalf of non-parties for lack of standing, and (5) Plaintiffs’ claim for injunctive relief.

Regarding reverse payments claims, the court concluded that summary judgment was not warranted because a reasonable juror could assess the incentives the acceleration clause created in combination with evidence several generics subsequently abandoned their patent challenges and conclude the acceleration clause conferred value and was anticompetitive.

Regarding a conspiracy to allocate the market for Xyrem, the court found that Plaintiffs’ argument that their relevant market definition was, and remains, the sodium oxybate market was persuasive. There was no issue with Plaintiffs’ market allocation theory from a market definition perspective. Taking a holistic view of the record, Plaintiffs had put forth sufficient evidence of a conspiracy to allocate the market to survive summary judgment.

Regarding causation, the court found that there were factual disputes about whether Hikma’s API contained too much dimer and whether Hikma could have fixed the dimer problem, if one existed, and launch well before 2024. Summary judgment on Defendants’ causation argument relating to Hikma’s alleged dimer issues was therefore unwarranted.

Regarding Humana’s, HCSC’s, and BCBS Florida’s damages claims on behalf of non- party clients, Defendants were entitled to summary judgment to the extent the ASO Providers assert claims on behalf of nonparty clients who were allegedly overcharged for Xyrem both on antitrust standing and capacity to sue grounds.

As to any injunctive relief, Plaintiffs failed to identify which injunctive relief would likely redress their asserted injuries; having failed to make such a showing, Plaintiffs lack standing to pursue such relief. Summary judgment was warranted to the extent Plaintiffs were seeking injunctive relief.

Plaintiffs’ motion. Plaintiffs moved for summary judgment on five issues: (1) that Jazz and Hikma entered into an agreement in restraint of trade in the U.S. market for Xyrem; (2) that Jazz “possessed substantial market power in the U.S. market for Xyrem and its generic equivalents during the relevant time period”; (3) that Jazz could not show infringement of the ’963 patent; (4) that “the restraints on trade affected intrastate commerce” and that “paying higher prices is the type of injury the antitrust laws were intended to protect against”; and (5) that Defendants’ statute of limitations, laches, and mitigation of damages defenses should be dismissed. The court denied the motion on each of these grounds except summary judgment was granted on Defendants’ statute of limitations and laches affirmative defenses and they were accordingly stricken.

The Case is No. 3:20-md-02966-RS.

Judge: Seeborg, R.

Attorneys: Dena C. Sharp (Girard Sharp LLP) for New York State Teamsters Council Health and Hospital Fund. Michael Morris Buchman (Motley Rice LLC) for City of Providence, Rhode Island. Joseph R. Saveri (Joseph Saveri Law Firm, LLP) for Self-Insured Schools of California. Benjamin M. Greenblum (Williams and Connolly LLP) for Jazz Pharmaceuticals, Inc. Jack E. Pace, III (White and Case LLP) for Hikma Pharmaceuticals PLC. Nicholas Samuel Goldberg (Keker, Van Nest & Peters LLP) for Par Pharmaceutical, Inc.

Companies: New York State Teamsters Council Health and Hospital Fund; Self-Insured Schools of California; Jazz Pharmaceuticals, Inc.; Par Pharmaceutical, Inc.; Hikma Pharmaceuticals PLC

Cases: Antitrust CaliforniaNews