Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Drug makers seek to dismiss state law claims in suit over Lidoderm pay-for-delay deal, (Feb 4, 2015)

By Linda O’Brien, J.D., LL.M.

In a consolidated class action by direct and end purchasers of the brand drug Lidoderm—challenging a settlement between the manufacturer, distributor, and a generic manufacturer to resolve patent infringement litigation, Endo Pharmaceuticals and two other drug manufacturers have filed a motion to dismiss the state antitrust and consumer protections claims in the second amended complaints filed by payors and government health associations (In re Lidoderm Antitrust Litigation, January 30, 2015).

Endo Pharmaceuticals distributes Lidoderm, an adhesive patch used to treat pain. Teikoku Seiyaku manufactures Lidoderm and holds one of the patents identified in the development of the drug. In 2009, generic drug manufacturer Watson Pharmaceuticals sought to market a generic version of Lidoderm. Subsequently, Endo and Teikoku sued Watson for patent infringement. While the litigation was pending, Endo, Teikoku, and Watson settled.

A series of class action suits were filed against Endo and Teikoku by three groups of purchasers of Lidoderm—suppliers to retail purchasers (direct purchasers), employee health and welfare benefit funds (end payors), and the Government Employee Health Association (GEHA)—alleging in part violations of Sections 1 and 2 of the Sherman Act. The plaintiffs asserted that the settlement agreement between Endo, Teikoku, and Watson delayed the introduction of a generic version of Lidoderm, precluding the plaintiffs from purchasing a less expensive version of Lidoderm.

The defendants contend that the state antitrust laws limit indirect purchaser actions to residents or citizens of the state and that mere purchases in the state are insufficient. Other states allow only the attorney general to pursue monetary relief on behalf of indirect purchasers. Additionally, the defendants contended that several states’ consumer protection statutes protect consumers who purchase goods for personal, family, or household use and that purchasers, such as GEHA, engaging in trade or commerce lack standing to pursue relief in those states.

Attorneys: Daniel B. Asimow (Arnold & Porter LLP) for Endo Pharmaceuticals Inc. Steven C. Sunshine (Skadden, Arps, Slate, Meagher & Flom LLP) for Watson Pharmaceuticals, Inc. David S. Elkins (Teikoku Seiyaku Co., Ltd.

Companies: Endo Pharmaceuticals Inc.; Teikoku Seiyaku Co., Ltd.; Watson Pharmaceuticals, Inc.

News: Antitrust