Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Suit alleges exclusion payment agreements between AstraZeneca and generic drug manufacturers involving Nexium, (Apr 14, 2014)

By Linda O’Brien, J.D., LL.M.

Brand name pharmaceutical manufacturer, AstraZeneca, and three generic drug manufacturers—Ranbaxy Pharmaceuticals, Inc., Teva Pharmaceutical Industries, Ltd., and Dr. Reddy’s Laboratories Ltd.—entered into the reverse payment agreements to block generic competition for the medication, Nexium, according to a complaint filed in the federal district court of Boston (CVS Pharmacy, Inc. v. AstraZeneca, AB, April 11, 2014).

AstraZeneca manufactures and sells Nexium (esomeprazole magnesium), a leading prescription drug used to treat the symptoms of gastroesophageal reflux disease (GERD). CVS Pharmacy purchases substantial quantities of pharmaceutical products for resale to the public and has purchased Nexium directly from AstraZeneca.

The complaint alleges that, to protect its annual Nexium sales from the threat of generic competition, AstraZeneca entered into exclusion payment agreements with generic drug manufacturers Ranbaxy Pharmaceuticals, Inc., Teva Pharmaceutical Industries, Ltd., and Dr. Reddy’s Laboratories Ltd. to delay marketing for their less expensive generic versions of Nexium.

After the generic manufacturers filed applications with the Food and Drug Administration (FDA) to market generic versions of Nexium, AstraZeneca filed patent infringement suits against the companies. Ranbaxy entered into an exclusive payment agreement in which AstraZeneca agreed to dismiss the claims and would delay the launch of its own generic version of Nexium. AstraZeneca also agreed to share its monopoly profits with Ranbaxy for its agreement to delay marketing its generic versions of Nexium. Teva and Dr. Reddy’s also entered into exclusive payment agreements with AstraZeneca, the complaint charged.

According to the complaint, the generic drug manufacturers delayed marketing their generic versions of Nexium until May 2014. But for the agreements, the generic versions would have been marketed as early as December 2008, after the 30-month stay of FDA approval of Ranbaxy’s generic Nexium drug expired, CVS alleged. Generic versions of brand name drugs contain the same active ingredient and are determined by the FDA to be just as safe and effective as their brand name counterparts. The only difference between brand name and generic drugs is their price, and the launch of generic drugs usually brings huge costs savings to all drug purchasers, the complaint charged.

The defendant drug manufacturers unlawful exclusion payment agreements allegedly were designed to (1) block entry of less expense generic versions of esomeprazole magnesium in the United States: (2) fix prices for esomeprazole magnesium; (3) permit AstraZeneca to maintain a monopoly for esomeprazole magnesium; (4) allocation 100 percent of the market for esomeprazole magnesium; and (5) allocate 100 percent of the sales for generic Nexium in the United States to Ranbaxy during the first 180 days of generic sales.

CVS asserts claims for conspiracy to monopolize and restrain trade and attempt to monopolize, in violation of Sections 1 and 2 of the Sherman Act. The action seeks declaratory and injunctive relief, treble damages, costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 1:14-cv-11788-WGY, MDL No. 2409.

Attorneys: Douglas H. Patton (Kenny Nachwalter P.A.) and Barry L. Refsin (Hangley Aronchick Segal Pudlin & Schiller) for CVS Pharmacy, Inc.

Companies: CVS Pharmacy, Inc.; AstraZeneca AB; Ranbaxy Pharmaceuticals, Inc.; Teva Pharmaceutical Industries, Ltd.; Dr. Reddy’s Laboratories Ltd.

News: Antitrust MassachusettsNews