IP Law Daily, PATENT NEWS: Opioid purchasers seek approval of $145M antitrust settlement with generic maker Impax Pharma, (Jul 22, 2022)

By E. Darius Sturmer, J.D.

Following failure at trial of their claims that Opana ER patent holder Endo Pharmaceuticals violated antitrust laws through reverse-payment settlement with patent licensee Impax, class counsel contends that settlement is a better outcome for the purchasers than proceeding with trial against Impax.

Direct purchasers of prescription opioid Opana ER have filed a brief with the federal district court in Chicago in support of their motion seeking preliminary approval of a proposed $145 million settlement with generic drug manufacturer Impax Laboratories, Inc. The proposed settlement would resolve the direct purchasers’ class action claims that Impax violated federal antitrust laws through a reverse-payment agreement with Opana ER maker and patent holder Endo Pharmaceuticals that allegedly prevented the sale of generic Opana ER substitutes. The antitrust claims against Endo failed at trial several weeks ago, the jury finding that the agreement was procompetitive and allowed Impex to bring a generic version of the opioid to market years earlier than otherwise would have been possible. In support of their motion, the class argues that the agreement satisfies each of the factors typically considered by courts in assessing the fairness, adequacy, and reasonableness of the proposed settlement (In re Opana ER Antitrust Litigation, July 19, 2022, Leinenweber, H.).

Background. The case involves patents for prescription opioids and alleged violations of antitrust law through intellectual property licenses and lawsuit settlements. The plaintiffs pursuing the antitrust claims have included End Payor Plaintiffs, Direct Purchaser Plaintiffs, and Retailer Plaintiffs, while the defendants are patent holders Endo Pharmaceuticals, Endo Health Solutions, Inc., and a subsidiary (together, Endo) as well as the patent licensee Impax Pharmaceuticals.

The litigation’s origins stem from 2010, when Endo sued Impax, alleging patent infringement from Impax’s proposed generic production of Opana ER, an extended-release formulation of the opioid. The parties settled this dispute through a 2010 Settlement and License Agreement, which allegedly provided a reverse payment settlement from Endo to Impax. Plaintiffs alleged that the patents that immunized Endo and Impax’s agreement from scrutiny were invalid, and thus the Agreement that prevented the distribution and sale of the cheaper generic of Opana ER violated the antitrust laws.

In June 2021, the federal district court in Chicago held that the plaintiffs sufficiently demonstrated causation and damages from the settlement and license agreement that prevented the distribution and sale of generic Opana ER. The court certified classes for end payor and direct purchaser plaintiffs.

However, following a trial that ended on July 1, the jury returned a verdict in favor of Endo and against the Opana ER purchasers, finding that the drug companies’ 2010 settlement agreement was procompetitive and enabled Impax to bring its generic version of the drug to market years earlier than otherwise would have been permitted.

Two weeks later, direct purchaser class plaintiffs Value Drug Company, Meijer, Inc., and Meijer Distribution, Inc., reached an agreement on behalf of that entire certified class to settle their claims in the litigation against Impax.

Proposed settlement. Under the terms of the proposed settlement, Impax would make aggregate cash payments of $145 million to the direct purchaser plaintiff class in exchange for that class’s dismissal with prejudice of its claims against Impax and its provision of certain other releases. According to the class, the settlement “represents an outstanding result” for the plaintiffs, therefore preliminary approval is appropriate. The class notes that the parties entered into the agreement “after approximately eight years of intense, fully developed litigation and as trial was beginning.”

In its brief supporting their motion for approval of the settlement, class counsel said that while the plaintiffs “were prepared to go to trial against Impax,” they concluded that the proposed all-cash settlement was in the best interests of the class. If approved, the brief argued, the settlement would assure class members “of receiving substantial cash settlement payments while putting the litigation against Impax to rest and avoiding the inherent risks of jury trial (as demonstrated by the verdict in favor of Endo) and potential appeals.”

The plaintiffs request that the court enter an order providing for preliminary approval of the proposed settlement agreement, proposed form of notice to the class, and proposed plan of distribution for settlement funds. They further ask the court to appoint the claims administrator and escrow agent they proposed in the settlement agreement and to schedule a fairness hearing to consider their request for final approval of the settlement and their counsel’s application for an award of attorney fees, costs, and service awards to the named class plaintiffs.

The Case is No. 1:14-cv-10150.

Attorneys: Richard Daniel Schwartz (Berger Montague PC) and Archana Tamoshunas (Garwin Gerstein & Fisher LLP) for Rochester Drug Co-Operative, Inc. Andrew W. Kelly (Odom & Des Roches, LLC) and Deborah Elman (Garwin Gerstein & Fisher LLP) for Value Drug Co. Lynne Marie Brennan (Krause, Kalfayan, Benink & Slavens, LLP) for Kim Mahaffay. Jayne Goldstein (Miller Shah LLP) for Fraternal Order of Police, Miami Lodge 20 Insurance Trust Fund. Gregory Asciolla (DiCello Levitt Gutzler) for Massachusetts Bricklayers & Masons Health and Welfare Fund. Brian M. Hogan (Freed Kanner London & Millen, LLC) for Plumbers & Pipefitters Local 178 Health & Welfare Trust Fund. Jay P. Lefkowitz (Kirkland & Ellis LLP) and Julia Chapman (Dechert LLP) for Impax Laboratories, Inc. Benjamin M. Greenblum (Williams & Connolly LLP) for Endo Health Solutions Inc., Endo Pharmaceuticals Inc. and Penwest Pharmaceuticals Co.

Companies: Rochester Drug Co-Operative, Inc.; Value Drug Co.; Fraternal Order of Police, Miami Lodge 20 Insurance Trust Fund; Massachusetts Bricklayers & Masons Health and Welfare Fund; Plumbers & Pipefitters Local 178 Health & Welfare Trust Fund; Impax Laboratories, Inc.; Endo Health Solutions Inc.; Endo Pharmaceuticals Inc.; Penwest Pharmaceuticals Co.

News: Patent IllinoisNews