Antitrust Law Daily Wrap Up, TOP STORY—E.D. Tenn.: Settlement of pay-for-delay claims for Skelaxin gets final approval, (Dec 23, 2015)

By Linda O’Brien, J.D., LL.M.

The federal district court in Chattanooga, Tennessee has granted final approval to a $9 million settlement of antitrust claims against King Pharmaceuticals by a class of end-payor purchasers of metaxalone, a prescription muscle relaxant sold under the brand name Skelaxin (In re Skelaxin (Metaxalone) Antitrust Litigation, December 22, 2015, Collier, C.).

Purchasers of metaxalone filed a series of class action suits against Skelaxin’s manufacturer, King Pharmaceuticals LLC, and Mutual Pharmaceutical Company, Inc. for allegedly conspiring to delay and obstruct generic competition for Skelaxin. The end-payor class is comprised primarily of health and welfare benefit funds, trust funds, and insurance companies that purchased and/or provided reimbursement for Skelaxin or its generic equivalents. In August 2014, the court granted preliminary approval to a proposed settlement. Before the court was the class representatives’ motion for final approval of the settlement.

Settlement class. For purposes of the settlement, the court certified an end-payor purchaser settlement class, consisting of all persons and entities in the United States and its territories who purchased and/or paid for some of the purchase price of Skelaxin and/or its generic equivalents in 28 states and the District of Columbia.

Reasonableness of settlement. The proposed settlement includes a cash payment of $9 million by the defendants into a fund for the benefit of the end-payor purchaser settlement class in exchange for dismissal of the litigation. A fairness hearing was held on December 15, 2015, and all settlement class members were given the opportunity to participate in the hearing.

The court found that the prerequisites to a class action under Federal Rule of Civil Procedure 23 were satisfied: (1) agreement was reached by arms-length negotiations; (2) the class counsel decided to enter into the settlement after substantial discovery; and (3) there were substantial risks in establishing liability and damages if the litigation continued.

According to the court, the settlement was fair, reasonable, and adequate. The agreement was in the best interests of the class and falls within the range of possibly approvable settlements. Additionally, the proposed form of notice and method of dissemination of the settlement notice was fair and reasonable.

Attorney’s fees and incentive awards. The court also awarded attorney’s fees in the amount of $3 million, which was one-third of the settlement fund, after considering the results of the efforts of the class counsel, the complex factual and legal issues involved in the case, and the significant risk that the class would not have obtained a recovery if the settlement had not been reached. Finally, the class representatives were awarded incentive fees in an aggregate amount of $60,000 for their participation and assistance in the prosecution of the litigation.

The case is No. 1:12-md-02343.

Attorneys: Aubrey B. Harwell, Jr. (Neal & Harwell, PLC) for King Pharmaceuticals LLC.

Companies: King Pharmaceuticals, Inc.; Mutual Pharmaceutical Company, Inc.

MainStory: TopStory Antitrust TennesseeNews