Appeals Court Upholds Nexium ‘Pay for Delay’ Decision
The 1st Circuit Court of Appeals has upheld a district court decision allowing a 2012 payment of $700 million from AstraZeneca to Ranbaxy for abandoning its challenge to patents covering Nexium, delaying market entry of a generic Nexium. Attorneys Eric Furman and Caleb Bates (Knobbe Martens Olson & Bear) say in an online blog post that it was the first case tried before a jury after the Supreme Court’s landmark decision in U.S. Federal Trade Commission v. Actavis that addressed pay-for-delay or reverse payment pharmaceutical litigation settlements. In a 5-3 decision, the high court concluded that reverse payment settlements can violate antitrust laws, but each case must be considered individually under a “rule of reason” standard.
The Nexium suit was filed in 2012 and alleged that the settlement agreement violated federal antitrust laws. The jury found that while AstraZeneca’s payment to Ranbaxy was “large and unjustified,” the attorneys write, the plaintiff drug wholesalers and health plans did not show that they were harmed because no generic medicine was ready to enter the market at the time of the settlement.
The district court had denied the plaintiffs’ request for a new trial and they appealed on four grounds, none of which was accepted by the 1st Circuit.
The attorneys write that it is important that at the time of the settlement Ranbaxy did not have a generic form of Nexium ready to go to market and there was insufficient evidence to find that the company could have obtained FDA approval at an earlier date. “Thus,” they say, “the timing of a settlement with respect to the generic manufacturer’s progress in developing the generic product may become a key factor in the permissibility of such reverse payments.”