A jury says it is within the bounds of law for a drug company with a blockbuster drug to pay potential generic competitors to delay coming to market with a generic me-too, a strategy known as "pay to delay."
The drugmaker, AstraZeneca, had reached agreements with the generic firms Ranbaxy, Teva, and Dr. Reddy's Laboratories, to delay until late May 2014 the generic firms' introduction of a generic versions of the acid reflux drug Nexium (esomeprazole).
A number of union locals -- including branches of the United Food and Commercial Workers Union, the Laborers International Union of North America, and the International Brotherhood of Electrical Workers -- sued over the deal, alleging that the unions, who insure their members and reimburse their drug costs, would lose large amounts of money by having to reimburse for the brand-name drug for several years longer than otherwise would have been the case.
The plaintiffs, in a in the U.S. District Court for the District of Massachusetts, alleged that without these agreements, their members could have had access to the generic version of Nexium 6 years earlier, in 2008, when "the 30-month stay of FDA approval of Ranbaxy's generic Nexium product expired."
However, the jury ruled Friday that no harm was done to the plaintiffs because no generic drugmaker -- including Ranbaxy -- actually had an FDA-approved generic version ready for marketing. "The system worked," , Washington-based lawyer for the defendants, said in a statement. "The jury understood the facts of the case and were not swayed by wishful thinking on the part of the plaintiffs."
The statement noted that in his closing arguments, Baldridge said that "the drug buyer groups were living in a fantasy world during the trial. No company could have produced generic Nexium sooner because none of the generics makers had FDA approval."
, Boston-based attorney for the plaintiffs, said in an email Monday that his clients were deciding what to do next.
"The jury concluded that top officials at AstraZeneca, including its current general counsel, caused AstraZeneca to make a large and unjustified payment to its would-be generic competitor Ranbaxy, and that the anticompetitive consequences of that payment outweigh whatever procompetitive benefits (if any) there were to making that deal," he said. "Given those well-grounded findings, we are evaluating all options."
This case "is significant in many ways and certainly not over," said Washington healthcare consultant in an email. He pointed out that this lawsuit is the first major action "following the , where the justices held that reverse payments were not presumptively illegal but that the FTC [Federal Trade Commission] should be allowed to prove antitrust claims in court."
Piper predicted that "given the number of plaintiffs, the high financial stakes, and the investment in the case so far, an appeal to the federal Circuit Court of Appeals appears certain. Any appeals court ruling can be appealed to the Supreme Court. However, in light of how they ruled in the FTC v. Actavis case, the Supreme Court is unlikely to take this kind of case."
He added that while anything that delays introduction of a generic increases costs for patients and insurers, "on the other hand, anything that reduces the innovator's life cycle or market value of a drug diminishes the incentives to develop new therapies."