Pharmaceutical Companies Agree to Settle Multi-State Antitrust Suit

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Abbott Laboratories and Fournier Industrie et Sante and Laboratories Fournier, S.A. have agreed to settle an antitrust action brought by 23 states and the District of Columbia, alleging that they conspired to block generic competition for the cholesterol-lowering drug Tricor.

The settlement agreement requires the pharmaceutical companies to refrain from illegal efforts to block generic competition to Tricor and to pay the states approximately $22.5 million. The $22.5 million settlement fund is intended to reimburse state governmental
agencies and cover their legal fees and costs in bringing the case.

"Abbott and Fournier devised a complex scheme that illegally blocked cheaper generic drugs from entering the market," said Edmund G. Brown Jr., Attorney General of California, one of the plaintiff states.

The settlement is the result of one of the country's first legal actions challenging pharmaceutical companies for "product hopping," a strategy to block generic competition by making slight changes to the formulation of a drug.

The companies purportedly made minor changes in the form and dosage strength of Tricor that did not provide any significant health benefits over previous Tricor formulations. These minor changes interfered with and delayed any Food and Drug Administration (FDA) approval of the generics.

Patent Infringement Lawsuits

The states contended that Abbott and Fournier also filed more than a dozen lawsuits against generic drug manufacturers Teva Pharmaceuticals and Impax Laboratories because the law prohibits the FDA from approving a generic drug for 30 months after patent-infringement
lawsuits have been filed.

After the 30-month automatic stays expired, all of the suits were eventually dismissed, according to the California Attorney General's Office.

States participating in the settlement include Arizona, Arkansas, California, Connecticut, Florida, Idaho, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New York, North Carolina, Oregon, Pennsylvania, South Carolina, Texas, Washington and West Virginia, along with the District of Columbia.

Private Actions

The states’ lawsuit—filed in 2008 in the federal district court in Delaware—followed private suits brought by generic drug makers, as well as direct and indirect purchasers of the drug. The private actions also alleged that the pharmaceutical companies manipulated the statutory framework regulating the market.

In October 2009, the federal district court in Delaware approved a settlement of claims brought against Abbott and Fournier by consumers and third-party payors, such as health insurers and employee benefit plans. That settlement was valued at approximately $65 million.

A January 7 news release on the settlement appears here on the California Attorney General’s website. Text of the settlement agreement is available here.