Virginia Lawyers Weekly VA Lawyers Weekly
Where there were disputed facts over whether two drug companies used a settlement agreement for anticompetitive reasons, causing resulting injury, their motions for summary judgment were denied.
Background
Plaintiffs claim that defendants Merck and Glenmark conspired to delay the introduction of generic ezetimibe to the market, in violation of the Sherman Act. Plaintiffs allege that defendants did so through a settlement agreement that resolved litigation between the parties.
After Glenmark and Merck filed their motions for summary judgment, the magistrate judge issued a report and recommendation, or R&R, recommending that this court deny defendants’ motions. Now before the court are objections to the R&R filed by Glenmark and Merck.
Reverse payment
The initial question in any reverse payment case is straight-forward: What was the reverse payment, and how much was it worth? Here, plaintiffs allege that the reverse payment from Merck to Glenmark consisted of two components: (1) a “No-AG provision,” valued at $25.5 million (or more) and (2) the reimbursement for Glenmark’s attorney’s fees, up to $9 million.
The court agrees with the R&R that plaintiffs have established triable issues of fact regarding whether defendants intended the settlement agreement to prevent Merck from launching a generic version of Zetia during Glenmark’s period of exclusivity. Plaintiffs have offered “extensive evidence that Glenmark sought a no-AG agreement during negotiations,” as well as extensive evidence that “both Merck and Glenmark made post-settlement decisions reflecting Defendants’ mutual understanding that the settlement restricted Merck’s ability to launch an AG.”
Defendants also object to the R&R’s determination that triable issues of fact exist regarding the value of both components of the reverse payment. Here, the court finds no error.
After identifying the nature and value of the reverse payment, the next inquiry is whether the payment had an anticompetitive effect. Defendants claim that the magistrate judge’s analysis of the anticompetitive effects of the settlement agreement relied on a theory of harm that plaintiffs were not alleging. Further, defendants argue that no disputes of material fact exist concerning whether the No-AG provision was given in exchange for the entry date of Glenmark’s generic nor whether Merck actually avoided the risk of patent invalidation. The court finds that plaintiffs have sufficiently produced evidence such that a reasonable juror could conclude that the settlement agreement had anticompetitive effects of the type contemplated by the Supreme Court.
Causation
To succeed in their antitrust action, plaintiffs must show that defendants’ “allegedly anticompetitive conduct was the actual and proximate cause” of their antitrust injury.” Defendants first argue that the R&R erred when recommending that the district court preclude plaintiffs from arguing two abandoned theories of causation at trial, rather than recommending the district court to grant summary judgment on those theories.
Next, defendants argue that the R&R erred by finding disputes of material fact regarding plaintiffs’ remaining “alternate settlement” theory of causation. Third, the defendants argue that the R&R erred in finding disputes of material fact regarding whether Glenmark had the manufacturing capacity to launch its generic in time for the alternate settlement’s generic entry date. The court finds no error in these conclusions.
Injury
Finally, defendants submit that the R&R “erred in finding that plaintiffs have created a genuine question of fact on antitrust injury.” The court disagrees.
Antitrust injury must reflect the anticompetitive effect of the violation. In this case, plaintiffs must do so by showing that “they suffered an injury in the form of higher drug prices because of the delay in generic entry caused by the reverse payment settlement.” Plaintiffs’ alternate settlement theory makes this showing and is sufficient to survive summary judgment.
Report and Recommendation affirmed. Defendants’ motions for summary judgment denied.
In re: Zetia (Ezetimibe) Antitrust Litigation, Case No. 2:18-md-836, Feb. 10, 2023. EDVA at Norfolk (Smith). VLW 023-3-060. 55 pp.
