As court-appointed lead counsel, Hagens Berman represented a class of direct purchasers in this class-action lawsuit against pharma giant Merck and generic drugmaker Glenmark. The lawsuit alleges they colluded to illegally delay the market entry of generic versions of Merck's blockbuster cholesterol drug, Zetia, and in 2024 reached a confidential settlement valued at hundreds of millions of dollars.
The complaint filed by Hagens Berman alleges that the defendants’ pay-for-delay settlement – in which Merck promised not to launch its own generic version of Zetia – likely caused those who bought Zetia from Merck to pay hundreds of millions in overcharges. Zetia purportedly reduces cholesterol and prevents the buildup of plaques in arteries.
In developing the drug, Merck obtained three patents for the discovery of lead compound, SCH48461, its metabolites, and metabolite-like analogues (one reissued as U.S. Patent No. RE37,721). In 2006, Merck sued Glenmark, the first generic manufacturer to seek FDA approval to market generic Zetia, alleging it had infringed the RE37,721 patent. Glenmark argued the RE’721 patent was invalid and unenforceable, in part because Merck had intentionally failed to tell the Patent Trade Office that compounds it claimed in the patent were actually inherent metabolites of compounds Merck publicly disclosed years earlier. Glenmark argued this intentional failure to disclose information about the inherent qualities rendered its invention unpatentable and voided the patent. Merck later conceded that the patent was invalid in seeking yet-another reissue.
Merck chose to settle its case against Glenmark. "The Supreme Court holds that resolving patent infringement litigation by having the plaintiff make a large and unjustified payment to the allegedly infringing defendant violates federal antitrust law (assuming the other elements are satisfied)," the lawsuit states. "Nevertheless, Merck paid Glenmark to stay out of the market for almost five years. Merck’s payment took the form of an agreement not to launch its own generic version of Zetia (called an “authorized generic”). Merck’s no-authorized-generic promise was worth an additional $800 million in sales to Glenmark."
Glenmark, as the first generic company to seek FDA approval, had earned the right to a 180-day period with no other generic companies’ products in the market. But, absent an anticompetitive agreement with Merck, it could not keep Merck’s generic out. "Brand companies launch authorized generics, particularly during a first filer’s so-called 180-day exclusivity period, in an effort to staunch the massive loss of revenue attending generic entry. The brand’s authorized generic takes up to 50% of generic sales away from the first filer. So even though they are selling at a lower price point than the brand, authorized generics let the brand hold on to sales that it otherwise would lose," the suit explains.
Had Merck not made a massive payment to Glenmark in the form of its promise not to launch an authorized generic version of Zetia, the complaint alleges, both companies would have expectedly launched a generic version of Zetia as early as December 2011 (and, in any event, well before Glenmark actually launched in late 2016). Several additional generic versions would have launched six months later. This healthy competition would have driven down prices, and direct purchasers would have spent far less on these drugs.
TOP PHARMA LAW FIRM
Hagens Berman is one of the most successful litigation law firms in the U.S. taking on pharmaceutical companies and has achieved more than $320 billion in settlements against Big Pharma largest sellers and manufacturers for antitrust schemes, pay-for-delay, IP shams and other forms of wrongdoing that drive up the costs of prescription drugs for consumers and others.
CASE TIMELINE
The case was scheduled to begin trial April 18, 2023. On the eve of jury selection, the direct purchasers successfully reached a confidential settlement with Merck and Glenmark.
On Feb. 10, 2023, the Court denied defendants’ motions for summary judgment, finding that there were disputes of material fact about the following aspects of the case: the nature and value of the alleged reverse payment in the case, whether the settlement agreement between Merck and Glenmark had anticompetitive effects, whether the alleged anticompetitive conduct caused the direct purchasers’ injury, and whether the injury suffered by the direct purchasers is of the type of harm the antitrust laws are meant to prevent.
On Feb. 24, 2022, the district court granted the purchasers’ motion for summary judgment as to market power and held that “[s]imply put, on this record, no reasonable juror could remain faithful to controlling precedent and cast the relevant market as broadly as Defendants suggest. Stretching the ambit to include non-ezetimibe drugs would blunt the procompetitive purpose of antitrust law and render the market power analysis inconsequential.”
On Aug. 9, 2019, the district court denied Merck and Glenmark’s motion to dismiss direct purchasers’ claims, holding that the direct purchasers had plausibly alleged an illegal scheme to keep less expensive generic Zetia off the market for years.
