MSD and Glenmark appeal pay-for-delay Zetia dispute
Pharmaceutical companies MSD (known as 'Merck & Co' in the US) and Glenmark have argued that the class certification of wholesale buyers of cholesterol drug Zetia (ezetimibe) should be reversed because the circumstances of the class members do not justify an award of class status.
The pharmaceutical companies filed an appeal against the award of class certification at the US Court of Appeals for the Fourth Circuit on January 5.
At the centre of the dispute is the allegation that MSD and Glenmark violated competition law by collaborating to prevent a generic version of Zetia from being brought to market.
MSD’s primary patent covering Zetia was due to expire in April 2017. In 2006, Glenmark sought to market a generic version of Zetia, and MSD filed a patent infringement suit against the company. In 2009, Mylan also sought to market a generic version of Zetia, prompting a similar lawsuit from MSD.
MSD and Glenmark settled their lawsuit with an agreement which allowed Glenmark to launch its generic drug in 2016. Meanwhile, MSD prevailed at trial against Mylan.
Wholesalers sue MSD and Glenmark
In 2018, a group of drug wholesalers that had purchased Zetia directly from MSD accused MSD and Glenmark of violating competition law. They alleged that the two companies conspired to inflate the price of the drug by coming to a “pay for delay” settlement in 2016.
MSD and Glenmark claimed that there was “no such large payment for delay”. MSD said it chose to discount its branded drug when Glenmark first launched its generic version, which is not prohibited under the Hatch-Waxman Act.
The group of wholesalers, who allege that their damages are “in the billions”, moved for class certification in November 2019 and, in August 2020, the US District Court for the Eastern District of Virginia certified the class.
In papers filed on Tuesday, MSD and Glenmark called the decision to certify the class of wholesale drug purchasers “unusual”. They noted that litigation is generally conducted by and on behalf of individual named parties, as “most cases are not class actions”.
“Class actions are designed to permit the adjudication of low-value claims on behalf of large numbers of people who might otherwise not file suit,” the pharmaceutical companies said.
However, they claimed the class action is the opposite: it consists of just 35 drug wholesalers, “almost all of which have claims purportedly worth millions—and three of which purportedly have billion-dollar claims”, said MSD and Glenmark.
The pair further criticised the class certification on the basis that the three named plaintiffs are “manifestly unfit” to represent the class.
They alleged that FWK Holdings is an entity created to pursue antitrust lawsuits; Rochester Drug Coop is a drug distributor which admitted to defrauding the government and has declared bankruptcy; and Castillo has suffered no injury, and so lacks the standing to pursue the claim.
“If this case qualifies as a proper class action, with adequate and typical class representatives, then it is hard to imagine a case that would not,” the pharmaceutical companies claimed.
They said: “The court should reverse the district court’s class-certification order and remand the case so that it may proceed on a non-class basis.”
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