A New Jersey federal judge has approved the $60 million settlement agreed to by Merck and Upsher-Smith with a class of direct purchasers who accused the drug companies of engaging in a pay-for-delay scheme related to potassium supplements. U.S. District Judge Stanley R. Chesler issued his final approval of the settlement that he had preliminarily approved in May, ending the long-running multidistrict litigation (MDL).
Judge Chesler then granted the class counsel one third in attorneys’ fees totaling more than $20 million, plus $3 million in costs and expenses, and interest. The lawyers working on the case – who are from Garwin Gerstein & Fisher LLP; Odom & DesRoches LLP; Cohn Lifland Pearlman Herrmann & Knopf LLP; Berger & Montague PC; Smith Segura & Raphael LLP; and Heim Payne & Chorush – put in more than 46,000 hours without being compensated, the order states. It was significant that no class members objected to the requested fees. Judge Chesler also granted $100,000 from the settlement fund to Louisiana Wholesale Drug Co., the class representative.
The suit deals with the supplement K-Dur, which treats potassium deficiencies including those that stem from taking diuretics to treat high blood pressure. It was made by Schering-Plough Corp., which merged with Merck & Co. Inc. during the litigation. Schering sued Upsher-Smith Laboratories Inc. in 1995 for patent infringement when the latter tried to bring a generic on the market. They settled that more than two years later, with Schering paying Upsher $60 million and Upsher putting its product on hold.
It was contended by the purchasers – including Walgreen Co., Rite Aid Corp. and CVS Pharmacy Inc. – that the payment was not for products that were under development, as the parties claimed, but rather an illegal payment to delay the release of generic versions of K-Dur. As a result, the brand name drug was priced artificially high in violation of the Sherman Act. The $60 million settlement between the direct purchasers and the drug companies was reached in February during the fourth round of mediation, the class said.
It’s most significant that this lawsuit led the U.S. Supreme Court to consider reverse payment settlements in the 2013 Federal Trade Commission v. Actavis Inc. case. The motion to approve the settlement stated:
This was one of the earliest antitrust cases challenging reverse payment settlement agreements between brand and generic pharmaceutical manufacturers as violative of the antitrust laws and class counsel litigated the cutting-edge legal issues presented in this case all the way up to the Supreme Court of the United States.
The case is Hip Health Plan Of F et al. v. Schering-Plough et al., (case number 2:01-cv-01652) and the MDL is In Re K-Dur Antitrust Litigation, (case number 1419) both in the U.S. District Court for the District of New Jersey.