Law360 (April 5, 2018, 8:34 PM EDT) -- A Massachusetts federal judge gave her initial approval Thursday to Impax Laboratories Inc.’s $20 million mid-trial settlement with a class of consumers and insurers that claimed the lab delayed the launch of a generic acne medicine in exchange for a $40 million payment.
Pending a fairness hearing where class members can object to the deal, U.S. District Judge Denise J. Casper gave her preliminary approval for the $20 million payout to a settlement fund for consumers and insurers who paid for Solodyn. The suit claimed Impax waited three years to launch its generic version of Solodyn after reaching an agreement in 2008 with Medicis Pharmaceutical Corp., the maker of the brand-name drug.
Judge Casper said the settlement “was concluded after arm’s-length negotiations by experienced counsel on behalf of the certified end-payor class.”
“Because the parties reached the settlement as a result of good-faith negotiations and after sufficient discovery, a presumption of fairness attaches to the settlement,” she said.
The plaintiffs asked the court for preliminary approval of the settlement Wednesday. They noted that Impax denies any allegations of misconduct, and that the deal will help them “avoid the uncertainties of litigation.”
Objectors to the settlement must put their complaints in writing by July 18, when the court is planning on holding a fairness hearing.
The agreement between the parties was revealed in court papers in late March and is the last in a long line of settlements resolving the litigation, which was first consolidated in Massachusetts in 2014.
Earlier in the month, Impax reached a settlement with CVS, Walgreens, Rite Aid and several other retailers, cutting them out of the suit. Details and terms of that agreement were not disclosed.
The past settlements in the case also include a $35 million deal in March between Impax and direct purchaser class representatives Ahold USA Inc. and Rochester Drug Co-Operative Inc.
Drug manufacturers Sandoz Inc. and Lupin Ltd. settled in April 2017 for a combined $6.7 million to escape the lawsuit. Valeant Pharmaceuticals International Inc., which counts Medicis as one of its subsidiaries, fought the allegations until the First Circuit declined to delay the trial to consider whether the class certification was improper, as Medicis argued. The brand-name manufacturer settled earlier this year for $58 million.
The diverse group of plaintiffs alleged that Impax could have gone to market with the generic acne medicine in early 2009, but reached a license and settlement agreement along with a joint development agreement with Medicis in late 2008. The end-payor buyers and retailers alleged a $40 million payment tucked into that deal was a bribe to delay launching generic Solodyn until late 2011, but Impax says the money was part of a joint agreement to work on future projects.
Impax has also said the deal it reached with Medicis allowed it to launch a generic acne medication six and a half years before the Solodyn patent expired in early 2018, so there was no “delay” in the alleged pay-for-delay scheme.
Few pay-for-delay cases have made it to trial since the 2013 U.S. Supreme Court decision in Federal Trade Commission vs. Actavis that settlements between branded drug companies and generic manufacturers ending patent suits brought under the Hatch-Waxman Act could be considered anti-competitive, but that the agreements should be reviewed under the rule of reason, which left wiggle room for drug companies to argue that the payments were aboveboard.
The instant litigation was centralized in Massachusetts federal court in early 2014 after a host of suits were filed targeting Medicis’ settlements for the oral antibiotic used to treat acne.
Counsel for the parties could not be reached for comment Thursday.
The direct purchasers are represented by Hagens Berman Sobol Shapiro LLP and Berger & Montague PC.
The consumers are represented by Motley Rice LLC, Hilliard & Shadowen LLP and Berman DeValerio.
Walgreens is represented by Kenny Nachwalter PA.
CVS and Rite Aid are represented by Hangley Aronchick Segal Pudlin & Schiller.
Impax is represented by Venable LLP, Coppersmith Brockelman PLC, Demeo LLP, O'Melveny & Myers LLP and Harkins Cunningham.
The case is In re: Solodyn (Minocycline Hydrochloride) Antitrust Litigation, case number 1:14-md-02503, in the U.S. District Court for the District of Massachusetts.