Esomeprazole – USA

Esomeprazole – USA

On Nov 21, 2016, the U.S. Court of Appeals for the First Circuit upheld a 2014 jury verdict for AstraZeneca (AZ) and Ranbaxy regarding a 2012 payment of $700 million from AstraZeneca for Ranbaxy to abandon its challenge to patents covering Nexium® (Esomeprazole).

This was the first pharmaceutical-settlement antitrust action tried before a jury since the Supreme Court’s decision in FTC v. Actavis, Inc. In 2014, the jury found that although the plaintiffs had proved an antitrust violation in the form of a large and unjustified reverse payment from AstraZeneca to Ranbaxy, the plaintiffs had not shown that they had suffered an antitrust injury that entitled them to damages.

Defendant AstraZeneca is a brand-name drug manufacturer that owns the patents covering Nexium, a prescription heartburn medication that has grossed billions of dollars in annual sales. After defendant Ranbaxy notified the Food and Drug Administration (“FDA”) that it sought to market a generic version of Nexium, AstraZeneca sued Ranbaxy for patent infringement in 2005. The two companies reached a settlement agreement, under which Ranbaxy agreed to delay the launch of its generic until a certain date in return for various promises from AstraZeneca in 2008.

The plaintiffs — various pharmaceutical retail outlets and certified classes of direct purchasers and end payors — brought suit, arguing that the terms of these settlement agreements violated federal antitrust laws and state analogues. District court decided in favour of Astrazeneca & Ranbaxy and then plaintiff appealed the decision.

The appellate panel upheld the District Court, finding, inter alia, that the jury verdict rendered harmless any error that may have occurred during the summary judgment proceedings. Importantly, at the time of the reverse-payment, Ranbaxy did not have a generic medicine ready to go to market, and there was insufficient evidence to find that Ranbaxy could have obtained FDA approval at an earlier date. Thus, Defendants successfully argued that, at the time the agreements were made, no generic manufacturer was positioned to enter the market with a generic Nexium® with regard to either marketing capacity or regulatory approval.

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