Judge Approves $75 Million Settlement of Generic Drug Antitrust Class Action

U.S. Judge Cynthia M. Rufe of the Eastern District of Pennsylvania has approved a settlement in an antitrust class action brought by direct pharmaceutical purchasers who allege Sun Pharmaceutical Industries Ltd., Taro Pharmaceutical Industries Ltd., and others took part in a scheme to fix generic drug prices. The $75 million agreement was reached with a $20 million limit on any amendments that may be agreed to by the parties.

Defendant Sun Pharmaceutical is a multinational company headquartered in Mumbai, India. Defendant drug maker Taro Pharmaceutical, a subsidiary of Alkaloida Chemical Company Zrt., is based in Haifa, Israel. Sun acquired a controlling interest in Taro in 2010. Both companies sell their products internationally.

One plaintiff is not without controversy. Rochester Drug Co-Operative, Inc., one of the 10 largest pharmaceutical distributors in the United States, was charged in 2019 by the U.S. Attorney in the Southern District of New York with unlawfully distributing controlled substances oxycodone and fentanyl. The company was hit with a $20 million penalty.

The other two plaintiffs are FWK Holdings LLC, the assignee of various claims of bankrupt drug wholesaler, Frank W. Kerr Company, and César Castillo, LLC, which provides distribution and logistics services to large global pharmaceutical, medical device, and consumer goods companies.

The three plaintiffs have teamed up before, including in In re: Zetia (Ezetimibe) Antitrust Litigation in which they alleged that Merck & Company, Inc. and generic drug maker Glenmark Pharmaceuticals, Ltd., executed an anticompetitive, anti-consumer pay-for-delay settlement of a patent infringement case. That case was certified then later decertified by the Fourth Circuit U.S. Court of Appeals. FWK has also brought its own antitrust actions, including actions against Allergan, Inc., GlaxoSmithKline, and Takeda Pharmaceutical Company, Ltd.

KPH Healthcare Services, Inc. is a national provider of pharmaceutical and health care services. It comprises four divisions: Kinney Drugs, a chain of 100 full-service drug stores located throughout New York and Vermont; HealthDirect Institutional Pharmacy Services, which services long-term care and alternative care needs; ProAct, Inc., a pharmacy benefit management company with sales offices throughout the country and a mail order pharmacy; and Noble Health Services, a specialty pharmacy that dispenses medications used to treat complex and chronic diseases.

The class is defined as: “All persons or entities, and their successors and assigns, that directly purchased one or more of the Named Generic Drugs from one or more Defendants in the United States and its territories and possessions, at any time during the period from May 1, 2009 until December 31, 2019. Excluded from the Settlement Class are Defendants and their present and former officers, directors, management, employees, subsidiaries, or affiliates, judicial officers and their personnel, and all governmental entities. Numerosity is satisfied as the settlement class includes more than 700 members geographically dispersed throughout the United States.”

In Re: Generic Pharmaceuticals Pricing Antitrust Litigation, E.D. Pa., MDL No. 2724.

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