Litigation

Judge OKs classes in case accusing Ranbaxy of delaying generics

4 minute read

A Ranbaxy office building is pictured in the northern Indian city of Mohali May 14, 2013. Indian generic drugmaker Ranbaxy Laboratories Ltd pleaded guilty on Monday to felony charges related to drug safety and will pay $500 million in civil and criminal fines under the settlement agreement with the U.S. Department of Justice. The settlement is its largest-ever with a generic drugmaker over drug safety, according to the U.S. government. It includes $150 million in payments for a criminal fine and forfeiture and $350 million in payments for civil claims. REUTERS/Ajay Verma (INDIA - Tags: HEALTH BUSINESS)

  • For direct and indirect buyers of three drugs
  • Ranbaxy delayed generics with false applications to regulators, say buyers

(Reuters) - A federal judge has approved multiple classes in litigation accusing Indian generic drugmaker Ranbaxy Laboratories Ltd of delaying the launch of generic drugs by submitting false applications to U.S. regulators.

In an opinion issued Friday, U.S. District Judge Nathaniel Gorton in Boston certified classes of both direct purchasers, including drug wholesalers, and indirect purchasers, such as health plans and insurance companies.

"We look forward to trial in January 2022," said Thomas Sobol of Hagens Berman Sobol Shapiro, a lawyer for the direct purchasers.

India's Sun Pharmaceutical Industries Ltd, which acquired Ranbaxy in 2014, and Devora Allon of Kirkland & Ellis, a lawyer for Ranbaxy, did not immediately respond to requests for comment. Nor did Gerald Lawrence of Lowey Dannenberg, a lawyer for the indirect purchasers.

The plaintiffs have accused Ranbaxy of delaying the launch of generic versions of Novartis AG's high blood pressure drug Diovan, Pfizer Inc's acid reflux drug Nexium and Genentech Inc's antiviral drug Valcyte.

Ranbaxy submitted applications to the U.S. Food and Drug Administration to make generic versions of those drugs in 2004 and 2005, and secured tentative approval by 2008. Under the federal Hatch-Waxman Act, the first company to apply to make a generic drug enjoys a 180-day period of marketing exclusivity.

Ranbaxy did not secure final approval for its generic Diovan or begin selling it until 2014. The FDA revoked tentative approval for Ranbaxy's generic Nexium and Valcyte, so the company never launched those drugs.

Plaintiffs allege that Ranbaxy submitted generic drug applications with missing or false information to secure 180-day exclusivity periods. Ranbaxy's applications prevented other companies from entering the market, they contend, resulting in higher prices.

The purchasers have brought claims under the federal Racketeer Influenced and Corrupt Organizations Act, federal and state antitrust laws and state consumer protection laws. Several lawsuits were consolidated in a multidistrict litigation before Gorton in 2019.

The direct purchasers sought certification of three classes, one for each drug, while the indirect purchasers sought certification of six classes – a RICO class and a state law class for each drug.

In opposing certification, Ranbaxy argued that the named representative of the direct purchaser class, Meijer Inc, could not represent the class because it bought brand-name as well as generic drugs. Gorton rejected that argument, saying Meijer's claim "arises from the same course of conduct and is based on the same legal theories" as all other class members.

Ranbaxy also argued that collective issues did not predominate over individual issues because different direct purchasers paid different prices for the drugs, and some class members might not have suffered any antitrust injury.

"Even if the proposed (direct purchaser) classes include a de minimis number of uninjured members, that fact alone is not fatal to class certification at this early stage," Gorton wrote, finding that average wholesale drug pricing data could support the plaintiffs' claims.

He rejected a similar argument in upholding the indirect purchaser classes, and found that data from pharmacy benefit managers could be used to identify class members.

The case is In re Ranbaxy Generic Drug Application Antitrust Litigation, U.S. District Court for the District of Massachusetts, No. 19-md-02878.

For direct purchasers: Thomas Sobol of Hagens Berman Sobol Shapiro

For indirect purchasers: Gerald Lawrence of Lowey Dannenberg

For Ranbaxy: Devora Allon of Kirkland & Ellis

Our Standards: The Thomson Reuters Trust Principles.

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