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A sign stands outside a Abbvie facility in Cambridge, Massachusetts, U.S., May 20, 2021. REUTERS/Brian Snyder

  • Judge finds jury must weigh alleged 'pay-for-delay' deal
  • Direct purchasers previously settled similar claims

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(Reuters) - AbbVie Inc must face a proposed class action on behalf of insurers and health plans that claim they overpaid for the company’s Alzheimer’s drug Namenda because of illegal settlements that delayed the launch of generic versions of the drug.

U.S. District Judge Colleen McMahon in Manhattan ruled Friday that whether or not settlements Namenda developers Forest Laboratories, now part of AbbVie, and Merz Pharma reached with generic drugmakers were anticompetitive was a question for a jury, denying both sides' motions for summary judgment.

Martin Toto of White & Case, a lawyer for AbbVie and Merz, declined to comment. Marvin Miller of Miller Law and Peter Safirstein of Safirstein Metcalf, lawyers for the plaintiffs, did not immediately respond to requests for comment.

The lawsuit focuses on a 2010 settlement between Forest and Merz on one hand and generic drugmaker Mylan, in which Mylan agreed to delay the launch of a generic version of Namenda. At the same time, Forest amended an agreement it had with Mylan over the launch of a generic version of the antidepressant Lexapro on terms allegedly favorable to Mylan.

Namenda treats moderate to severe dementia in people with Alzheimer's disease. Sales of a generic version of the original form of the drug, Namenda IR, began in July 2015 and generic Namenda XR, an extended release form, launched in March 2018.

The plaintiffs said the settlement was a "pay for delay" deal, which courts have found may be illegal. They brought their claims under various state antitrust laws.

McMahon certified a class of indirect purchasers of Namenda between 2012 and 2017 in February. In seeking summary judgment, Forest and Merz argued that the settlement with Mylan and the Lexapro deal did not involve a "large and unjustified" payment to Mylan that could make the deal anticompetitive.

McMahon ruled Friday that the case depended on issues of fact, including whether or not the amendments to the Lexapro agreement were part of the same agreement as the one over Namenda.

The plaintiffs previously settled with generic companies they had accused of illegally delaying generic Namenda, leaving AbbVie and Merz as the only defendants.

Forest was acquired in June 2014 by Actavis Plc, which changed its name to Allergan in June 2015. Allergan was acquired by AbbVie last year.

Allergan previously reached a $750 million settlement of antitrust allegations brought by direct purchasers of Namenda, such as drug distributors.

The case is In re: Namenda Indirect Purchaser Antitrust Litigation, U.S. District Court, Southern District of New York, No. 15-cv-06549.

For plaintiffs: Marvin Miller of Miller Law, Peter Safirstein of Safirstein Metcalf and others

For defendants: Martin Toto of White & Case

Read more:

Judge rejects ‘unseemly’ fee bid in Namenda antitrust case, awards $69 mln

Brendan Pierson reports on product liability litigation and on all areas of health care law. He can be reached at brendan.pierson@thomsonreuters.com.

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