Welcome to Reuters Legal News beta. Please enjoy and provide us with your feedback as we continue to improve the Reuters Legal News experience.

Skip to main content

Direct purchaser class decertified in Zetia pay-for-delay suit

3 minute read

The Merck logo is seen at a gate to the Merck & Co campus in Rahway, New Jersey. REUTERS/Brendan McDermid

Register now for FREE unlimited access to reuters.com
  • District court ordered to weigh class treatment against joinder
  • Circuit upholds finding that plaintiffs are adequate representatives

The company and law firm names shown above are generated automatically based on the text of the article. We are improving this feature as we continue to test and develop in beta. We welcome feedback, which you can provide using the feedback tab on the right of the page.

(Reuters) - A federal appeals court on Wednesday decertified a class of direct purchasers of Merck & Co Inc's cholesterol drug Zetia accusing the company of entering into an illegal pay-for-delay deal with generic drugmaker Glenmark Pharmaceuticals Ltd.

The unanimous 4th U.S. Circuit Court of Appeals panel said that Senior U.S. District Judge Rebecca Beach Smith in the Eastern District of Virginia declined to fully consider whether the 35 potential class members could be joined to the lawsuit as parties, rather than proceeding as a class action.

Thomas Sobol of Hagens Berman Sobol Shapiro, a lawyer for the plaintiffs, FWK Holdings LLC, Rochester Drug Co-Operative, Inc and Cesar Castillo Inc, did not immediately respond to a request for comment. Nor did Merck, Glenmark or their attorney, Theodore Boutrous of Gibson, Dunn & Crutcher.

Register now for FREE unlimited access to reuters.com

The plaintiffs alleged in their 2018 complaint that the two drugmakers violated antitrust law through a 2010 settlement in which Merck dropped patent infringement claims over Glenmark's proposed generic version of Zetia, and Glenmark agreed not to launch its version for almost five years.

They allege that Glenmark, which had challenged the validity of Merck's patent claims, would have prevailed had it not settled and launched generic Zetia earlier. Merck induced it to delay by agreeing to not launch its own authorized generic version of Zetia to compete with Glenmark's, a concession worth $800 million, the plaintiffs said.

In opposing class certification, the drugmakers noted that the potential class members were sophisticated parties, including the nation's three largest drug distributors, and could litigate on their own. Smith, however, found that judicial economy favored class certification, adopting recommendations of a magistrate judge.

Circuit Judge Henry Floyd wrote Wednesday that, in finding that the numerosity of the class weighed in favor of certification, Smith improperly focused on the advantages of a class action over multiple individual lawsuits without adequately considering the possibility of joinder. He said civil procedure requires judges to weigh class treatment against the joinder of class members in considering judicial economy.

"Otherwise, the judicial-economy factor would always favor class certification, which is simpler to manage than individual lawsuits," the judge wrote. "In fact, even compared to joinder, class certification will often be preferable from a judicial economy perspective."

Floyd said the court did not intend to change the "substantial deference" owed to district courts on class certification, but merely required the lower court to "conduct the requisite full-throated analysis."

The circuit also rejected the defendants' appeals on other grounds, finding that the plaintiffs could adequately represent the class and that common issues predominated over individual ones.

Floyd was joined by Circuit Judges Paul Niemeyer and Allison Jones Rushing.

The case is In re Zetia (Ezetimibe) Antitrust Litigation, 4th U.S. Circuit Court of Appeals, No. 20-2184.

For Glenmark and Merck: Theodore Boutrous of Gibson, Dunn & Crutcher

For plaintiffs: Thomas Sobol of Hagens Berman Sobol Shapiro

Register now for FREE unlimited access to reuters.com

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

More from Reuters