What DOJ Investigation Means For Generic Drug Plaintiffs

June 19, 2017 – More than 80 named plaintiffs whose antitrust claims have been consolidated in Philadelphia recently learned that discovery in their cases will be stayed until August pending developments in the U.S. Department of Justice investigation into the generic pharmaceutical industry and a ruling on the potential further consolidation of an action brought by 40 State Attorneys General. Despite this delay, plaintiffs can use the next several months productively to strengthen their claims, as explained by Butler Rubin attorneys Jason Dubner and James Morsch, along with Adams Holcomb attorney Richard Leveridge, in a recent article in Law360 about the In re Generic Pharmaceuticals Pricing Antitrust Litigation, MDL No. 2724.

First, the putative class plaintiffs will be preparing and filing consolidated, amended complaints for each of the drugs at issue and by each of the subclasses of claimants: direct purchasers, indirect resellers, and end-payer plaintiffs. Second, each private plaintiff and potential claimant should be taking steps to make sure they preserve and review their purchase data for the eighteen generic drugs at issue in the MDL to determine on what drugs and against which defendants they may have viable claims. Third, plaintiffs should have the prices they paid on those drugs analyzed. Publicly available information indicates that many of the drugs experienced a pricing pattern consistent with a price-fixing conspiracy: sharp, unexplainable spikes in price followed by sustained high pricing for a period of time and ultimately steep declines back to pre-2013 prices after the commencement of the government’s investigation of the industry. Fourth, companies that purchased large volumes of generic drugs should be reviewing their contracts with their generic drug suppliers to determine whether they “own” the claims and whether those claims are as direct or indirect purchasers. Answers to these questions will dictate the best way forward for these companies to remedy the injuries they have allegedly suffered.

While plaintiffs are evaluating and preparing their claims against pharmaceutical heavyweights such as Teva, Mylan and Actavis, the federal government’s investigation of the industry may uncover further evidence of price fixing to add to the guilty pleas of the former Heritage Pharmaceuticals executives already obtained. The MDL Panel will also hear argument from the State Attorneys General as to whether their separate federal action in Connecticut should be consolidated with that of the other private plaintiffs or whether the States should be allowed to proceed in their chosen forum because they initiated their investigation years ago and are entitled to proceed without any further delay. That argument will occur on July 27, 2017, with a decision expected to follow shortly thereafter.

Only time will tell how the various antitrust cases against the generic drug industry will fare. Developments over the next several months, however, will play a significant role in the outcome of these cases despite the fact that discovery in the MDL has been stayed.