INDIA – Sun Pharma has announced a US$485 million settlement agreement to end class-action claims that Ranbaxy’s erroneous FDA approval filings kept low-cost generics off the market.

Sun, which acquired Ranbaxy in 2014, denied any wrongdoing. The company agreed to the settlement to “resolve this dispute and avoid uncertainty,” according to a filing.

The settlement may be small in comparison to the pharmaceutical industry’s multibillion-dollar opioid settlements—or even Roche and AstraZeneca’s US$775 million patent settlement last week—but Sun is a much smaller company, with US$370 million in U.S. drug sales in fiscal 2021.

In 2019, the class-action lawsuit was consolidated in court, and last year, Boston Federal Judge Nathaniel Gorton denied Sun’s request to avoid a trial.

In the litigation

In the lawsuits, drug buyers accused Ranbaxy of improperly obtaining tentative FDA approvals in 2007 and 2008 to produce generic versions of Novartis’s blood pressure medication Diovan, Pfizer’s acid reflux medication Nexium, and Roche’s antiviral drug Valcyte.

However, the plaintiffs, a group of generic drug purchasers, claimed Ranbaxy violated antitrust laws as well as state consumer protection laws by submitting multiple applications for FDA approval that contained missing or false information.

The federal Hatch-Waxman Act provides for a 180-day period of marketing exclusivity for the first company to apply to make a generic drug.

Ranbaxy obtained coveted 180-day exclusivity for its generic versions of Novartis’ blood pressure drug Diovan, Pfizer’s stomach acid pill Nexium, and Roche’s herpes antiviral Valcyte using flawed Abbreviated New Drug Approval applications in 2014.

According to the plaintiffs, Ranbaxy’s false applications prevented other companies from entering the market, causing prices to rise.

This class-action battle was just one of the issues Sun faced when it acquired Ranbaxy in one of the largest pharma merger and acquisition (M&A) deals of 2014.

Nexium and Valcyte generics’ approval revoked

In 2014, the FDA granted final approval to the Diovan generic. However, after regulatory review, the FDA revoked its tentative approval for generic Nexium and Valcyte.

At the time, the FDA had shut down four of Ranbaxy’s manufacturing plants due to quality issues. They were operating under an FDA consent decree, with outside auditors overseeing them.

According to a court filing, the direct purchasers sought up to US$7.1 billion in damages, which would be tripled under RICO and federal antitrust law, while the end payors sought up to US$3.3 billion in damages.

With a view to resolve this dispute and avoid uncertainty, the company has agreed to enter a comprehensive settlement with these plaintiff groups for a total settlement amount of USD 485 million,” it said.

As a consequence of the binding term sheet, the company shall execute the necessary settlement agreements, which, upon approval by the US Court, will ensure that all allegations against it has denied, is “not conceded and not admitted, do not survive and stand extinguished”.

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

Ranbaxy, based in Delhi, was once a pharma industry poster boy, but it had been sold twice. First, it was sold to Daiichi Sankyo, a Japanese pharmaceutical company, for US$4.6 billion in 2008, and then to Sun Pharma for US$4 billion in 2014.

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