Merck, Upsher-Smith put ancient K-Dur pay-for-delay case to rest in $60M settlement

Merck
Merck and Upsher-Smith agreed to a $60 million settlement in the "reverse payment" case for potassium chloride supplement K-Dur.

Resolving litigation nearly two decades old, Merck & Co. and Upsher-Smith agreed to a $60.2 million settlement with drug purchasers that claimed the companies inked a deal to delay generic competition to Merck's potassium chloride supplement K-Dur.

Way back in 2001, the purchasers sued Schering-Plough and Upsher-Smith, claiming a 1997 patent settlement between the companies illegally blocked generics that would have allowed the buyers access to cheaper options.

In their class action, the plaintiffs took issue with a settlement in which Schering paid Upsher-Smith $60 million to hold off launching its K-Dur 20 generics until September 2001. The FTC charged Schering in 2001 on similar allegations, but the agency's case ultimately fell short.

When the purchasers filed their action, they claimed the drugmakers’ agreement cost payers and consumers more than $100 million.

RELATED: Mylan signs off on $96.5M Provigil pay-for-delay settlement

A judge denied the defendants’ motion to dismiss the case in 2004, and discovery continued until 2008, according to a brief filed Monday in U.S. District Court in New Jersey.

The brief shows just why the case took almost two decades to resolve. In discovery, the plaintiffs reviewed “millions of pages of documents, … took or defended dozens of depositions, submitted or responded to 26 expert reports, and engaged in protracted discovery-related motion practice,” according to the brief. The case involved years of courtroom wrangling that enabled both the plaintiffs and drug companies to “scrutinize the strengths and weaknesses of their claims.”

“Equipped with this knowledge, and with the prospect of a looming trial, the parties engaged in intensive settlement negotiations that were detailed, time-consuming, and hard-fought,” the brief continued.

RELATED: FTC scores hefty $1.2B settlement in Teva pay-for-delay case

If the settlement is approved, the funds will be placed in an escrow account and will ensure that all class members receive a “substantial” cash payment, according to the brief.

Merck bought Schering-Plough in 2009 for $41 billion. The New Jersey drug giant and Upsher-Smith didn’t immediately respond to a request for comment on the proposed settlement.

Dubbed a “reverse payment,” the agreement and proposed settlement draw similarities with cases filed against Mylan and Teva over narcolepsy med Provigil. After fighting in court for more than a decade, Mylan agreed earlier this year to a $96.5 million settlement payment with drug purchasers. And back in 2015, Teva settled for a whopping $512 million with the plaintiffs and $1.2 billion with the FTC.

RELATED: FTC stats show pharma backing off pay-for-delay deals after SCOTUS ruling

After observing a high point of 40 suspected pay-for-delay settlement agreements back in 2012, the FTC has worked to get tough on the arrangements in recent years. The agency’s efforts, in part, have led to a decrease to 29 suspected deals in 2013 and 21 in 2014, according to published stats.

Helping in that cause was a U.S. Supreme Court ruling in 2013 that found the deals, which drugmakers defended as legal, aren’t always lawful.

RELATED: Democrats, Sanders back massive pharma overhaul in 'landmark' pricing legislation

More recently, Democrats in Congress in introduced legislation aimed at overhauling the pharma industry and tackling high drug prices, with a portion of their focus on banning such deals that critics argue force payers and consumers to overpay.