The good news for Sun Pharma is that it's closed the books on one more legal problem it inherited from its Ranbaxy Laboratories buyout eight years ago. The bad: It's going to cost the generics maker $485 million.
Sun struck a settlement deal (PDF) worth $485 million to wrap up class-action claims that Ranbaxy's faulty FDA approval filings kept low-priced generics off the market, the company said Wednesday.
Sun, which bought Ranbaxy in 2014, admitted no wrongdoing. It agreed to the settlement to “resolve this dispute and avoid uncertainty,” the company said in a filing. The settlement's size may be small in comparison to the pharma industry's multibillion-dollar opioid settlements—or even Roche and AstraZeneca's $775 million patent settlement last week—but Sun is a much smaller company, with U.S. drug sales (PDF) in fiscal 2021 of $370 million.
The class-action lawsuit was consolidated in court in 2019, and last year Boston Federal Judge Nathaniel Gorton denied Sun's attempt to avoid a trial.
The plaintiffs—a variety of generic drug buyers—claimed Ranbaxy violated antitrust laws and state consumer protection laws by submitting multiple applications for FDA approval that contained missing or fraudulent information.
With those flawed Abbreviated New Drug Approval applications, Ranbaxy won coveted 180-day exclusivity for its generic versions of the Novartis blood pressure drug Diovan, AstraZeneca's stomach-acid pill Nexium and Roche's herpes antiviral Valcyte.
The plaintiffs said Ranbaxy’s false applications prevented other companies from entering the market, causing higher prices. Ranbaxy itself finally won FDA approval for the Diovan generic in 2014 but lost its tentative approvals for the other two drugs.
The settlement requires court approval. Asked for comment, a Sun spokesperson said, "We don’t have anything further to add" to Wednesday's official announcment.
This class-action battle was just one of the problems Sun took on when it bought Ranbaxy in one of pharma's biggest M&A deals of 2014. At the time, four of Ranbaxy's manufacturing plants had been sidelined by the FDA for quality problems. They were operating under an FDA consent decree with oversight by outside auditors.
Those manufacturing problems prompted the FDA to revoke Ranbaxy's tentative approvals for the Valcyte and Nexium generics, a move that later precipitated the drug purchasers' lawsuit.