Union sues Warner Chilcott, Watson and Lupin over alleged pay-for-delay deal

Chalk up another pay-for-delay class-action suit. A union fund sued Warner Chilcott, Watson Laboratories and Lupin, claiming that their Loestrin 24 Fe patent settlements amounted to unfair market-sharing deals that cost payers money. Warner's key patent on the formula was weak, the fund claims, and the generics makers only backed away because Warner paid them to.

It's the latest lawsuit over so-called pay-for-delay patent settlements. Pharmacies have sued Pfizer ($PFE) and Ranbaxy Laboratories over their Lipitor patent settlement, and accused Pfizer and Teva Pharmaceutical Industries ($TEVA) of colluding to delay Effexor XR generics. GlaxoSmithKline ($GSK) agreed to pay $150 million to drug wholesalers that sued about generic Flonase delays.

This time, the plaintiff--United Food and Commercial Workers Local 1776's insurance fund--wants damages amounting to triple the cost of buying Warner's branded pills rather than cheaper generics. According to the lawsuit, Warner protected its Loestrin exclusivity via "evergreening." The company obtained patents on minor variations of the original formula and used its "massive sales force" to persuade doctors to switch patients to the newer versions.

And because Warner knew the Loestrin 24 patent was thin--and may not hold up in court--the company paid off Watson (now Actavis, $ACT) and Lupin to delay their generic versions, the lawsuit claims. Watson agreed to hold off on its launch till January 2014, 6 months before a patent expired. Lupin agreed to wait till the July 2014 expiration date. Warner used the extra time to push a newer version, Lo Loestrin Fe.

According to the fund, generic versions of Loestrin 24 would have hit the market as early as September 2009, when Watson won final FDA approval for its version. It's asking for compensation for brand-name expenses, on behalf of itself and other third-party payers, plus consumers.

- read the complaint (pdf)
- see the brief at Law360 (sub. req.)

Special Reports: Top 11 Fastest-Growing Generics Companies | Top 10 Generic Drug Companies 2010

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