Sanofi's vaccines unit has settled up with class-action plaintiffs that claimed the company leveraged its heavyweight status in the field to knock aside a rival meningococcal jab from Novartis.
After fighting the allegations for years, Sanofi Pasteur agreed to pay $61.5 million to wrap up the lawsuit, which claimed the company’s pediatric vaccine marketing stifled competition and “artificially inflated” prices on meningococcal vaccines.
According to the lawsuit, Sanofi sold its meningococcal vaccine Menactra in bundles with other key pediatric vaccines. The bundles included discounts that were not available to purchasers that chose to buy Novartis' Menveo instead, the documents claim.
Composed of roughly 25,000 physician practices, 1,000 hospitals, 2,000 pharmacies, and 100 wholesalers, the plaintiff class argued that Sanofi used the bundles “to enhance and maintain its monopoly power,” instead of “competing through lower prices or improved quality,” according to a court brief.
A Sanofi spokesperson said the company “has vigorously denied and continues vigorously to deny the plaintiffs’ claims and any allegation of wrongdoing.” The settlement does not require Sanofi to admit fault.
Buyers in exclusive contracts for Sanofi vaccine bundles faced a penalty if they used Menveo instead of Menactra, the suit claimed. The penalty—ranging from 15.8% to 34.5%—would then apply to all the Sanofi vaccines a particular customer bought. The vaccines Sanofi put in those bundles included its Hib vaccines Pentacel and ActHIB, "for which there are no reasonably adequate medical substitutes," the suit claimed.
Sanofi defended its bundled sales approach in court documents, however. The company's "contracting and pricing practices did not constitute anticompetitive bundling,” Sanofi said in a court filing. Instead, the bundles helped competition and “benefited consumers by, among other things, lowering vaccine prices.” Sanofi also argued that Novartis was “both a profitable and successful competitor.”
The class action, on the other hand, said the practice “unfairly” hurt Novartis’ ability to compete with its meningococcal entrant, according to the complaint.
As part of the proposed settlement, Sanofi will pay $61.5 million. That figure represents about 14% of an estimated $439 million in Menactra overpayments, according to a court brief.
“Despite Sanofi’s strong defenses, [our company] recognizes that continued litigation is likely to be extraordinarily expensive and time-consuming and thus has agreed to enter into this Settlement Agreement to avoid the further expense, inconvenience, risk and distraction of burdensome and protracted litigation,” according to a statement.
The class-action plaintiffs originally filed the case in 2011. The next year, Sanofi hit back with a counterclaim, arguing that the class “engaged in unlawful collective action through membership” in physician buying groups, according to a brief, “purportedly causing vaccine prices to fall below competitive levels.”
Sanofi has agreed to abandon its counterclaim as part of the settlement. The settlement deal requires final court approval.
Novartis has exited vaccines through a multibillion-dollar asset swap with GlaxoSmithKline and a sale of its flu assets to CSL.