Lawsuit: Merck, Glenmark, Par Unlawfully Suppressed Competition for Zetia, Generic Alternative

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A group of pharmaceutical companies is facing a proposed class action alleging the defendants entered into an unlawful antitrust agreement that allowed them to reap significant profits from the sales of Zetia and its generic by delaying market competition. Filed against Merck & Co., Inc.; four subsidiaries; Par Pharmaceutical, Inc.; Glenmark Generics Inc., U.S.A.; and its parent company, the suit argues that the companies’ “reverse payment scheme” caused consumers to pay a premium price for the high-cholesterol treatment until generic alternatives were finally introduced, reducing prices by nearly 97 percent.

The case begins with allegations against the Merck defendants, claiming they unlawfully attempted to extend the patents on Zetia by submitting false information to the U.S. Patent and Trademark Office and thereby barred competitors from selling generic alternatives to the drug until the new patents expired. In 2006, the suit continues, Glenmark filed an Abbreviated New Drug Application (ANDA) for a generic alternative to Zetia, challenging the legality of Merck’s patents. In response, Merck filed a lawsuit against Glenmark that stretched into 2010, the case says.

In the meantime, the case notes, Glenmark entered into an agreement with Par Pharmaceuticals whereby Glenmark would manufacture generic Zetia and Par would market, sell, and distribute the drug in the United States.

Suspiciously, the complaint notes, Glenmark and Merck decided to settle their lawsuit on May 10, 2010, two days before the trial was scheduled to begin. The case alleges that the two pharma companies entered into an unlawful “pay-for-delay” agreement that would allow Merck to sell Zetia without competition for six-and-a-half years. In exchange, Merck allegedly promised not to launch an “authorized generic” version of Zetia when Glenmark began selling its generic version. This would effectively allow Glenmark to enjoy, without competition, the 180-day period of exclusivity awarded to the first company to introduce a generic version of a brand-name drug, or the “first filer.” The suit explains that under federal law, the first filer’s only competition during those six months would be the brand-name drug and its manufacturer’s authorized generic version.

“A brand manufacturer’s promise not to launch an authorized generic is a very valuable payment to a generic company with first-filer status. The promise doubles the generic entrant’s sales volume during that time, and because it removes a source of price competition from the market, it more than doubles the generic entrant’s revenues and profits,” the complaint explains.

As a result of the alleged agreement, the lawsuit surmises, Merck, Glenmark, and Par effectively suppressed competition for almost seven years and reaped significant profits. Their conduct effectively deprived consumers “of the benefits of competition that antitrust laws were designed to ensure,” the case argues, causing them to pay inflated prices for a necessary medicine long after competitors would have entered the market.