Merck & Co. and Glenmark Pharmaceuticals Ltd. are expected to face a jury trial in a five-year-old case about alleged involvement of the two companies in stifling fair competition through an agreement.
In a judgement on Feb. 10, a U.S. court denied a plea by Merck and Glenmark for a summary trial against the agencies, which claimed that an unlawful reverse payment was done by Merck to Glenmark to delay the launch of a generic of the former’s cholesterol drug, Zetia. The delay allegedly compelled the public to pay a higher price for the drug due to lack of competition.
The Virginia court identified an unexplained large reverse payment. It observed that such a large payment suggested that the patent holder—Merck—may have prevented the risk of competition, by paying off the generic challenger—Glenmark—to settle the infringement suit. Thus, Merck controlled the date on which the generic entered the market.
This reverse payment and agreement were a result of exchanging a share of its monopoly profit for a delay in competition, the court said.
“This delay, potentially obtained by the improper use of the patent power, leaves consumers with a relatively longer period without generic competition in the market and higher prices as a result,” it said.
On May 10, 2010, Merck and Glenmark signed a settlement agreement:
Merck would reimburse Glenmark for up to $9 million in attorneys’ fees, already incurred.
During its period of exclusivity, Glenmark was granted the exclusive right to market the generic Zetia.
Glenmark could launch this generic version on Dec. 12, 2016.
Merck and Glenmark Pharma would execute a consent judgment, ending their dispute/patent challenge.
This agreement caused a delay in launch of the generic.
In the past, the Supreme Court had delivered a landmark judgement in the case of Actavis Inc. versus the Federal Trade Commission that dealt with the same issue of reverse payment, and patent and antitrust laws.
The Virginia court said the decision in the Actavis case addresses the concern that settlements taking this form tend to have significant adverse effects on competition by declaring that these agreements may be subject to antitrust scrutiny—laws that deal with unlawful business activity.
Citing the Actavis case, the court dismissed the plea for summary judgement and said there were disputes of material fact regarding an antitrust injury.
The court needed to determine the nature and value of the reverse payment, whether the settlement agreement had anti-competitive effects, whether the alleged anti-competitive conduct by Merck and Glenmark caused plaintiffs’ injury, and whether the injury suffered by the plaintiffs is the type of harm that the antitrust laws are meant to prevent.
The trial against Merck and Glenmark is scheduled to begin on April 17, 2023.
This could have a negative impact, in terms of compensation and legal fees to the companies, depending on the outcome of the hearing.
