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In re: Nexium Plaintiffs Seek a Permanent Injunction

As we reported earlier, the jury in In re: Nexium found that AstraZeneca had violated the antitrust laws by acting to keep generics off the market but that no generic would have been introduced earlier in the market even without the violation. Thus, the jury found that the plaintiffs were not entitled to relief. Despite the unfavorable jury verdict on the issue of causation, In re: Nexium plaintiffs have filed for a permanent injunction barring AstraZeneca from implementing its No-Authorized-Generic pledge. Plaintiffs primarily argue that AstraZeneca’s pledge continues to violate the antitrust laws. According to plaintiffs, that pledge harms consumers in two ways: “(1) it serve[s] as a payment to Ranbaxy, in exchange for which Ranbaxy agree[s] to push back the generic entry date . . . ; and (2) once Ranbaxy finally does enter the market, the No-[Authorized-Generic] clause . . . prohibit[s] AstraZeneca from entering with an authorized generic and driving down the generic price.”

In order for the plaintiffs to prevail on their motion for a permanent injunction, they must satisfy two tests: first, under Section 16 of the Clayton Act, plaintiffs must show an antitrust violation and threat of injury. Second, under the traditional four-factor test for equitable relief, plaintiffs must show (1) they will suffer an irreparable injury; (2) the remedies available at law are inadequate to compensate for that injury; (3) on balance, an equitable remedy is warranted; and (4) the public interest would not be disserved by a permanent injunction.

Plaintiffs’ injunction motion focuses on the first test under Section 16 of the Clayton Act. Under that section, any person may sue for injunctive relief “against threatened loss or damage by a violation of the antitrust laws.” Plaintiffs argue that they “need only demonstrate a threat of injury” rather than an actual loss and that the jury’s specialized verdict has thus already established both prongs of this test. As we previously reported, the jury’s specialized verdict answered five questions. The jury found for the plaintiffs on the first three; specifically they found that AstraZeneca has market power, that AstraZeneca paid Ranbaxy a large and unjustified payment, and that the anticompetitive effects of the AstraZeneca-Ranbaxy settlement outweighed its procompetitive effects. The jury did not find, however, that Ranbaxy or Teva would have entered the market at an earlier date absent the agreement or that AstraZeneca would have introduced its own generic Nexium if another generic had entered the market.

Plaintiffs now argue that the jury’s verdict finding both anticompetitive effects and a large and unjustified payment by AstraZeneca demonstrates a violation of antitrust law and a threat of injury warranting injunctive relief. Specifically, AstraZeneca argues, the No-Authorized-Generic pledge is part of the “large and unjustified payment” and the pledge is still executory: that is, the pledge is still in effect and will prevent AstraZeneca from introducing its own generic Nexium. Such a pledge is a threatened injury since that pledge is valued at $697 million – money plaintiffs argue will “com[e] straight out of consumers’ pockets.”

Though the defendants have yet to file a response, they will likely argue the plaintiffs cannot show a threatened injury. Specifically, by finding that AstraZeneca would not have introduced its own generic had another generic entered the market, the jury found no threatened injury. The defendants may therefore argue that plaintiffs have failed with respect to their burden of proof.

The hearing date for the permanent injunction is scheduled for February 6, 2015 before Judge William G. Young in the United States District Court for the District of Massachusetts.