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Oral Argument on “Pay for Delay” Class Action Certification Heard by First Circuit

A panel of the U.S. Court of Appeals for the First Circuit heard oral argument this week in In Re: Nexium (Esomeprazole) Antitrust Litigation in an appeal of a lower court’s decision certifying a class of drug consumers and third-party payors challenging AstraZeneca’s “pay-for-delay” patent suit settlements, as reported by the National Law Journal.

In the agreements at issue, AstraZeneca allegedly paid three generic drug manufacturers – Ranbaxy Pharmaceuticals, Teva Pharmaceuticals, and Dr. Reddy’s Laboratories – to settle patent disputes relating to the gastrointestinal drug Nexium in exchange for the generic manufacturers’ promise to delay their marketing of generic drugs that would compete with Nexium.

Plaintiffs filed a putative class action in the District of Massachusetts challenging the settlements, claiming that AstraZeneca and the generic manufacturers had entered into a collusive scheme in violation of Sections 1 and 2 of the Sherman Act (among other laws) that prevented generic alternatives to Nexium from entering the market and artificially increased drug prices as a result.  District Court Judge William Young granted class certification in separate orders issued November and December 2013.

Defendants appealed, and a panel of the First Circuit – composed of Judges William Kayatta Jr., Juan Torruella, and Timothy Dyk (sitting by designation from the Federal Circuit) – heard oral argument yesterday, July 31, 2014.   The court pressed the parties on a number of issues, including whether common issues prevailed when some class members had suffered no economic injury because they paid for Nexium under rebates and other price incentives.

The National Law Journal’s report on the oral arguments is available here (no subscription currently required).