For Over Fifteen Years Now, Legacy Schering-Plough’s K-Dur® “Pay For Delay” Federal Antitrust Litigation Grinds Onward. . .

Mercifully, we have only been covering these ill-starred K-Dur® pieces of litigation for about seven years. [Just one of many recent backgrounders, here.] Overnight, we learned, after over two years of sarcophagus-like silence, the mummy had awakened, anew.

More seriously, just yesterday, the very able US District Court Judge (NJ) Stanley R. Chesler issued an opinion dismissing certain parts of the litigation, but allowing other parts to move forward — to an eventual trial on the merits. He ruled that several “hub and spoke” conspiracy claims could not go forward, as no reasonable jury could find any evidence of the elements that make up such a conspiracy claim. However, in his 53 page opinion, he did hold that as to Schering-Plough’s $60 million payment to Upsher — the largest non-contingent license payment ever made by Schering to that point (circa 1998), a jury might in fact conclude that part of that windfall was to keep a generic off market for a period of time, in a way that violated the federal antitrust laws. So some version of this litigation may yet reach a jury. It has already been up to the US Supreme Court, at least once (along with the Actavis® case, which raised similar issues), and now returned back through the Third Circuit at least twice, to the US District Court, for the District of New Jersey — at least four times. And so onward, we go — below is a salient bit of the 53 pages, and a full PDF of the not-for-publication opinion, if you need some bed-time reading, this weekend:

. . . .Schering paid Upsher $60 million as a term of the settlement. (Defs.’ SUF Upsher ¶ 43; Pls.’ SDF Upsher ¶ 43.) Defendants have put forth evidence that Schering’s payment to Upsher paid for the license to Niacor, as well as other licenses, satisfying their burden of production on this issue. (Defs.’ SUF Upsher ¶¶ 18, 21-51.) Plaintiffs have offered expert testimony showing that Schering’s payment to Upsher exceeded the value of the Niacor license, in an attempt to discredit Defendants’ evidence. (Pls.’ SDF Upsher ¶¶ 72-149.) As outlined in more detail below, Plaintiffs’ evidence on this point raises significant questions as to Defendants’ justification for the value of the Schering-Upsher settlement payment. The Court concludes that there is indeed a genuine dispute of material fact as to whether Schering’s payment exceeded the fair value of the licenses coupled with litigation costs. Accordingly, there is sufficient evidence on this record such that a reasonable finder of fact could find that Plaintiffs have established a prima facie case for antitrust liability as to the Schering-Upsher settlement. . . .

Additionally, Plaintiffs assert that Schering failed to acknowledge substantial risks with the Niacor licensing deal in its evaluation process. First, the $60 million payment Schering made to Upsher was, at the time, Schering’s largest upfront non-contingent payment ever for a license, despite the fact that the FDA had not granted Niacor marketing approval at the time of the payment. (Pls.’ SDF Upsher ¶¶ 115-16.) Furthermore, Niacor was not expected to be a blockbuster drug with huge sales. (Id.) The Board of Directors did not discuss these issues or other potential risks for licensing Niacor in their evaluation of the settlement, despite the fact that a Schering subsidiary employee had identified significant downsides to licensing Niaspan. . . .

And so, ever onward it seemingly goes. There may yet be a[nother?] trial as to these matters, in the New Jersey federal District Courts. Now, have a wonderous weekend, one and all — and keep it spinning in good karma! I know I shall. . . .


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