A federal judge has certified a class action antitrust suit that accuses GlaxoSmithKline of using monopolistic tactics to boost its profits from Wellbutrin, a popular antidepressant, by delaying a generic version of the drug from coming to market.
The suit was brought by direct purchasers who claim that GSK concocted a plan to keep Wellbutrin prices high by making fraudulent assertions to the U.S. Patent and Trademark Office and by engaging in "sham" patent litigation against generic drug manufacturers.
According to the suit, the plan worked because the patent litigation delayed the market entry of generic versions of Wellbutrin, and the direct purchasers were forced to pay unnecessarily high prices for the drug, because no generic versions of bupropion were available for nearly two years after GSK's patent monopoly would have expired.
The case is captioned In re Wellbutrin Direct Purchaser Antitrust Litigation.
The plaintiffs team is led by attorney Dianne M. Nast of Roda & Nast in Lancaster, Pa., and includes Arnold Levin of Levin Fishbein Sedran & Berman in Philadelphia; Daniel E. Gustafson of Gustafson Gluek in Minneapolis; and Shelly L. Friedland of Cohen Milstein Hausfeld & Toll in New York.
In their motion for class certification, the plaintiffs team urged Senior U.S. District Judge Bruce W. Kauffman to certify the case on behalf of direct purchasers who bought the 100 mg or 150 mg dosage of Wellbutrin directly from GSK between Jan. 24, 2002 -- the date on which the suit says generic entry would have occurred but for GSK's allegedly anticompetitive conduct -- and June 30, 2006, the date on which prices allegedly stabilized at competitive levels.
GSK's lawyers, led by Amy R. Mudge and David P. Gersch at Arnold & Porter in Washington, D.C., urged Kauffman not to certify the class, arguing that the interests of the named plaintiffs and other class members are in conflict.
In their brief, the defense team argued that when a brand-name drug faces no competition from generic equivalents, it is usually sold to the three major national drug wholesalers who purchase the majority of the product for resale to other parties in the distribution chain.
When a generic drug enters the market, the defense team argued, it generally hurts the national wholesalers because generic manufacturers often sell directly to the other parties in the distribution chain, bypassing the national wholesalers.
As a result of that "generic bypass," the defense team argued, a conflict exists among the members of the proposed class of direct purchasers because the national wholesalers benefit from anticompetitive activity that prevents entry of generic drugs into the market, allowing them to retain higher sales volumes, whereas other direct purchasers are harmed by the same anticompetitive activity in the form of higher prices.
But Kauffman found that the defense argument was premised on a 2003 decision from the 11th U.S. Circuit Court of Appeals that has been rejected by other courts.
In Valley Drug Co. v. Geneva Pharmaceuticals Inc., the 11th Circuit reversed a lower court's certification of a direct purchaser class alleging antitrust injury due to delayed generic entry, finding that potential conflicts among class members prevented certification without further "downstream discovery."
The court said the putative class in Valley Drug, which included the three major national wholesalers and other direct purchasers, likely had differing interests because the national wholesalers may have benefited from the alleged anticompetitive activity.
But Kauffman refused to follow Valley Drug, saying GSK's defense team had failed to convince him that a true conflict exists in the Wellbutrin purchaser class.
"Even assuming that the national wholesalers in this case were harmed by the introduction of generic drugs, generic versions of Wellbutrin ... have been on the market since 2004. Therefore, the national wholesalers are no longer reaping the alleged benefits of delayed generic entry, and their interests are not 'harmed' by recovery of any illegal overcharge," Kauffman wrote.
"Indeed, any economic benefits the wholesalers experienced in the past are legally irrelevant because the overcharge itself -- not any economic effect of the overcharge -- is the proper measure of recovery in this antitrust case," Kauffman wrote.
Kauffman said the U.S Supreme Court, in its seminal decisions on direct purchaser antitrust suits, has held that plaintiffs may recover for antitrust overcharges irrespective of whether they suffered a net loss or even a net gain.
Applying that logic, Kauffman found that "regardless of whether some class members profited from the alleged activity in this case, the controlling question is whether the class members suffered an overcharge: if an overcharge occurred, all class members are entitled to recover, whether or not some plaintiffs experienced a net benefit while others experienced a net loss."
Viewed in that light, Kauffman said, all of the direct purchasers, including the national wholesalers, "seek exactly the same result: they urge the court to conclude that defendant committed an antitrust violation, thereby allowing all direct purchasers to recover the overcharges."
For those reasons, Kauffman said, numerous courts have rejected the reasoning of Valley Drug.
"These cases recognize that because all class members have the right to pursue overcharge damages, they have the same incentive to do so, and there is no conflict among class members allegedly harmed by the same antitrust violation," Kauffman wrote.
A spokesperson for GSK said the company would have no specific comment at this time.