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Los Angeles-The makers of a popular blood pressure medication who settled class actions alleging that they violated antitrust laws have been cleared of claims that they caused $21 million in damages to one of their largest customers. Kaiser Foundation Health Plan Inc. had sued Abbott Laboratories and Geneva Pharmaceuticals Inc. for allegedly bilking the managed health care company out of $7 million in potential savings on the purchase of Hytrin, which also relieves the symptoms of enlarged prostate glands. The suit sought triple those damages, plus attorney fees. In its complaint, Kaiser claimed that the drug makers hurt consumers through a 1998 agreement in which Geneva-now Sandoz Inc., a subsidiary of Novartis A.G.-delayed marketing its generic version of Abbott’s terazosin hydrochloride drug, Hytrin. In exchange, Abbott allegedly agreed to pay Geneva $4.5 million per month. Kaiser Foundation v. Abbott Laboratories, No. 02cv02443 (C.D. Calif.). The decision against Kaiser, which was reached on April 4, is the only jury verdict to result from years of antitrust litigation against brand-name and generic drug companies over such agreements. Most cases have settled or ended with a judge’s ruling. “It’s relatively rare for drug companies like these two companies, Abbott and Geneva, to take a case like this one to trial,” said Robert Milne, a partner in the New York office of White & Case, who defended Sandoz in the recent case. “It justifies to a significant extent what we’ve been saying all along: that this agreement did not harm competition and shouldn’t have been found illegal to begin with.” FTC’s crackdown Since the late 1990s, several large drug companies have faced antitrust allegations associated with agreements to delay generic launches, typically brought to avoid damages tied to pending patent disputes they had with one another. The deals became a hot-button issue for the Federal Trade Commission (FTC), which filed claims and briefs in litigation against the makers of several drugs, including heart medication Cardizem and breast cancer drug tamoxifen. In one of the most high-profile cases, the FTC filed a complaint in 2001 alleging that an earlier patent settlement between Schering-Plough Corp. and Upsher-Smith Laboratories Inc. over K-Dur 20, a potassium supplement, illegally restrained trade. The suit was thrown out. But in December 2003, the full commission of the FTC reversed and found against the drug companies. The case was appealed to the 11th U.S. Circuit Court of Appeals, which reversed the FTC in March 2005. Schering-Plough v. Federal Trade Comm’n, No. 04-10688 (11th Cir.). The FTC has petitioned the U.S. Supreme Court to rule on the case. Abbott and Geneva, which settled with the FTC in 2000, faced class actions alleging that they prevented buyers of the drug from getting the generic version of Hytrin when it could have been available but for the 1998 agreement between the two companies. The two companies made the deal while in patent litigation Abbott had filed against Geneva. The cases were consolidated before Judge Patricia Seitz in the U.S. District Court for the Southern District of Florida, who found that the Abbott-Sandoz agreement was a per se violation of the federal Sherman Antitrust Act. In re Terazosin Hydrochlor Antitrust Litigation v. Abbott Laboratories, No. 99MD1317 (S.D. Fla.) The drug companies appealed to the 11th Circuit, which reversed. After the appellate ruling, most of the plaintiffs in the class actions settled. Oakland, Calif.-based Kaiser, which had filed suit in the Central District of California in 2002, opted to go to trial. “We thought Abbott and Geneva engaged in outrageous conduct,” said Kenneth Freeling, a partner in the Washington office of Minneapolis-based Robins, Kaplan, Miller & Ciresi who represents Kaiser. “There already had been a finding that their agreement violated state and federal antitrust laws, and illegal agreements like this one cost Kaiser, the largest private purchaser of prescription pharmaceutical products in the country for its own use, and its members millions and millions of dollars.” In the recent case, the parties came close to a settlement, but “we couldn’t quite agree on the numbers,” he said. Jeffrey Weinberger, a partner in the Los Angeles office of Munger, Tolles & Olson who was lead counsel representing Abbott, said, “we put on evidence that the generic company’s board decided they would not come on the market before the patent litigation was finished anyway because it was too risky.” After a two-week trial, the jury sided with the drug companies’ position. “For Geneva, it was a very important piece of litigation, given the magnitude of the claims before the settlements and given the fact the FTC had been interested,” Milne said.

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