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SmithKline Beecham has agreed to pay $65 million to settle a class action antitrust suit brought by consumers who alleged they paid inflated prices for Paxil, a popular anti-depressant drug, because the pharmaceutical giant allegedly filed a series of “sham” patent lawsuits in a campaign to delay any generic version of the drug from reaching the market. The filing of a patent suit delays a generic drug from entering the market by 30 months, according to court papers. In the proposed settlement, which is awaiting final approval by U.S. District Judge John R. Padova, SmithKline admitted no liability and maintains its position that its litigation efforts were not designed to cause any delay. In court papers filed Wednesday, the team of plaintiffs lawyers who have been litigating the case since December 2000 asked Padova to award them attorney fees equal to 30 percent of the settlement fund, or $19.5 million, due to the novelty of their theory and their “significant recovery” in a case that was “fraught with risk.” In their brief, co-lead plaintiffs counsel Ellen Meriwether of Miller Faucher & Cafferty in Philadelphia; Dianne M. Nast of Roda & Nast in Lancaster, Pa.; and Kenneth A. Wexler of The Wexler Firm in Chicago argue that they “built this case from the ground up on a novel theory of liability without the benefit of a government case laying the groundwork.” In the suit, plaintiffs lawyers alleged that SmithKline attempted to monopolize the Paxil market by filing “sham” patent litigation against Apotex Inc. and TorPharm Inc., both of Weston, Ontario, soon after the generic manufacturers notified SmithKline that they were seeking approval from the Food & Drug Administration to copy Paxil. The suit came on the heels of news reports that said the Federal Trade Commission was investigating SmithKline for possible antitrust violations. But the FTC investigation was later closed without any government action against SmithKline. But the plaintiffs’ team pressed on with the private litigation, logging more than 17,000 hours and racking up fees of more than $6.1 million at their usual hourly billing rates, according to the fee petition. The fee petition notes that an award of $19.5 million in funds would represent a “multiplier” of 3.15 times the plaintiffs lawyers’ ordinary billing rates. The plaintiffs’ team argues that it is entitled to the multiplier because the case presented complex and novel issues of antitrust law. In an affidavit supporting the plaintiffs’ fee request, University of Pennsylvania law professor Geoffrey Hazard said: “It should be recognized that the legal and factual theories presented by plaintiffs’ counsel represented a high degree of professional creativity. These concepts included reliance on state antitrust statutes, consumer protection provisions and the state common law rules of unjust enrichment. These theories have an established provenance, giving them plausibility, but had not been used in the context of monopolization claims.” To succeed, the plaintiffs lawyers said in their petition, they would have had to prove five elements: � That SmithKline intentionally misled the Patent and Trademark Office into issuing the patents protecting Paxil; � That SmithKline committed fraud on the PTO; � That the allegedly illegally obtained patents were used to prevent generic competition; � That “sham litigation” was used to prevent generic competitors from going to market with generic versions of Paxil; and � That SmithKline’s improper conduct — and not other factors, such as delay in the FDA approval process — actually delayed generic entry. The plaintiffs’ fee petition explained the novelty of the antitrust theory. In an ordinary price-fixing case, the plaintiffs lawyers said, the focus is on proving the existence of a price-fixing conspiracy. “Here, there was no smoky room, no FBI video surveillance, no meeting of competitors to fix prices. This case, involving unilateral action by [SmithKline] and a liability theory based on its alleged filing of serial sham litigation, presented significantly more difficult legal issues … than those present in cases in which a horizontal agreement is reached,” they wrote. The stakes are high in the litigation because Paxil is the third-best-selling drug in the burgeoning category of anti-depressants that affect the “re-uptake” of serotonin, a neurotransmitter. Since its discovery in the 1950s, researchers have found mounting evidence that one of serotonin’s roles is to mediate emotions and judgment. With annual sales of $1.4 billion in 1999, Paxil was outsold only by Prozac, made by Eli Lilly, and Zoloft, made by Pfizer. The consumer class action alleged that SmithKline used sham lawsuits and bogus patents filings to delay the debut of generic Paxil by months or even years. According to the suits, the patent for Paxil was granted on Jan. 26, 1988, for an invention called “anti-depressant crystalline paroxetine hydrochloride hemihydrate.” The patent was assigned to Beecham Group Plc in February 1987 and re-assigned to SmithKline in November 1995. Apotex and TorPharm filed an “abbreviated new drug application” with the FDA for “paroxetine HCl tablets” and notified SmithKline in May 1998 that it was seeking approval to market “anhydrous paroxetine HCl,” relying on SmithKline’s safety and efficacy data. But the suits say the letter explicitly stated that Apotex’s product did not infringe on SmithKline’s patent. In response to the letter, the suits alleged, SmithKline filed sham patent litigation in the Northern District of Illinois and numerous additional patents relating to Paxil with the FDA. Each of the patent filings could add 30 months’ delay to Apotex’s efforts to get the generic version to the market, the suits alleged. In February 2000, the suits allege, Apotex filed a petition with the FDA that said SmithKline had “systematically and unlawfully used the statutory and FDA patent listings procedures to stifle generic competition.

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