Buyers of a bacterial meningitis vaccine made by Sanofi-Pasteur will share in a $61.5 million settlement of an antitrust class action following Friday’s ruling by a U.S. judge granting final approval to the deal.
U.S. District Judge John Michael Vazquez also approved $20.5 million in legal fees, $7.2 million in costs, and service awards of $100,000 each to three medical practices that served as class representatives. All of the roughly 30,000 class members who submit claim forms will share in the portion of the settlement fund that remains after legal fees, costs and service awards are paid.
The suit said that Sanofi-Pasteur suppressed competition for its pediatric meningococcal vaccine, Menactra, by charging physicians and hospitals up to 35 percent more for its product unless they agreed to buy Sanofi’s pediatric vaccines exclusively. Sanofi-Pasteur is the vaccines division of French drug manufacturer Sanofi.
Sanofi-Pasteur had the entire market for meningococcal vaccine to itself until 2010, when competition arrived in the form of Menveo, a comparable vaccine made by Novartis. But Sanofi-Pasteur has held on to a 93 percent market share for meningococcal vaccine because that same year it instituted a program requiring buyers to agree to purchase its full portfolio of six vaccines exclusively, and not to buy competing products from a different manufacturer, lest they face higher prices, the suit claimed.
The suit was filed in 2011. In 2012, according to court documents, Sanofi filed a stand-alone counterclaim against the class representatives and members of any class that might be certified in the case, claiming their aggregation of vaccine purchases through physician buying groups was an unlawful collective action that caused prices to fall below competitive levels. The counterclaim was dismissed on procedural grounds but Sanofi brought it again as part of its answer. It was dismissed with prejudice, but Sanofi sought interlocutory appellate relief. U.S. District Judge Jose Linares, now the chief judge in the district, denied Sanofi’s leave for interlocutory appeal of the dismissal of its counterclaim.
In November 2014, the parties entered into private mediation with Charles Renfrew, a former U.S. District Court judge from the Northern District of California, but the mediation ended without agreement. In March 2016, the parties entered into mediation with attorney William O’Shaughnessy of McCarter & English in Newark, but the mediation ended with no resolution.
In September 2016, Sanofi moved for summary judgment and filed a motion to exclude testimony of the plaintiffs’ primary expert witness on economics, Harvard Law School professor Einer Elhauge. Elhauge advanced a theory that “bundling” deals such as the one promoted by Sanofi, which gave favorable terms to those who agree to buy a group of products from one seller, was a restraint of trade.
Reply briefs were due Jan. 20, 2017. With motions pending, the parties reached the settlement in December 2016.
Linda Nussbaum of the Nussbaum Law Firm in New York, co-lead counsel for the plaintiffs and the class, said the settlement was “an excellent outcome for the class. It was a very difficult theory, and a difficult case, We made it work,” she said, referring to the so-called bundling theory of antitrust violation.
Eric Cramer of Berger & Montague in Philadelphia, who was also co-lead counsel for plaintiffs and the class, said “we are gratified to be able to settle this case and distribute funds to thousands of doctors across the country.”
For their work on the case, Castro v. Sanofi-Pasteur, the American Antitrust Institute gave its award for Outstanding Antitrust Litigation Achievement in Economics to Elhauge, the Harvard economist, in 2016. In 2017, it bestowed its Outstanding Antitrust Litigation Achievement in Private Law Practice to Cramer.
Sanofi-Pasteur, for its part, continues to deny that its actions were improper, according to a statement from company spokeswoman Anna Robinson.
“Sanofi Pasteur confirms it has entered a settlement agreement with the plaintiff on behalf of all Class Members to fully and finally resolve the parties’ respective claims. In the litigation, Sanofi has vigorously denied and continues vigorously to deny the plaintiffs’ claims and any allegation of wrongdoing. The Settlement Agreement likewise does not involve any admission or finding of wrongdoing. The Settlement Agreement also does not require Sanofi to change its business practices—practices that Sanofi believes are pro-competitive and benefit customers and patients by providing substantial discounts, reducing prices, increasing immunizations, and protecting against disease,” the statement said.
“Despite Sanofi’s strong defenses, Sanofi recognizes that continued litigation is likely to be extraordinarily expensive and time-consuming and thus has agreed to enter into this Settlement Agreement to avoid the further expense, inconvenience, risk and distraction of burdensome and protracted litigation. Sanofi is finally putting to rest this case by obtaining complete dismissal of the action and a release by settlement class members of all released claims,” the statement said.
Sanofi was represented by lawyers from the Newark office of Proskauer Rose and Newark-based Walsh Pizzi O’Reilly Falanga.