A federal judge has approved a $150 million settlement by GlaxoSmithKline of a 33-member direct purchaser class action over allegations the drugmaker monopolized the market for its nasal spray Flonase.
On Friday, U.S. District Senior Judge Anita B. Brody of the Eastern District of Pennsylvania also approved the payment of $50 million in attorney fees for plaintiffs class counsel.
Thomas Sobol of Hagens Berman Sobol Shapiro in Cambridge, Mass., and Joseph Meltzer of Kessler Topaz Meltzer & Check in Radnor, Pa., are co-lead counsel for the direct purchaser class.
"We are very pleased with Judge Brody's decision to approve the settlement on behalf of direct purchasers of Flonase," Meltzer said in an email. "The settlement is an excellent result following more than four years of hard-fought litigation. We also recognize and appreciate all of the hard work that Judge Brody in deciding difficult motions and overseeing a complex case."
The plaintiffs argued that GSK delayed the entry of generic Flonase into the market, which led to direct purchasers being overcharged, according to court papers. The plaintiffs also argued that "this allowed GSK to unlawfully maintain monopoly power in the American [Flonase] market; maintain the price of Flonase at above-competitive levels; and overcharge the direct purchasers millions of dollars by blocking unrestricted competition and access to less expensive generic versions," Brody said.
GSK said in a statement, however, that it agreed to the settlement "in order to avoid the protracted disruption, expense and uncertainty of continuing litigation. It's important to note that in reaching the settlement, the parties have agreed that it is not an admission or evidence of any violation of any statute or law, or any liability or wrongdoing by GSK."
The case settled shortly before going to trial and after Brody denied GSK motions for summary judgment, including one on causation and one on Noerr-Pennington immunity, which immunizes private entities from liability under antitrust laws.
"A proposed settlement totaling $150 million cash is reasonable both in absolute terms and in light of the circumstances of this litigation, particularly the risks of establishing liability at trial," Brody said in analyzing the reasonableness of the settlement fund in light of the risks of litigation and the best possible recovery for the class, among other factors in favor of approving the settlement. "Under this settlement, each class member can benefit from the $150 million fund immediately, and avoid the uncertainties and delay inherent in continuing to litigate this complex class action."
Among other risks, there was no guarantee the jury would have found GSK liable or a guarantee on how the jury would have responded to the "complicated economic data necessary to show damages," the judge reasoned.
Class counsel reported they spent more than 41,000 hours litigating this case over almost five years, Brody said in her opinion.
The average billable rate is $407 per hour, according to the judge's opinion. The lodestar multiplier is calculated by dividing the attorney fees of $50 million by the total amount of hours devoted to the litigation times the $16.75 million in class counsel's hourly rates. There is a multiplier of 2.99 in the case under the calculation, Brody said, and it is within the "generally acceptable range and provides additional support for approving the attorneys' fees request."
Once all the claims are submitted, payments will be distributed based on each class member's percentage of the total market purchases, Brody said.
Brody also approved $2.1 million from the settlement fund for the plaintiffs counsel's expenses in prosecuting the class action.
She also approved $50,000 to class representative American Sales and $40,000 to class representative Meijer in recognition of the work they took in representing the class. The plaintiffs had sought larger incentive awards of $95,000 for American Sales and $75,000 to Meijer. American Sales filed the first complaint and litigated its case for a year before Meijer filed its own action.
There is another indirect purchaser class action involving a proposed $35 million settlement that is still pending before Brody.
The plaintiffs in that case are both consumers and third parties who paid for or reimbursed consumers' use of Flonase or its generic equivalents.
GSK also agreed to settle for $11 million claims from over 30 large commercial health insurers, and those insurers have agreed to give $1 million of their recovery in fees to the indirect purchaser class action counsel for "having created the benefits to be received by the SHPs (settling health plans) and/or under certain conditions for payment to the settlement class."