Judge says Walgreen, Rite Aid must show numbers to push allegations Opana drugmakers cheated them

By Dan Churney | Mar 7, 2016

A Chicago federal judge has kicked drug retailers Walgreen and Rite Aid from an antitrust lawsuit against the maker of prescription pain killer Opana, saying the retailers must provide hard dollar figures to back up their allegations that the drugmaker improperly paid off another pharmaceutical company to delay the release of the generic version of its pain killer, and keep the price of its name brand drug high.

Judge Harry D. Leinenweber delivered the memorandum opinion and order Feb. 25 in U.S. District Court for the Northern District of Illinois. Although he dismissed Walgreen and Rite Aid’s suits, he gave them time to come up with specific numbers and refile their complaints.

An antitrust lawsuit involving plaintiffs from 31 states and the District of Columbia against Pennsylvania-based Endo Health Solutions and California-based Impax Laboratories, was consolidated in December 2014 in the Chicago federal court district. Plaintiffs have sought class-action status.

The suit alleges Endo tried to block competition to its pain killer Opana ER, agreeing in 2010 to end its patent infringement litigation against Impax, a generic competitor, by paying Impax millions of dollars to keep its generic drug off the market for 2 ½ years, based on future sales and other contingencies.

This payment arrangement was described in the suit as a “reverse payment.” The U.S. Supreme Court, in its 2013 ruling in Federal Trade Commission vs Actavis, has held reverse payments may constitute restraint of trade when payments are “large and unjustified.”

Endo and Impax filed a motion to dismiss the claims brought by drug store chains Walgreen and Rite Aid, which are pursuing their suits separately from the proposed class-action case. The drug chains claim the deal between Endo and Impax made them pay excessive prices to wholesalers for Opana ER.

Endo and Impax asked to dismiss the two drug retailers’ lawsuit on five grounds, one of which found traction with Leinenweber: Plaintiffs failed to lay down any hard numbers that show the alleged reverse payment was large or unjustified

Endo and Impax contended Walgreen and Rite Aid did nothing more than claim the agreement between the drug makers was worth “many millions of dollars” to Impax. Leinenweber acknowledged plaintiffs may need to obtain more information that is now in the exclusive possession of Endo and Impax, and which will have to be analyzed by experts, before they can lay down any firm numbers to support their claim. Nevertheless, plaintiffs must rise above the speculative level and present a “reliable foundation” from which to show an estimated value, the judge said.

Without some number crunching, Leinenweber observed it was impossible to say whether the alleged reverse payment was large or unjustified.

Leinenweber said it was “plausible and persuasive” a reverse payment was arranged, with Endo giving Impax an 180-day period to exclusively sell its generic version, conveying “significant value” and giving Impax a “generic monopoly instead of a generic duopoly.”

Leinenweber concluded that if plaintiffs’ allegations are true, it is reasonable to expect evidence will be revealed to prove a reverse payment was made with the intention of preventing competition in the drug marketplace.

The judge gave Walgreen and Rite Aid 30 days to amend and refile their complaint against defendants.

Endo and Impax advanced other arguments that Leinenweber rejected. One such contention was Walgreen and Rite Aid have no standing to sue, because they are “indirect purchasers,” too far removed from Endo and Impax to have suffered an alleged anti-trust injury.

Endo and Impax also unsuccessfully argued that even if Walgreen and Rite Aid have standing, it is not enough standing for them to sue on their own. Instead, they should be part of the class action.

Walgreen is represented by the firms of Kenny & Nachwalter P.A. and Kenny, Nachwalter, Seymour, Arnold, Critchlow & Spector, both of Miami, Fla.

Rite Aid is represented by the firm of Hangley, Aronchick, Segal, Pudlin and Schiller, of Harrisburg, Penn.

Walgreen and Rite Aid are also represented by the Law Offices of Eugene M. Cummings, of Chicago.

Endo is represented in the action by attorneys with the firm of Dechert LLP, with offices in Philadelphia and Chicago.

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Organizations in this Story

Dechert LLP Endo Pharmaceuticals, Inc. Hangley Aronchick Segal and Pudlin Impax Kenny Nachwalter Law Offices of Eugene M. Cummings Rite Aid The Walgreen Company

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