Dexilant (Dexlansoprazole) Antitrust

In this pharmaceutical antitrust class-action lawsuit, plaintiffs accused Takeda of engaging in a complex scheme to drive up the price of the heartburn drug Dexilant (Dexlansoprazole) and its AB-rated generic equivalents deemed by the FDA to be therapeutically equivalent to the brand-name counterpart. The lawsuit cites a “reverse payment” scenario in which payments flowed in the opposite direction as patent holders (the brand drug company) paid alleged infringers (would-be generic competitors) to stay out of the market, suppressing competition. As co-lead counsel, Hagens Berman represents a proposed class of end-payors – including health and welfare benefits plans – who indirectly purchased, paid and/or provided reimbursement for brand or generic Dexilant since June 15, 2020. Dexilant sales grew from around $200 million annually in 2010 to over a billion dollars annually beginning in 2015 and nearly every year thereafter until generic dexlansoprazole came to the market in 2022, according to the lawsuit.

TAKEDA’S ALLEGED PRICE-FIXING

When brand manufacturers do not face generic competition, they can usually sell the branded drug far above the marginal cost of production, generating profit margins in excess of 70% while making hundreds of millions of dollars in sales. The ability to make those kinds of profit margins is what economists call market power. When generics enter the market, however, they quickly take 80% or more of the unit sales. And when multiple generics are in the market, the competition between generics eventually drives their prices to near the marginal cost of production. This competition puts an end to the brand manufacturer’s market power and delivers enormous savings to drug purchasers.

According to the lawsuit, beginning in 2010, generic pharmaceutical manufacturers began filing applications with the FDA seeking approval to market and sell generic versions of Dexilant to compete with Takeda’s branded product. Takeda sued to stop this competition, claiming that these generic manufacturers would infringe one or more of Takeda’s patents for the drug.

Takeda sued generic manufacturers Twi, Par and Imax. TWi was eventually found to have infringed a single patent—U.S. Patent No. 7,737,282 (the “’282 patent”)—which had an expiration date of June 15, 2020. Par and Impax were found to infringe other patents, with later expiration dates.

“Rather than compete, Takeda and TWi entered a reverse-payment settlement to unlawfully prolong Takeda’s monopoly and to grant TWi a temporary monopoly over the sale of generic Dexilant,” the lawsuit states. “Specifically, on or around April 27, 2015, Takeda and TWi reached an anticompetitive agreement in which TWi agreed to delay launching a generic version of Takeda’s Dexilant product until January of 2022, approximately 18 months after the expiration date of the single patent blocking TWi from entering the market.”

DEXLANSOPRAZOLE ANTITRUST EXPLAINED

The lawsuit states Takeda paid TWi off with $9.5 million in cash and gave it the option to launch either an authorized generic (AG) version of Dexilant or its own product, knowing that TWi would choose the former because doing so would ensure that only one generic version of the drug came to market rather than two.

In accordance with their unlawful agreement, TWi waited until January 2022 to begin selling the AG Dexilant product, and as agreed, TWi had the generic market to itself for nearly a year.

“In effect, Takeda granted TWi a monopoly on generic sales of the drug and agreed not to compete with TWi when TWi was finally permitted to enter the market in 2022,” according to the lawsuit. ”The deal was a win-win for Defendants. Takeda benefited by prolonging its monopoly until 2022, which allowed it to avoid generic competition and charge supracompetitive prices for branded Dexilant during that time. TWi benefited because, when it did eventually enter the market, it was able to sell generic Dexilant without competition from other generic manufacturers for nearly a year.”

ABOUT THE DEXILANT LAWSUIT

This deal harmed end payors who were overcharged for dexlansoprazole, forced to buy branded Dexilant instead of a cheaper, generic product that would have otherwise been available by 2020. Even when delayed generics entered the market in 2022, those prices were affected by a monopoly agreement with TWi, according to attorneys. The lawsuit seeks to represent those affected by the price-fixing agreement with Takeda and seeks overcharge damages and related relief to redress Takeda’s and TWi’s unlawful conduct, which prevented free and fair competition.

The complaint brings claims of deceptive trade practices, monopolization, conspiracy in restraint of trade under state law and unjust enrichment.

TOP PHARMA LAW FIRM

Hagens Berman is one of the most successful litigation law firms in the U.S. taking on pharmaceutical companies and has achieved total settlements valued at more than $320 billion in class actions, including more than $3.4 billion recovered in lawsuits against Big Pharma. The firm’s pharmaceutical litigation against the industry’s largest sellers and manufacturers includes antitrust schemes, pay-for-delay, IP shams and other forms of wrongdoing that drive up the costs of prescription drugs for consumers and others.