Sun and Ranbaxy Facing January Trial as Federal Judge Denies Summary Judgment in Generic Drug Overpricing Lawsuit
BOSTON – Yesterday, a federal judge denied all motions for summary judgment in a lawsuit against Sun Pharmaceutical Industries LTD and Ranbaxy Inc., accusing the drug makers of violating racketeering and antitrust laws and affecting the costs of three blockbuster drugs – generic versions of Valcyte, Diovan and Nexium – leaving Ranbaxy facing liability in the billions, even before automatic trebling, according to the complaint filed by Hagens Berman.
The complaint alleges that parent company Sun stands liable for Ranbaxy wrongfully acquiring – through a series of misrepresentations and omissions – the ability to keep all generic versions of Valcyte, Diovan and Nexium off the market for years.
The complaint also alleges that Ranbaxy concealed and misrepresented the quality of drug products tested and produced at its Paonta Sahib facility, as well as the company’s repeated compliance failures, in order to obtain valuable marketing exclusivities from the Food and Drug Administration (FDA). As a result, direct purchasers paid billions more for branded versions of those drugs than they would have in the absence of Ranbaxy’s wrongdoing, according to the complaint. The federal racketeering statute (RICO) and the Sherman Act, which underpin the claims in the lawsuit, require automatic trebling of damages as a punitive measure against violators.
In his 40-page order issued Nov. 22, 2021, United States District Judge Nathaniel M. Gorton rejected two of Sun’s key defenses.
First, defendants had argued to the court that, because Ranbaxy never obtained approval to market two of the drugs, it could not have monopolized the market for either drug. But the court “reject[ed] defendants’ assertions that the fact that Ranbaxy never sold Valcyte and Nexium... is dispositive of the Sherman Act claims.”
Second, the court rejected the defendants’ argument that three letters from the FDA in 2012 and 2014 proved that the FDA’s tentative approvals of Ranbaxy’s Valcyte, Diovan and Nexium applications were not induced by fraud, holding that the “defendants’ description of the [FDA’s later] letters as ‘no fraud’ letters is misguided and inaccurately characterizes their significance.”
“Judge Gorton’s order is a big win for U.S. drug purchasers who allegedly paid much more for Valcyte, Diovan and Nexium than they otherwise would have as a result of Ranbaxy’s misconduct and deception. It clears the way for trial early next year,” said Kristen A. Johnson, co-lead counsel for the direct purchasers and a partner at Hagens Berman’s Boston office.
“Under federal antitrust and racketeering law, this leaves Sun, which is one of the largest generic drug makers in the world, facing significant damages for Ranbaxy’s past actions,” said Hagens Berman’s Thomas M. Sobol.
The lawsuit is now set for trial beginning Jan. 10, 2022.
“We look forward to taking this case to trial soon, and doing what our firm does best,” Johnson added.
About the Lawsuit vs. Ranbaxy
The lawsuit, originally filed in the U.S. District Court for the District of Massachusetts in 2015, alleges that Ranbaxy misled the FDA as to the state of its manufacturing plants in India and its manufacturing compliance, affecting the availability of generic versions of Valcyte, Diovan and Nexium.
This deceit, the lawsuit says, enabled Ranbaxy to wrongfully obtain tentative FDA approval, locking in very valuable regulatory exclusivities, and delaying the availability of safe, affordable medications. Only after years of delay did the FDA discover the extent of Ranbaxy’s deceit and revoke Ranbaxy’s approvals, finally allowing other generic drugs to reach the market.
Attorneys say Ranbaxy recklessly stuffed generic drug approval queues with grossly inadequate applications, deceiving the FDA into granting tentative approvals to lock in statutory exclusivities to which Ranbaxy was not entitled. It then brandished these undeserved exclusivities to exclude others while its own applications floundered, all at the direct expense of U.S. drug purchasers, according to the lawsuit.
Hagens Berman Sobol Shapiro LLP, Hilliard Shadowen LLP, Radice Law Firm PC, Sperling & Slater PC, Kessler Topaz Melzer & Check LLP, Wexler Wallace LLP, Nussbaum Law Group PC, and Cohen Milstein Sellers & Toll PLLC are class counsel for the direct purchaser plaintiffs and the certified classes.
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About Hagens Berman
Hagens Berman is a global plaintiffs’ rights complex litigation law firm with a tenacious drive for achieving real results for those harmed by corporate negligence and fraud. Since its founding in 1993, the firm’s determination has earned it numerous national accolades, awards and titles of “Most Feared Plaintiff’s Firm,” MVPs and Trailblazers of class-action law. More about the law firm and its successes can be found at www.hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw.