Sun Pharma to face antitrust trial over Diovan, Nexium, Valcyte

U.S. District Judge Nathaniel Gorton in Boston on Monday ruled Sun failed to compellingly rebut claims by generic drug buyers that they were overcharged for medications as a result of a fraud Ranbaxy Laboratories perpetrated on U.S. regulators.

The ruling clears the way for a Jan. 10 jury trial in class action lawsuits by direct purchasers of the drugs, including drug wholesalers, and indirect purchasers, such as health plans, accusing the company of racketeering and antitrust violations.

"We look forward to trying the classes' racketeering and antitrust claims to a jury," Kristen Johnson, a lawyer for the direct purchasers at Hagens Berman Sobol Shapiro, said in a statement.

Neither Sun, which acquired Ranbaxy in 2014, nor its lead attorney, Jay Lefkowitz of Kirkland & Ellis, responded to requests for comment.

In lawsuits consolidated before Gorton in 2019, drug buyers accused Ranbaxy of wrongly obtaining tentative approvals from the U.S. Food and Drug Administration in 2007 and 2008 to produce generic versions of Novartis AG's blood pressure drug Diovan, Pfizer Inc's acid reflux medication Nexium and Genentech Inc's antiviral drug Valcyte.

Under the federal Hatch-Waxman Act, the first company to apply to make a generic drug enjoys a 180-day period of marketing exclusivity.

But the plaintiffs said Ranbaxy locked in those exclusive periods by misleading the FDA about its compliance with current good manufacturing practices, when its processes were grossly inadequate.

The FDA granted final approval to the Diovan generic in 2014. But following regulatory scrutiny, the FDA revoked its tentative approval for the generic Nexium and Valcyte.

Ranbaxy's lawyers argued the plaintiffs failed to show the FDA was induced to tentatively approve the drugs through fraud.

But Gorton, in denying Ranbaxy summary judgment, said the plaintiffs have presented sufficient evidence showing the FDA had not assessed all the evidence of the company's wrongdoing for a jury to assess the fraud question.

He also rejected Ranbaxy's contention that because it never sold Valcyte and Nexium, it lacked monopoly power over those medications. Gorton cited the effect of its first-filer status as an issue a jury could assess in determining whether it had monopoly power.