Will Brandt, Class of 2022, Belmont Law
Insurance providers Humana and Centene have filed suit against Merck & Co. and Glenmark Pharmaceuticals Ltd. alleging a monopolistic scheme to delay generic versions of its blockbuster cholesterol drug, Zetia. Merck is an American multinational pharmaceutical company that is headquartered in New Jersey. Merck produces the drug Zetia, which is used to treat high cholesterol by reducing the amount of cholesterol the body can absorb. Merck and Glenmark have been sued in a New Jersey federal court for allegations of state and federal antitrust violations. The plaintiffs include: Centene Corporation, WellCare Health Plans, Inc., New York Quality Healthcare Corporation dba Fidelis Care, and Health Net, LLC.
Interestingly, this matter started when Merck sued Glenmark, (a related company to Merck) who intended to launch a generic version of Zetia, for patent infringement. Merck allegedly filed suit against Glenmark knowing that the case had no merit because Merck never made the proper disclosures to the United States Patent and Trademark office. Thereafter, it is alleged that Glenmark dropped all its “meritorious” defenses to Merck’s lawsuit and entered into a settlement that delayed Glenmark’s ability to begin selling its generic version of Zetia for 180 days. Further, by Merck filing a suit against Glenmark, a thirty-month stay was triggered that prevented the FDA from approving Glenmark’s generic version of Zetia. In the terms of the settlement, Glenmark agreed to not launch a generic version of Zetia for five years.
The plaintiffs, who each filed separate suits, include two of the nation’s largest health insurance companies, Humana and Centene. Both companies claimed that Merck has reaped billions of dollars in additional sales of Zetia due to the delay in a generic alternative to Zetia being launched into the market. Therefore, the plaintiffs, as health insurance agencies, claimed that they have overpaid millions of dollars for brand-name Zetia, that would not have been paid if a generic alternative was available.
The predominant issues within the lawsuits are the pay-for-delay deals between generic companies and branded companies. This practice has been criticized by the Federal Trade Commission and there is a proposed ban from the Biden Administration. Moreover, a 2010 report from the FTC has said that these schemes cost consumers over $3.5 billion dollars a year, which has likely increased in the following decade of the report.
On September 9th, the Biden administration included the following comments in a report:
“To facilitate competition, it is important to reduce regulatory challenges to approving new products . . . .”
“Reforms should address industry tactics and regulatory challenges that delay or discourage competition by slowing down the approval of competing generics and ‘biosimilar’ products.”
“Improving competition through these methods will result in a more resilient and transparent prescription drug industry than we have today, which in turn should lower prices.”