Insurers Centene and Humana have sued Merck & Co., alleging the drugmaker’s “monopolistic scheme” delayed generic versions of its blockbuster cholesterol drug Zetia from coming to market, causing the insurers to pay higher prices for years.
The suits by two of the biggest health insurers were filed in separate, but similar lawsuits Wednesday in federal court in New Jersey. The insurers are both represented by the firm Crowell & Morning, according to the suits.
“Merck took aggressive measures to protect its profits,” the lawsuits allege.
The lawsuits claim a generic version ultimately entered the market in December 2016 when one could have launched years earlier in December 2011. As a result, Centene and Humana allege each overpaid by hundreds of millions of dollars and the insurers are seeking damages for the overpayment.
At issue in the fight are so-called pay-for-delay deals between branded companies and generic drugmakers, a practice long criticized by the Federal Trade Commission and that the Biden administration has proposed banning. Such agreements can keep generics off the market past patent expirations for the branded reference product, although the FTC has found legal settlements involving direct payment have declined significantly in recent years.
In this case, generic drugmaker Glenmark sought to sell a generic version of Zetia, but Merck filed a lawsuit to stop Glenmark, which is also named as a defendant in the lawsuits. Merck alleged Glenmark’s version would infringe one of Merck’s patents.
The lawsuit was a means to delay generic entry, the insurers’ suits claim.
“Merck later admitted its lawsuit had no merit because it had failed to disclose prior art to the United States Patent and Trademark Office … that would have resulted in the denial of patent protection for Zetia,” the lawsuits state.
By suing over a patent Merck knew was invalid, the pharma company blocked the FDA from granting approval to Glenmark’s version of Zetia, the lawsuit claims. Drugmakers have been accused of abusing federal regulations that can postpone approval for 30 months to allow for patent litigation to proceed.
The two entered into settlement discussions following a lawsuit brought by Glenmark against Merck. They then engaged in a “scheme to deprive the market of generic competition,” the lawsuits allege.
Under the terms of the settlement, Glenmark agreed to drop some of its challenges and delay a generic launch of Zetia for five years. In exchange, Merck would not produce its own generic version for at least 180 days, giving Glenmark a market advantage.
Centene and Humana are not alone in their litigation against Merck. The drugmaker has faced similar suits, one of which was brought by Kaiser Permanente earlier this summer. Before that, drug distributors also filed suit.
In a 2010 report, the FTC estimated that pay-for-delay schemes were then costing consumers $3.5 billion a year, although it’s not clear how that figure has since changed.
California became the first state to prohibit these deals when Gov. Gavin Newsom signed the legislation in the fall of 2019. The law assumes that a patent settlement is anticompetitive and is in violation of the law if the generic drugmaker agrees “to limit or forego research, development, manufacturing, marketing, or sales … for any period of time,” the law states.
The Supreme Court has ruled on the hotly debated issue. In 2013, the court ruled these arrangements can sometimes violate antitrust laws and, in the case it oversaw, found that federal regulators should have been allowed to proceed with a suit against drugmakers over such settlements.