Cash-Payment Rule Needed For Pay-For-Delay Litigation Frenzy

The fallout from the Supreme Court’s decision last Summer in FTC v. Actavis remains unabated as a host of purported classes of direct and indirect drug payers continue to file suits against branded and generic manufacturers for settling their Hatch-Waxman disputes in deals involving delayed market entry of cheaper, generic drugs.  While some of the settlements involved a genuine cash “reverse payment” from the branded to the generic manufacturer, as was the case in Actavis, settlements lacking any cash payment are also under attack.  However, a recent dismissal of a pay-for-delay federal suit in New Jersey on the basis that no cash reverse payment was involved will likely cause the Third Circuit and perhaps eventually the Supreme Court to decide whether Actavis’s antitrust “rule of reason” approach can and should be applied to non-cash reverse payment settlements.  [Read more…]

Using A Company’s “Intrinsic” Value In Defending Securities Fraud Suits

A recent securities class action lawsuit filed in a Connecticut federal court charges that Achillion Pharmaceuticals, Inc., and its CEO and CFO misled investors by failing in an adequate and timely fashion to disclose clinical information and FDA actions related to sovaprevir, an Achillion drug under study for the treatment of hepatitis infections.  If the Connecticut-based pharmaceutical company’s ability to fend off the allegations of the Complaint turns on the relationship between the Company’s “disclosures” and drops in its stock price (as the plaintiff and his lawyers would like), the Company may have a problem.  However, as M&A lawyers are learning in the context of garden variety shareholder litigation and appraisal rights litigation, one available defense may lie in the Company’s ability to demonstrate the long-term “fair” or “intrinsic” value of its stock. [Read more…]

Plaintiff’s Lawyers File RICO Class Action Suit Against Abbott Over Depakote Off-Label Promotion

A well-known plaintiff’s law firm with a stable of union pension fund clients has used the Racketeering Influenced and Corrupt Organizations Act (“RICO”), which was originally enacted in 1970 to combat organized crime, to file a class action lawsuit against Abbott Laboratories for the off-label promotions of Depakote.  Unless Abbott and similarly situated big pharma companies intend to fork over hundreds of millions (if not billions) of more dollars to plaintiff’s lawyers, they need to fight such suits tooth and nail. [Read more…]