$60M Settlement Reached in K-Dur 20 Pay-For-Delay MDL

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Santa Clara, CA: Preliminary approval of a $60.2 million settlement against Merck & Co. Inc., and Upsher-Smith Laboratories Inc., has been granted, potentially ending a long running multi-district litigation (MDL) alleging the companies engaged in a pay-for-delay scheme affecting direct purchasers of the potassium supplement K-Dur.

The MDL, which has been ongoing for over 17-years, involves allegedly improper settlements Merck reached with Upsher-Smith and Baxter International Inc. unit ESI Lederle Inc. Those deals included an agreement to delay release of their generic versions of K-Dur 20, which is used to treat potassium deficiencies, the plaintiffs contended.

According to court documents, the plaintiffs, who include Walgreen Co., Rite Aid Corp. and CVS Pharmacy Inc., alleged the defendants had entered a reverse-payment agreement that delayed the market entry of low-cost, generic versions of K-Dur 20 until September 2001. This meant that the price of the brand-name drug would remain artificially high for a longer period of time, in violation of the Sherman Act.

Approved by US District Judge Stanley R. Chesler, the deal requires a final fairness hearing, set for October. Under the terms of the deal, the defendants would put $60.2 million into an escrow fund for class members in exchange for dismissal of the claims with prejudice.

According to the settlement motion, “The settlement assures that all class members will receive a substantial cash settlement payment, and that the litigation will finally be put to rest, avoiding continued litigation and potential appeals.”

The case is Hip Health Plan Of F et al. v. Schering-Plough et al., case number 2:01-cv-01652, and the MDL is In Re K-Dur Antitrust Litigation, case number 1419, both in the U.S. District Court for the District of New Jersey.

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