On Friday, August 13, 2021, United States District Judge Lucy H. Koh (ND Cal) issued an order in In re Xyrem (Sodium Oxybate) Antitrust Litigation upholding the plaintiffs’ complaint and largely denying the defendants’ motion to dismiss.  In the case, the plaintiffs, purchasers of the drug Xyrem, allege that the defendants, Jazz Pharmaceuticals and certain generic drugmakers, engaged in anticompetitive conduct to block generic entry of the drug until at least July 1, 2023.

The court found that the plaintiffs plausibly pled that Jazz, the brand manufacturer of Xyrem, entered into unlawful reverse payment settlements with several generic companies to delay generic competition for Xyrem.  Between Jazz and the first filing generic company, Hikma Pharmaceuticals, the court found that the plaintiffs “plausibly alleged at least three reverse payments . . . (1) Jazz’s six-month delay on third-party licensing; (2) the escalating royalty structure for Hikma’s [authorized generic] sales; and (3) an acceleration clause that deters generic entry and enforces collusion among all Defendants.”  The alleged value of these payments is close to $500 million.  The court found that the plaintiffs plausibly alleged that Jazz entered into additional illegal reverse payment settlements, valued in the tens of millions of dollars, with three more generic manufacturers. 

The court also found that the plaintiffs plausibly alleged that the reverse payment settlements, all reached in quick succession, constituted an overarching conspiracy between the defendants to allocate the market for Xyrem.

Aside from the reverse payments, the court found that plaintiffs adequately pled that Jazz unlawfully monopolized the market for Xyrem through its sham petitioning to the FDA regarding its Risk Evaluation and Mitigation Strategy (REMS) program and through a series of sham lawsuits against generic manufacturers to delay generic entry.

Previously, on February 22, 2021, Partner Karin Garvey was appointed by Judge Koh to serve on the Plaintiffs’ Steering Committee.