[Ip-health] Norvir price hike case settled

[Sean Flynn]

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Many will recall Abbott's 2003 price hike for Norvir of 400% when used
as a stand alone product, i.e. when used with competitors brands.  The
price of Kaletra (Abbott's fixed dose PI containing Norvir) remained the
same.



The Prescription Access Litigation project recently announced a
settlement of the antitrust complaint filed against Abbott in California
for the price hike.  It does not appear that Abbott will reduce the
price, but is paying California consumers between $10 - 27 million.



Below is a blog entry from PAL's website.



-Sean





http://prescriptionaccess.org/blog/?p=286






1.                   Abbott and plaintiffs agree to proposed Norvir
settlement <http://prescriptionaccess.org/blog/?p=286>


We've frequently reported here on the Prescription Access Litigation
(PAL) blog about the class action lawsuit brought by PAL coalition
member SEIU Health & Welfare Fund and others against Abbott Laboratories
<http://www.prescriptionaccess.org/lawsuitssettlements/current_lawsuits?
id=0022>  [NYSE:ABT], challenging Abbott's December 2003 price increase
of 400% on its HIV/AIDS drug, Norvir. That lawsuit alleged that Abbott's
price-hike was intended to increase the sales and market share of
another Abbott HIV/AIDS drug, Kaletra.

We're pleased to announce that SEIU Health & Welfare Fund, the two
individual plaintiffs in the class action and Abbott agreed to a
proposed settlement of the case on August 13, 2008. Abbott has agreed to
pay between $10 Million and $27.5 Million, depending on court rulings to
come, to settle the nationwide claims by consumers who were overcharged
for the medicine.

There have been a number of important decisions by the Court to date
that have set the stage for this settlement. On June 11, 2007, the Court
certified the case as a nationwide class action. On May 16, 2008 the
Court issued a ruling
<http://prescriptionaccess.org/docs/Summary%20Judgment%20Order%205-16-20
08.pdf/manage_workspace> that was a partial victory for the plaintiffs
and a partial victory for Abbott. The Court held that Abbott could not
claim a patent that it holds on Norvir as a defense to the plaintiffs'
claims (the partial win for the plaintiffs). However, the Court also
dismissed the plaintiffs' claims for "unjust enrichment." These claims
alleged that Abbott was "unjustly enriched" by its allegedly illegal
Norvir price hike.

What's important about this dismissal is that these common law unjust
enrichment claims were the only nationwide claims for monetary damages
(as opposed to claims for "injunctive relief," that is, for changes in
company practices) in the case. When the Court dismissed these claims,
the only claims for damages that remained in the case were under
California state law. Thus, in a nutshell, after the Court's May 16
order, the case for monetary damages was narrowed to cover just
consumers and health plans in California.

Abbott had asked the Court to allow an "interlocutory appeal." This
means, basically, that Abbott asked the District Court to ask the 9th
Circuit Court of Appeals to make a decision on a particular question of
antitrust law that Abbott felt could determine the outcome of the case.
The Court refused, since the trial was at that point only three months
away.

The proposed settlement attempts to get the Court of Appeals to resolve
this and several other legal issues, and to tie the amount of the
settlement to the decisions of the Court of Appeals. Abbott and the
plaintiffs will ask the court hearing the case (the federal District
Court for the Northern District of California) to allow them to appeal
three legal issues to the 9th Circuit immediately. These legal issues
are ones that have been essential to the plaintiff's success so far, and
which Abbott would likely appeal if the plaintiffs were to win at trial.


There are several different forms the settlement could take, depending
on how this appeal goes:

*	If the District court "certifies" all three questions up to the
Ninth Circuit for appeal, and the Ninth Circuit accepts at least two of
them, Abbott will pay a non-refundable $10 Million in to a settlement
fund. That $10M (and possibly more - see below) would eventually be
distributed to 13 different non-profit organizations that benefit people
with HIV/AIDS. (See a list of those organizations here
<http://prescriptionaccess.org/docs/NORVIR%20SETTLEMENT%20%28proposed%29
%20Exhibit%20C%20-%20cy%20pres%20recipients.pdf> ).
*	How much Abbott would have to pay beyond the initial $10M
depends on how the 9th Circuit rules on the appeals questions:

	*	If Abbott wins the appeal of any of the three questions
before the Ninth Circuit, then it doesn't pay anything beyond the
initial $10M.
	*	If the plaintiffs win on all the questions before the
9th Circuit, then Abbott must contribute another $17.5 Million to the
settlement fund.
	*	If the 9th Circuit "remands" (sends back) the case to
the District Court for any reason (such as asking the District Court to
make findings of fact), then Abbott must contribute only $4.375 Million
more to the settlement fund.

In a nutshell, Abbott will ultimately pay between $10M and $27.5M. After
the attorneys' fees and expenses are paid (approximately 1/3 of the
total), here is how the rest of the settlement will be divided:

*	If Abbott wins any one of the questions before the Ninth
Circuit, then the $10M, reduced to $6-7 M after costs and attorneys'
fees, will be distributed equally to all the cy pres recipients on the
list above.
*	If, however, the court remands any question, or if the Plantiffs
win all the questions, then the settlement amount ($14.3M or $27.5M
respectively, before legal costs and fees, or between $9.6 and $18.4M
after) will be divided, with

	*	70% of it (between $6.7M and $12.8M approximately) going
to the 13 organizations described above, and
	*	30% (between $2.9M and $5.5M approximately) going to
consumers and TPPs in California)

Confusing? Yes. But the settlement is a creative resolution of the
lawsuit. It takes into account the different possible outcomes to a
trial and inevitable appeal, and essentially adjusts the amount of the
settlement accordingly.

The Court has scheduled a hearing for August 19 on whether to grant
"preliminary approval" to the Settlement. If it does grant that
approval, notice will be published to alert members of the class about
the proposed settlement. Consumers and TPPs that paid for Norvir will
have the option of opting out of the settlement (if they want to pursue
their own individual lawsuits against Abbott), objecting to the terms of
the settlement, and, if they are located in California, filing claims
forms to receive a portion of the settlement proceeds. The Court will
schedule a Final Approval hearing for several months from now. After
that hearing, the Court will decide whether to grant Final Approval to
the settlement. If it does grant that approval, and after any appeals,
the money in the settlement will be distributed as described above.

To see a copy of the settlement, go here
<http://prescriptionaccess.org/docs/NORVIR%20SETTLEMENT%20%28proposed%29
.pdf> .

Other resources:

*	A summary of the lawsuit challenging Abbott's price hike of
Norvir
<http://www.prescriptionaccess.org/lawsuitssettlements/current_lawsuits?
id=0022>
*	Earlier PAL blog entries
<http://prescriptionaccess.org/blog/?cat=36>  on the plaintiff's
successful class certification, Abbott's attempt to keep damaging
documents from public view, or the plaintiff's anti-trust claims.





PIJIP <http://www.wcl.american.edu/pijip/>

American University, Washington College of Law



Sean Flynn, esq.
Associate Director

Program on Information Justice and IP
Washington College of Law
American University
4801 Massachusetts Ave NW
Washington DC 20016
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sflynn@WCL.American.edu <mailto:sflynn@WCL.American.edu>

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