PENNSYLVANIA RECORD

Nearly five years of Flonase antitrust litigation has come to a close after a federal judge

in Philadelphia approved of a $150 million settlement in a case in which a direct purchaser class claimed that drugmaker GlaxoSmithKline monopolized the market with its nasal spray prescription medication.

U.S. District Judge Anita Brody, sitting in the Eastern District of Pennsylvania, gave final approval to the settlement on June 14, which also provides for $50 million in attorneys’ fees, as well as reimbursement of expenses and class representative incentive awards.

The case had its roots in a complaint brought by named plaintiffs American Sales Company Inc., Meijer Inc., and Meijer Distribution Inc., who filed suit on behalf of a class of 33 companies that buy medications directly from the manufacturer, known as “direct purchasers.”

The civil action claimed that GlaxoSmithKline improperly delayed the entry into the marketplace of the generic version of Flonase, which is the brand-name version of fluticasone propionate, a drug used to treat nasal inflammation caused by allergies.

The plaintiffs claimed that the defendant’s improper delay resulted in overcharges to the direct purchasers, and that GlaxoSmithKline’s actions allowed the drug company to unlawfully maintain monopoly power over the American fluticasone propionate market, a violation of federal antitrust laws.

The plaintiffs also maintained that GSK’s wrongdoing allowed the price of Flonase to remain at above-competitive levels, and that the direct purchasers were overcharged by millions of dollars due to the defendant’s restricting competition and access to the less expensive generic version of Flonase.

The case dates back to 2008, when the complaint was first filed against GSK, the record shows.

Discovery began later that year and continued through 2010.

After the first set of oral arguments, Brody, the judge overseeing the multidistrict litigation, certified a class of 33 direct purchasers in the winter of 2010.

The case had been slated to go to trial this year before the parties reached a settlement agreement in November 2012, which was preliminarily approved by the court on Jan. 14, according to the record.

Brody agreed with the parties that the settlement agreement helps stave off an undoubtedly “difficult and expensive multi-week trial involving complex scientific and regulatory testimony, and the time and expense associated with the appeal that would likely have followed a verdict.”

The judge noted that the settlement was reached after the parties completed significant preparation for trial, including the identification of hundreds of exhibits and briefings over more than a dozen motions in limine.

Brody said none of the 33 class members had objected to the settlement.

In her memorandum, Brody wrote that final approval of the settlement was warranted in this case because the underlying substantive issues in the litigation were well developed after the completion of extensive discovery and trial preparation.

Brody also determined that the $50 million in attorneys’ fees – that figure represented one-third of the $150 million settlement fund – were reasonable in this case, as were the $2,069,433 in litigation costs and expenses, given similar amounts in prior complex cases such as this.

The plaintiffs’ attorneys reported that they had cumulatively spent more than 41,000 hours litigating the case over its five-year history.

While seven different firms worked on the class action, most of the hours were logged by the two lead plaintiffs’ firms, Hagens Berman Sobol Shapiro LLC and Kessler Topaz Meltzer & Check LLP.

According to the judge’s memorandum, the half-decade worth of work included preparing the complaint, conducting extensive discovery including the taking of 39 depositions of current and former GSK employees, filing for class certification, submitting 13 expert reports, and defending against various pre-trial challenges and summary judgment motions.

Hourly rates from the plaintiffs’ firms ranged from $120 to $795, the record shows.

The more than $2 million in expenses reflected the fees paid to experts and document management, a figure that Brody ruled was “reasonable and proper.”

And while the named plaintiffs, American Sales and Meijer, originally requested $85,000 and $75,000 in incentive awards respectively, Brody determined that while incentive awards are indeed appropriate in this case, the request dollar figures were too high.

In the end, the judge awarded $50,000 to American Sales and $40,000 to Meijer.

“These class representatives launched this litigation despite the risk of retaliation inherent in suing a supplier,” Brody wrote. “This risk should be recognized.

The $10,000 difference in the requested incentive awards between the named plaintiffs, the judge wrote, reflected the fact that American Sales filed the first complaint and maintained the action for nearly a year before Meijer filed its own suit.

Brody gave the class members 35 days after final approval to submit their claim forms; class counsel was given 65 days after approval to submit a motion for distribution of the settlement funds.

“I find that the proposed plan is fair, reasonable, and adequate, especially as claimants are expected to receive the maximum amount they would have received if they had opted for trial and won,” Brody wrote.