Centene and Humana sue Merck for alleged pay-for-delay scheme

Photo: dszc/Getty Images

Centene and Humana filed similar lawsuits against Merck and Glenmark on the same day, alleging a pay-for-delay scheme they claim Merck used to protect billions in profits from generic competition.

The separate lawsuits, filed on September 22 in New Jersey federal court, claim that to protect profits from its two blockbuster lipid-regulating drugs to treat high-cholesterol, Merck first sued and then settled with generic drugmaker Glenmark to delay a generic drug from entering the market for five years.

"And these companies have reaped enormous profits from their efforts," the Centene lawsuit said. "In 2011 alone, sales of cholesterol regulating drugs exceeded $39.1 billion per year."

Both insurers said the scheme has cost them money. They want financial damages and other relief and a declaration of the act as unlawful. They both request a jury trial. 

WHAT THE LAWSUITS CLAIM

Merck has marketed blockbuster cholesterol-reducing drugs, Zetia and Vytorin for about 15 years, generating more than $1 billion in sales per year, according to the lawsuits. Vytorin is a combination drug that includes Zetia. 

When the new chemical exclusivity period on Zetia was nearing its end, Glenmark filed an application to launch a generic to Zetia, the lawsuits said. Merck sued Glenmark for patent infringement, which in itself, triggered a 30-month stay.

Glenmark entered into a marketing and distribution agreement with Par Pharmaceuticals in which Par would be the exclusive distributor for Glenmark's generic Zetia and share all potential Zetia settlement proceeds and profits on sales, the lawsuits said.

Approximately seven days after Glenmark executed the distribution agreement with Par, Glenmark and Merck settled their action, according to the lawsuits. 

"This settlement, along with Merck's pursuit of litigation to enforce a patent it knew was invalid, was at the heart of Merck's – and now Glenmark's – anticompetitive scheme to deprive the market of generic competition," the Centene lawsuit said. "Pursuant to their settlement agreement, Glenmark agreed to drop its meritorious claims and defenses against Merck and delay its launch of generic Zetia for nearly five years."

In exchange, Merck agreed to refrain from competing with Glenmark by not introducing its own generic version of Zetia during Glenmark's 180-day period of first-filer exclusivity. 

"Par played an integral role in negotiating these terms," the lawsuit said. "As a result of Merck's monopolistic scheme and its anticompetitive agreement with Glenmark, Merck reaped billions of dollars in additional sales of Zetia and Vytorin. Glenmark also reaped millions of dollars in additional profits once its product finally reached the market.

"Meanwhile, health plans, like the Centene Companies, were forced to significantly overpay for Zetia and Vytorin because there were no generic equivalents of Zetia. By the time Glenmark finally entered the market with its generic on December 12, 2016, the Centene Companies had overpaid by hundreds of millions of dollars for their members' Zetia and Vytorin prescriptions."

The lawsuits are against Merck, Schering-Plough Corp. and Glenmark.

WHY THIS MATTERS

A pay-for-delay claim was also the basis for Kaiser Foundation Health Plans' lawsuit against Merck in August over the same drugs, Zetia and Vytorin.

Kaiser alleged the same scheme involving Glenmark.

THE LARGER TREND

President Biden proposed banning pay-for-delay in a September 9 report on addressing high drug prices.

"To facilitate competition, it is important to reduce regulatory challenges to approving new products," the report said. "Reforms should address industry tactics and regulatory challenges that delay or discourage competition by slowing down the approval of competing generics and biosimilar products.

"Improving competition through these methods will result in a more resilient and transparent prescription drug industry than we have today, which in turn should lower prices."

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com