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What’s Next for In re: Nexium: Defendants’ Motions for Directed Verdicts Likely to Turn on Sufficiency of Expert Testimony

As we previously reported, the In re: Nexium  trial is the first pay-for-delay trial in the wake of the Supreme Court’s Federal Trade Commission v. Actavis decision. But if the Nexium defendants have it their way, plaintiffs’ case will be decided by the court as a matter of law instead of by the jury.

The defendants (AstraZeneca, Ranbaxy Pharmaceuticals, and Teva) recently moved for directed verdicts on all claims on one of the key issues in dispute—whether brand-name manufacturer AstraZeneca made a “large and unjustified” payment to generic manufacturer Teva to delay entry of Nexium’s generic competitor. As you will recall from our prior posts (click here and here to read more), the Nexium  plaintiffs are asserting a somewhat novel pay-for-delay theory. Instead of claiming that generic entry was delayed because a brand name manufacturer made a cash payment to a generic manufacturer, plaintiffs allege that AstraZeneca agreed to accept a reduced settlement payment from Teva in a separate litigation involving Prilosec in exchange for Teva’s agreement to delay launching Nexium’s generic competitor.

Defendants’ motions for directed verdicts and accompanying motions to strike largely consist of attacks on plaintiffs’ experts’ testimony. Defendants argue that plaintiffs’ experts failed to show that the Prilosec settlement payment was a reverse payment at all or that it was “large and unjustified.” Defendants principally criticize plaintiffs’ expert, Dr. W. Shannon McCool, and contend that his opinion was “baseless” because he admitted that there were no transactions that were comparable to the Prilosec settlement negotiations. According to defendants, Plaintiffs cannot prove that any payment was large because plaintiffs’ experts are using the wrong test. Rather than relying on avoided litigation costs, plaintiffs should use lost opportunity costs or a sales-based test as the measuring stick. Finally, defendants argue that plaintiffs cannot show that any payment was unjustified because there was no evidence that the Prilosec settlement was anything other than a reasonable litigation compromise.

Plaintiffs countered by relying on “qualitative” and “quantitative” evidence. The former principally consisted of facts demonstrating that the Nexium and Prilosec agreements were intertwined. For example, Plaintiffs point out that the agreements were signed on the same day after simultaneous negotiations among the same counsel. As far as qualitative evidence, plaintiffs stood by their reverse-payment theory based on saved litigation costs. Plaintiffs contended that AstraZeneca’s $9 million Prilosec settlement payment to Teva was far more than AstraZeneca’s $4-5 million in avoided future litigation costs.

The parties filed simultaneous briefs on November 10 (Plaintiff's briefTeva's briefAstraZeneca's brief). The court heard argument from the parties on November 12, and the parties subsequently filed supplemental briefs (Plaintiff's briefTeva's briefAstraZeneca's briefRanbaxy's briefDefendant's brief). The motion is sub judice.

We’ll report back after the court rules.