Class Action: Drug Makers Conspired to Overcharge for Diabetes Medication Glumetza [UPDATE]

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A proposed class action lawsuit out of California claims the prices of type 2 diabetes medication Glumetza and its generic version have skyrocketed due to an anticompetitive conspiracy executed by the drugs’ manufacturers. Alleging violations of federal antitrust laws, the 66-page lawsuit claims defendants Bausch Health Companies Inc.; Assertio Therapeutics, Inc.; Santarus, Inc.; Lupin, Ltd.; and several subsidiaries conspired to delay the availability of generic alternatives to Glumetza, which caused consumers to pay supracompetitive prices for the drug.

The timeline in the lawsuit begins when Assertio Therapeutics developed Glumetza, an extended-release form of metformin used to prevent and control high blood sugar in patients with type 2 diabetes, in 2005. After Lupin developed a generic alternative to the drug, Assertio, the case explains, sued its competitor for patent infringement, triggering an automatic 30-month delay for the generic’s entrance into the market.

In February 2012, just before the 30 months were up, the drug makers settled the lawsuit with what’s known as a “reverse payment,” the case says. As part of the settlement, the suit says, Assertio and its marketing partner, Santarus, agreed to pay Lupin to keep its generic alternative off the market until February 2016. In exchange, the case states, the companies would delay the entrance of their own generic version of Glumetza until six months after Lupin entered the market, allowing Lupin to enjoy a period of exclusivity with no generic competition. The lawsuit charges that this anticompetitive activity violated federal law.

“Those Defendants allocated the Glumetza market between them: Assertio/Santarus got the entire market from 2012 to February 2016, and Lupin got the generic sector of the market from February 2016 until at least August 2016,” the complaint reads. “That market-allocation agreement is blatantly unlawful under antitrust law.”

The suit says the settlement agreement also included “deterrent provisions” aimed at keeping other generic competitors from foiling the drug makers’ plan. The provisions allegedly provided that if another generic competitor entered the market before February 2016, Lupin could also enter on that date without Assertio/Santarus granting a license to any other generic manufacturer until 180 days after Lupin’s entrance.

According to the lawsuit, the effect of the defendants’ conspiracy was that the price of Glumetza was inflated to more than 50 times what it would have been in a competitive market.

“Fair competition would have limited the price of a 30-day supply of diabetes prescription drug Glumetza to less than $55. Defendants instead were able to charge more than $3,000 for the brand version and more than $2,200 for the generic version,” the complaint states.

The profits generated from this alleged conspiracy allowed Assertio/Santarus to enter into various transactions that eventually saw the Glumetza monopoly sold to Valeant Pharmaceuticals, Inc. (which is now known as Bausch Health) for $14.5 billion, the lawsuit alleges.

According to the complaint, the direct purchasers of Glumetza such as the plaintiff shouldered the costs of the defendants’ anticompetitive scheme, and have overpaid for the drug by more than $2.8 billion.