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SmithKline Beecham Breathes Easier As Class Is Delayed In Nasal Spray Antitrust Suit

Posted  July 19, 2010

SmithKline Beecham Corp. may be breathing a little easier for now as a result of a temporary denial of class certification in the antitrust litigation that seeks to hold the pharmaceutical company liable for delaying generic versions of the nasal spray Flonase.

Judge Anita B. Brody of the U.S. District Court for the Eastern District of Pennsylvania ordered the plaintiffs to rebrief their motion by September 30 in light of the U.S. Court of Appeals for the Third Circuit’s ruling a day earlier in a price-fixing class action against diamond company De Beers SA.

A day before Judge Brody’s ruling, the Third Circuit vacated a $295 million settlement in the De Beers case, Sullivan v. DB Investments Inc.  The Third Circuit held that the district court failed to properly ascertain whether class certification was appropriate.  In vacating the De Beers settlement, the appeals court found that the lower court had not addressed differences among the state laws at issue in the case.

The De Beers ruling could have significant implications for the plaintiffs in the Flonase antitrust litigation because they are seeking the certification of multiple classes based on various state and federal laws.  Each of the potential classes seeks to represent individuals and entities that purchased Flonase or its generic equivalent from May 19, 2004, until the full effects of generic competition had been felt.

The court had previously allowed the plaintiffs to proceed with allegations that Glaxo SmithKline (formed by the merger of Glaxo Wellcome and SmithKline Beecham in 2000) caused them to overpay for Flonase by repeatedly filing sham citizen petitions that stalled the entry of generic nasal sprays into the market.  Citizen petitions can be filed with the FDA while approval of a generic drug is pending to express concerns about a product or request that the FDA take administrative action.  Congress passed a law in 2007 permitting the FDA to summarily dismiss citizen petitions to stop drug companies from abusing the process to extend monopolies.

Judge Brody’s ruling temporarily denying class certification may turn out to be only a hiccup in plaintiffs’ quest for class certification.  That said, in seeking class certification, the plaintiffs will need to fully address the differences among the various state and federal laws at issue or risk certification being denied yet again.  Until they achieve the requested class certification, it is the plaintiffs who cannot breath easy.

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