Ovation Antitrust Litigation

Case Progress in Court:

The parties reached a confidential settlement and the case was dismissed with prejudice on June 7, 2011. The settlement resolves the claims of the hospitals, pharmacies and health care organizations who directly purchased Indocin or NeoProfen from Defendant Ovation Pharmaceuticals, Inc. and/or Lundbeck, Inc.

About the Litigation:

In June 2009, three entities filed antitrust class action lawsuits against Ovation Pharmaceuticals, Inc. and Lundbeck, Inc. (“Defendants”), alleging violations of federal antitrust laws and unjust enrichment.  The lawsuits were commenced in the United States District Court for the District of Minnesota on behalf of all persons or entities in the United States that purchased Indocin and/or NeoProfen from Defendants or any of their subsidiaries at any time from January 2006 until the effects of Defendants’ anticompetitive conduct cease (“Class Period”).  The Plaintiffs filed a Consolidated Amended Complaint and the Court has designated an Executive Committee of firms, including Zimmerman Reed, to act as Interim Class Counsel on behalf of all Plaintiffs.

The Complaint challenges Defendants’ anticompetitive conduct in obtaining, maintaining and extending their monopoly power in the market for pharmaceutical treatments of patent ductus arteriosus (“PDA”), a potentially fatal heart condition that primarily affects premature babies.  Plaintiffs allege that since Indocin and NeoProfen are the only two pharmaceutical treatments sold in the U.S. to treat this congenital heart defect, Defendants have deprived purchasers of the benefits of competition and the lower prices such competition would have brought.  Purchasers have had no other option but to pay the artificially high prices imposed as a result of Defendants’ PDA drug monopoly since January 2006.

Background:

In 2005, Ovation acquired patent rights to Indocin from Merck & Co., when Indocin was the only FDA-approved drug to treat PDA and it cost approximately $26 per vial. Upon acquiring Indocin from Merck, Ovation raised the price of Indocin to $36 per vial. Shortly after, in January 2006, Ovation acquired the patent rights to NeoProfen from Abbott Laboratories Inc. in a transaction that fell below the Hart-Scott-Rodino reporting thresholds, and escaping pre-closing review by the antitrust agencies. NeoProfen was still awaiting FDA’s approval at the time of this transaction. Two days after acquiring rights to NeoProfen, Ovation raised the price of Indocin by about 1,300% to $500 per vial. The FDA then approved NeoProfen as a treatment for PDA in April 2006. Ovation launched NeoProfen as its second PDA drug in July 2006, at a price slightly below the price of Indocin, at about $480 per vial.

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