Prescription Drug Monopoly Results in Class Action Lawsuit

Case Title: Barba, et al. v. Shire US Inc., et al. (S.D. Fla.)

Adderall XR is an extended-release version of a drug commonly used for treating attention deficit hyperactivity disorder (ADHD). In 2016, two plaintiffs sued Shire U.S. Inc., the company that makes and distributes Adderall XR, in a class action lawsuit, alleging that Shire had taken various actions to block generic versions of the drug from entering the marketplace.

Generic drug purchases make up 88% of all prescription drug purchases in the United States. These drugs are not necessarily made up of the very same ingredients, but they are shown to be bioequivalent to their respective brand name drugs. That is, they act in the body in the same way as the original drug. Generic drugs tend to be much cheaper than their brand-name cousins because they do not have to meet the same standard of testing as an original drug and can be produced by many different manufacturers, leading to more marketplace competition.

The plaintiffs, in this case, stated that Shire brought patent-infringement suits against generic-drug makers in 2003 after they filed Abbreviated New Drug Applications with the U.S. Food and Drug Administration to sell generic formulations of Adderall XR. The Hatch-Waxman Act, passed in 1984, governs the licensing of generic drugs. After five years on the market, brand-name drugs are supposed to be available to be approved and released as generic drugs. Shire’s litigation was, according to the plaintiff’s counsel, a “sham” used to continue their monopoly on the drug.

Shire settled their patent-infringement suits in 2006, agreeing to pay two generic drug manufacturers for their agreement not to launch any generic versions until 2009. They also promised to license the drug to these two generic manufacturers, which would enable them to produce the generic form even in the event that their Abbreviated New Drug Applications were not approved. This type of agreement is called “pay-to-delay,” which allows drug makers to sidestep competition. The Federal Trade Commission has found that schemes of this sort cost consumers $3.5 billion in higher drug costs every year.

Even with this “pay-to-delay” settlement in effect, Shire failed to live up to their agreement by sending only a limited amount of Adderall XR to the generic manufacturers. This slowed the generic drug firm’s progress in developing their own version and forced customers to buy the more expensive brand of the medication, which violated the Sherman Act prohibiting monopolies and unreasonable restraints of trade.

In 2013, this class action lawsuit was filed, alleging that Shire’s actions caused millions of dollars in damages to consumers and violated antitrust laws. In 2016, the Multidistrict Litigation panel approved a $14.75 million cash payment to the class in this lawsuit in exchange for the release of claims asserted in all parallel pending actions. The settlement administrator received over 23,000 claims to reimburse over 855,000 Adderall prescriptions.

John Davis was named class counsel on this matter, helping to move it to its successful conclusion. The judge called the judgment reasonable and adequate and struck down three objections challenging it.

John R. Davis‘ practice is focused on complex litigation, with an emphasis on consumer fraud, healthcare fraud, antitrust, environmental, and insurance matters. He has spent the majority of his career either working for or litigating cases in the U.S. Federal Courts.

Date of Incident

April 11, 2016

Location of Incident

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