Federal court ruling in KCK allows millions to join lawsuit over high cost of EpiPens

by Dan Margolies, Kansas News Service

In a major victory for consumers, a federal judge in Kansas City, Kansas, is allowing a lawsuit over EpiPen price hikes to move ahead as a nationwide class action under the federal racketeering statute.

U.S. District Judge Daniel Crabtree also is allowing consumers to sue for damages under state antitrust laws.

The ruling was a setback for the main defendants in the case, Mylan NV and Pfizer Inc., which sell and make the potentially life-saving auto-injector device.

The case addresses whether the drugmakers sought to monopolize the EpiPen market after they dramatically hiked the price of the device, triggering consumer fury and a congressional investigation.

“On behalf of the nationwide class of consumers and third-party payers, we’re grateful that Judge Crabtree ruled in favor of holding Big Pharma accountable for illegally raising the price on lifesaving drugs like EpiPen,” said Prairie Village lawyer Ryan Hudson, whose firm, Sharp Barton, represents dozens of consumers who purchased EpiPens.

“We look forward to pursuing these claims at trial and holding the defendants responsible for their conduct in Kansas and nationwide.”

Lawyers said the classes certified by Crabtree could number in the millions of individuals.

Although Crabtree issued his ruling in two separate sealed filings, he also issued a publicly available order summarizing it. He said he plans to unseal the filings after the parties have reviewed them for confidential information.

Crabtree’s ruling allows “all persons and entities” in the United States who paid or provided reimbursement for EpiPens as of Aug. 24, 2011, to sue for damages under the federal Racketeer Influenced and Corrupt Organization Act. The law allows plaintiffs to recover triple damages.

The ruling also allows “all persons and entities” who paid or provided reimbursement for EpiPens as of Jan. 28, 2013, to sue under the antitrust laws of 17 different states, including Kansas, that allow indirect purchasers to pursue antitrust claims.

“It’s a great day for the class and consumers everywhere,” said Overland Park lawyer Chuck Schimmel, who represents an EpiPen purchaser.

“A big hurdle in any class action is obtaining an order from the court deeming it appropriate to proceed as a class action and certifying the class or classes,” Schimmel said. “And that’s exactly what Judge Crabtree has done.”

Elizabeth Pritzker, an attorney in Oakland, California, who serves as chair of the plaintiffs’ steering committee in the massive litigation, said the ruling was cause for celebration by consumers.

“It was a nice order to see,” she said.

Julie Knell, a spokeswoman for Mylan, said in an email that the company was pleased with Crabtree’s decision to deny certification of other classes sought by the plaintiffs. But she said it believed none of the claims should have been certified.

“Importantly, she said, “the court’s decision to certify certain topics as a class action is not a decision about the merits of Plaintiffs’ claims. It is a ruling in which the court assumed the truth of what Plaintiffs assert. The undisputed facts will show that Plaintiffs’ allegations are completely without merit. Mylan denies all of Plaintiffs’ claims and will continue to vigorously defend itself as the case continues.”

The litigation has been playing out here since 2017, when a judicial panel consolidated five separate consumer cases filed in Kansas, New Jersey, Illinois and Washington in federal court in Kansas City, Kansas, plus another case filed by drugmaker Sanofi-Aventis. The panel ruled that the court presented a “geographically central forum for this nationwide litigation.”

The consolidated cases allege that Mylan, Pfizer and their affiliates engaged in an illegal scheme to monopolize the EpiPen market by hiking its price more than 500 percent and offering rebates and discounts to pharmacy benefits managers and insurers in return for their pledge not to reimburse competing products.

The consumer cases also allege the companies secured overlapping patents on minor changes to the EpiPen and then engaged in sham patent litigation to forestall competition from generic products.

In addition, they charge that Mylan offered public schools free or discounted EpiPens conditioned on the schools entering into exclusive contracts with the company. Mylan reportedly spent $4 million lobbying Congress to pass the School Access to Emergency Epinephrine Act, which was enacted in 2013 and gives federal funding priority to schools that stockpile EpiPens.

Sally Beatty, a spokeswoman for Pfizer, said in an email that the company believed the certification of the classes by Judge Crabtree was unwarranted.

“Plaintiffs cannot prove that members of those classes were injured by Pfizer’s EpiPen patent settlement. Protecting our intellectual property is vital to our ability to develop new medicines that save or enhance patient lives. We believe the Company’s enforcement of the EpiPen patents and settlement of the EpiPen patent litigation were proper and lawful, and we will evaluate our legal options.”

Mylan officials did not immediately respond to a request for comment.

EpiPens are auto-injector devices containing epinephrine, otherwise known as adrenaline, used to counter the effects of severe allergies and indicated for people at risk of going into life-threatening anaphylactic shock. Anaphylaxis is most commonly caused by food allergens but can also be caused by insect bites, medications and other substances.

Mylan acquired the right to market and distribute the EpiPen in 2007. Pfizer, through two of its subsidiaries, is Mylan’s exclusive supplier.

Since the Mylan purchase, the price of EpiPens has shot up, from about $100 in 2007 to more than $600 in 2016, accounting for more than $1 billion in annual sales for the company. Meanwhile the cost of the EpiPen’s dose of epinephrine has remained at about $1.

At a hearing in September 2016, the late Rep. Elijah Cummings, the ranking Democrat on the House Oversight Committee, accused Mylan CEO Heather Bresch, who is also a defendant in the litigation, of exploiting an “old cheap drug that has virtually no competition” and raising “the price over and over and over again as high as you can.”

Bresch, the daughter of Democratic Sen. Joe Manchin of West Virginia, saw her pay rise during the period of 2007 to 2015, when Mylan hiked the price of EpiPens, from about $2.5 million to nearly $19 million, a more than seven-fold increase. That triggered fury among EpiPen users, many of whom said they could no longer afford the device.

In 2017, Mylan paid the federal government $465 million for misclassifying the EpiPen as a generic drug, allowing it to overcharge Medicaid by $1.27 billion.

And last year, it paid $30 million to settle a case brought by the Securities and Exchange Commission. The SEC alleged Mylan failed to disclose to investors the government’s probe into whether it overcharged Medicaid.

Other deals entered into by Mylan have come under congressional scrutiny as “pay-for-delay” agreements.

When drugmaker Teva Pharmaceutical Industries sought FDA approval in 2008 to market a generic EpiPen, Pfizer sued it for infringing its patents. They settled the case in 2012. The consumer cases in Kansas City, Kansas, allege that settlement was unlawful because it required Teva to delay launching its product for three years in return for Pfizer’s agreement to provide significant benefits and compensation to Teva.

Crabtree’s decision is the first major ruling he’s issued in the fiercely fought case since August 2018, when he largely denied Mylan and Pfizer’s motion to dismiss it. His 128-page ruling found that the plaintiffs “plausibly” alleged that “Mylan’s anticompetitive conduct harmed the competition.”

He also declined to dismiss Sanofi-Aventis’ lawsuit, which charges that Mylan used its monopoly power to block the inclusion of Sanofi-Adventis’ auto-injector device in drug formularies – the list of prescription benefits covered by health plans.

This story was updated to include comments by Pfizer and later updated again to include comments by Mylan.
Kansas News Service stories and photos may be republished at no cost with proper attribution and a link back to kcur.org.
Dan Margolies is a senior reporter and editor at KCUR. You can reach him on Twitter @DanMargolies.
See more at https://www.kcur.org/post/kansas-city-kansas-ruling-allows-millions-join-lawsuit-over-high-cost-epipens

Small rate increase approved for Atmos gas residential customers

A rate increase was approved Monday for Atmos Energy’s natural gas residential customers.

The company had requested an increase that would have raised bills for residential customers about $4.33 per month in the winter and $3.41 per month in the summer, according to a news release from the Kansas Corporation Commission.

The increase that was approved Monday will allow 35 cents more per month in the winter and 11 cents more per month in the summer, according to the KCC. The increase will be a little over $3 a year for average residents.

Parts of Wyandotte County are served by Atmos Energy.

According to the KCC, instead of a net revenue increase, the order calls for a net revenue decrease of $223,953. The slight increase in residential ratepayers’ bills is designed to better align rates between customer classes and reduce the subsidization of the residential class by the commercial sales class, according to the KCC.

The rate case also addressed return on equity and the creation of a system integrity program to accelerate the replacement of aging infrastructure, the KCC stated.

Atmos initially proposed a return on equity of 10.25 percent. The KCC opted to stay with the current return on equity of 9.1 percent, stating the proposed return on equity ran counter to the downward trends in Kansas and nationwide because of lower costs of capital.

The system integrity program was denied, based on the current proposal, according to the KCC. The door was left open for the company to make the recommended adjustments and initiate a new filing with the KCC if desired, according to the KCC.

The KCC’s order is online at http://estar.kcc.ks.gov/estar/ViewFile.aspx?Id=fd4bf519-8109-4591-a339-86922f6bc68f.

Kansas attorney general warns consumers about unlicensed Chiefs merchandise and counterfeit tickets

Kansas Attorney General Derek Schmidt today advised consumers to protect themselves against purchasing unlicensed NFL merchandise or falling victim to phone scams involving fake tickets to Super Bowl LIV.

“Like many across our state, I’m proud of the Chiefs and excited to watch them compete for the championship on Sunday,” Schmidt said. “However, Kansans should be sure and take the appropriate precautions against scammers looking to make a buck off the team’s success by selling fake merchandise or tickets.”

Schmidt offered the following tips for making a purchase related to the Super Bowl:

Check the tag: All officially licensed NFL products will bear the league’s shield on the tag. If the tag on the merchandise does not have the shield, it may be unlicensed.

Beware of phone scams: Local authorities have reported phone scams regarding game ticket purchases, with scammers using phone numbers that appear local with a 913 or 816 area code offering discounted tickets sold online. Once the scammer receives the online payment for the tickets, they block the consumer’s phone number to prevent a call back when the tickets inevitably do not arrive. As a general rule, consumers should not answer the phone when it is an unrecognized number and never give personal information or make a payment over the phone or over an unverified website.

Purchase tickets through a verified source: The Chiefs have offered NFL ticket exchange, StubHub and SeatGeek as examples of NFL-approved retailers to purchase or sell tickets to the game.

Door-to-door and ‘pop-up stand’ sales: Kansas law says that for any purchase of more than $25 made at your home, or any location that is not the seller’s permanent place of business or local address, consumers have three days after the purchase is made to cancel the transaction. Kansas door-to-door statutes regulate these sales from, for example, “pop-up” sidewalk stands and tents in parking lots with Chiefs merchandise.

The seller must give written and verbal notice of this right to cancel and contact information if consumers choose to exercise their right to cancel. Consumers who wish to cancel the transaction should do so by certified mail so it can be tracked. Companies are then required to refund the consumer’s money within 10 days of receiving the cancellation.

Kansas law also requires the sales receipt to be dated, show the name and address of the seller, be in a large legible font and explain the right to cancel. The receipt must be in the same language used in the sales presentation.

Consumers who believe they may have fallen victim to a Super Bowl-related scam should contact their local law enforcement, or call the attorney general’s Consumer Protection Division at 800-432-2310. Complaints may also be filed online at www.InYourCornerKansas.org.