Jazz is being accused of anti-competitive practices regarding its narcolepsy drug, as generic competitors emerge on the market.
Jazz Pharmaceuticals will pay $145 million to settle allegations of anti-trust practices related to its narcolepsy drug Xyrem, according to an SEC filing on Tuesday.
The settlement, which is still subject to court approval, will release Jazz, its affiliates and its employees from claims presented in the lawsuits. Jazz continues to deny all allegations of wrongdoing.
Jazz will fund the settlement with its cash on hand and will record the charge in the first quarter of this year.
Xyrem is an orally available central nervous system depressant indicated for the treatment of cataplexy—sudden muscle weakness triggered by strong emotions—or excessive daytime sleepiness in patients with narcolepsy. Jazz first got FDA approval for the drug in 2002, and since then, several companies have sought to develop generic versions of the medicine.
The class action lawsuit was brought by a variety of plaintiffs, including the A.G.C. Building Trades Welfare Plan, the city of Providence, Rhode Island, the New York State Teamsters Council Health and Hospital Fund, as well as others.
In their lawsuit against Jazz, the plaintiffs alleged that the company entered into complex reverse payment agreements with generics drugmakers, hoping to stave off copycat challengers to Xyrem, as per an August 2024 report from VitalLaw. These potential competitors include Hikma Pharmaceuticals, Amneal Pharmaceuticals and Lupin Ltd.
According to the suits, these payments were anti-competitive and violated state and federal antitrust policies, as well as several consumer protection and unfair competition laws. Several similar complaints filed from June 2020 to September 2020 were consolidated before the U.S. District Court for the Northern District of California in December 2020, as per Jazz’s SEC document.
Plaintiffs also alleged that from 2007 to 2014, Jazz was able to hike Xyrem’s price by more than 800% as it enjoyed its position of exclusivity in the market, according to an August 2024 court filing.
Jazz has consistently denied these allegations. In its SEC document on Tuesday, the biotech noted that will “defend against these claims vigorously” if the court denies its settlement proposal. Jazz “remains confident in its defenses to the other claims brought by plaintiffs,” it continued, insisting that its prior patent settlement agreements with generics developers are “pro-competitive.”
Xyrem had achieved blockbuster status as recently as 2021, garnering about $1.3 billion in sales, but has steadily declined since then, bringing in just $233.8 million in 2024. Royalties from approved generics did net Jazz an additional $217.6 million last year. Generics from Hikma and Amneal were approved in 2017 and 2023, respectively.
In a parallel lawsuit, Amneal and Lupin settled with a group of insurers and third-party payors from 31 states for $3.4 million, which would establish a legal fund to continue legal proceedings against Jazz and Hikma.
At the end of 2024, Jazz had $3 billion in cash, cash equivalents and investments, while its outstanding principal balance on long-term debt was $6.2 billion.
