King Pharmaceuticals Hit With Antitrust Headaches Over Its Muscle Relaxant, Skelaxin

King Pharmaceuticals Inc. begins the new year with another antitrust headache caused by a class action complaint brought in federal court in the Eastern District of Tennessee by two pharmacies alleging that it has unlawfully conspired to suppress competition to its muscle relaxant, Skelaxin.

According to the complaint in Johnson’s Village Pharmacy, Inc. et al. v. King Pharmaceuticals, Inc., King Pharmaceuticals (which was acquired by Pfizer in 2010) restrained trade in violation of the Tennessee Trade Practices Act and common law by entering into a reverse-payment agreement in 2005 with Mutual Pharmaceutical Company.  In the agreement, Mutual agreed to delay selling a generic version of the drug in exchange for an up-front payment of $35 million and a 10%-30% annual share of King Pharmaceuticals’ sales of Skelaxin.

The plaintiffs, Johnson’s Village Pharmacy Inc. and Russell’s Mr. Discount Drugs Inc., allege that this agreement forced a class of thousands of businesses that have purchased Skelaxin for resale to overpay by millions of dollars.

The complaint follows an earlier antitrust action brought under the federal Sherman Act by SigmaPharm Inc. against both King Pharmaceuticals and Mutual.  In that case, SigmaPharm alleged that the King-Mutual agreement eliminated sales of a generic version of Skelaxin to the detriment of SigmaPharm, which had a development agreement with Mutual.

The SigmaPharm action was dismissed last year because the federal district court found that SigmaPharm did not qualify as a consumer or competitor that could bring suit under the Sherman Act.  The United States Court of Appeals for the Third Circuit affirmed that ruling in December.