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Nexium

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PAL members are currently plaintiffs in Nexium cases in California and Massachusetts state court and in federal court in Delaware.

About Nexium
Nexium is a proton pump inhibitor ("PPI") used in the treatment of gastroesophogeal reflux disease ("GERD"). Nexium is manufactured by AstraZeneca, Inc. ("AstraZeneca"). Nexium is the successor drug to Prilosec, also manufactured by AstraZeneca.

Background
In 2000, Prilosec was the world's largest selling prescription drug, with sales of over $6 billion. Sales of Prilosec accounted for 39 percent of AstraZeneca's revenues. Patent protection for Prilosec was due to expire in 2001. The loss of patent protection and the introduction of inexpensive but equally effective generic competitors into the PPI market would have resulted in substantial revenue losses for AstraZeneca.

In anticipation of the expiration of the Prilosec patent, AstraZeneca began a massive advertising campaign that endeavored to transfer the brand loyalty patients felt for Prilosec to Nexium. Nexium quickly became the most heavily advertised drug in the United States . The media was blanketed with Nexium ads - "Today's purple pill is Nexium, from the makers of Prilosec." To help with the switch, AstraZeneca priced Nexium slightly below Prilosec, gave discounts to managed care plans and hospitals, barraged doctors with free samples, and even offered coupons in newspapers. The campaign reportedly cost the company a half billion dollars in 2001. The introduction and intense promotion of the expensive brand name drug Nexium into the PPI market allowed AstraZeneca to prevent revenue losses to generic competition. In 2003, although revenues from Prilosec slid to under $1 billion, Nexium sales exceeded $3.3 billion.

PAL Member Litigation
PAL filed lawsuits against AstraZeneca in California on October 18, 2004, and on January 25, 2005, in Massachusetts as well as a nationwide case on May 27, 2005, in Delaware, alleging that despite knowing that Nexium offered no meaningful advantage over Prilosec, AstraZeneca engaged in a fraudulent and unlawful campaign to switch consumers from Prilosec to Nexium. The purpose of the campaign was to deter consumers from using inexpensive generic PPIs in order to prevent loss of revenues and profits to AstraZeneca.

The lawsuits allege that AstraZeneca unlawfully extended its hold on the brand name PPI market by (i) commencing baseless patent infringement litigation against potential generic competitors, (ii) conducting misleading studies to support claims of the benefits of Nexium over Prilosec, (iii) engaging in unfair and deceptive marketing and promotional tactics including providing inaccurate and incomplete information to physicians and consumers concerning the benefits of Nexium, and (iv) engaging in improper pricing practices to induce drug purchasers to switch from Prilosec to Nexium.

The California case was brought under California's Unfair Competition and False Advertising Laws and the Massachusetts' under Massachusetts's Consumer Protection Act (Mass. Gen. Laws c. 93A), all three lawsuits seek damages and an order enjoining AstraZeneca from continuing its unlawful conduct.

Massachusetts Update: On October 1, 2007, the plaintiffs filed their motion for class certification. The defendants' reply was due on February 28, 2008. A decision on whether the Court will certify the case as a class action is pending.

California Update: On September 21, 2005, Judge Chaney refused to dismiss the individual plaintiffs' case. The organizational plaintiffs were dismissed, however, in light of Proposition 64 (a state referendum that changed the requirements for bringing a case under California's consumer-protection statute). On October 1, 2007, the plaintiffs filed their motion for class certification. A decision on class certification is pending. Based on the decision of the Third Circuit Court of Appeals in the Nationwide case (see below), AstraZeneca also filed a Motion for Judgment on the Pleadings (asking the Court to dismiss the case). A decision on that motion is pending.

Nationwide Update: On November 8, 2005, the judge in the the U.S. District Court for the
District of Delaware dismissed the case, on the grounds that the claims were "preempted" by the Food and Drug Administration's (FDA) federal authority under the Food, Drug and Cosmetics Act (FDCA). The plaintiffs appealed, and on August 17, 2007, the Third Circuit Court of Appeals affirmed the District Court's order dismissing the case, with one judge (Judge Cowen) dissenting. On September 19, 2007, the plaintiffs' petition for rehearing en banc (i.e. by all the judges in the Third Circuit Court of Appeals, not just a panel of three) was denied, with Judge Cowen and three other judges voting for rehearing. On December 18, 2007, the plaintiffs filed a petition for certiorari, asking the United States Supreme Court to hear the case. A decision on that petition is pending.

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