Canada’s Intellectual Property Firm

Federal Court approves litigation funding agreement in proposed class proceeding against generic drug manufacturers

Authored byUrszula Wojtyra

As previously reported, a proposed class action proceeding against over 50 generic drug manufacturers was commenced in 2020. The proposed class action alleges that the defendants conspired to “allocate the market, fix prices and maintain the supply of generic drugs” contrary to the Competition Act, and claims damages of $2.75 billion.

On September 20, the Federal Court approved a litigation funding agreement (LFA) (Kathryn Eaton v Teva Canada Limited et al., 2021 FC 968). The proposed class representative plaintiff entered into an LFA with a litigation funding group, Parabellum, to fund the action. Pursuant to the LFA, Parabellum will fund and be reimbursed for certain costs, including disbursements and adverse cost awards, and would be entitled to a Funding Fee. The approved Funding Fee is 10% of the claim proceeds after reimbursement of certain funds advanced and is subject to a cap of between $5 and $45 million depending on when the overall claim proceeds are received.

The claim references an ongoing investigation in the United States into price fixing, bid rigging, and market allocation in the generic pharmaceutical industry. According to the United States Department of Justice Antitrust Division Spring Update 2021, two companies – Teva and Glenmark – and one executive are awaiting trial. Three other executives have pleaded guilty, and five other generic companies have admitted to the charged conduct and have collectively agreed to pay over $426 million in criminal penalties for collusion.

Should you have any questions, please do not hesitate to contact a member of the Pharmaceutical Litigation Group.

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