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US judge orders probe of Novartis $30 mln settlement claims process

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By Brendan Pierson

June 6 (Reuters) -A federal judge has ordered a probe of the claims distribution process in a $30 million settlement by Novartis NOVN.S with consumers and health plans in an antitrust class action over its hypertension drug Exforge, citing concerns about its integrity.

U.S. District Judge Alvin Hellerstein in Manhattan in an order on Wednesday said that of more than 132,000 consumer claims submitted to the settlement administrator, just over 22,000 were allowed, which "seems disproportionately low."

Of the checks mailed to consumers whose claims were deemed eligible,nearly 15,000, totaling about $2.1 million, have become stale for failure to be deposited, Hellerstein said.

That is out of about $4.8 million of the $30 million that was set aside for consumers. The rest of the settlement went to third-party payors like health plans and insurance companies and to legal fees and costs.

"An inquiry by the court is required to assure the integrity of the claims distribution process," Hellerstein wrote.

He appointed U.S. Magistrate Judge Stewart Aaron to oversee that inquiry and prepare a report on his findings. Lawyers for plaintiffs and Novartis did not immediately respond to requests for comment.

Hellerstein's order comes amid growing concern that class action settlements can be targeted by scammers. More than 80 million claims submitted to class action settlement funds in 2023 showed "significant" signs of fraud, up more than 19,000% since 2021, according to a report last month from digital payment processor Digital Disbursements.

The consumers and third-party payors had accused Basel, Switzerland-based Novartis of violating federal antitrust law by entering into an illegal "reverse payment" agreement with Endo International's EO7.F Par Pharmaceutical unit to delay launches of less expensive, generic versions of Exforge, which treats hypertension to lower blood pressure and reduce the risk of strokes.

They said Par agreed not to launch a generic Exforge product for two years after the expiration of one of Novartis's patents, and Novartis agreed not to compete with Par by launching its own Exforge generic during the 180-day exclusivity period Par enjoyed as the first generic on the market.

The $30 million is part of a broader $245 million settlement that Novartis reached in 2022, which also includes claims by drug wholesalers and retailers.

Novartis's annual U.S. sales of brand-name Exforge exceeded $400 million before generic versions were sold.

The case is In re Novartis and Par Antitrust Litigation, U.S. District Court, Southern District of New York, No. 18-04361.

For Novartis: Evan Chesler of Cravath, Swaine & Moore

For plaintiffs: Gregory Asciolla of DiCello Levitt and Robert Eisler of Grant & Eisenhofer

Read more:

Novartis to pay $30 mln to health plans, consumers over Exforge antitrust claims

Novartis to pay $245 mln to end antitrust cases over Exforge drug generics

Reporting By Brendan Pierson in New York; editing by Nate Raymond


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