Mylan Rejected by U.S. Supreme Court on $77 Million Award

The U.S. Supreme Court rejected Mylan Inc.’s appeal of a $77 million award to four health insurers that accused the generic-drug maker of cornering the market on ingredients for two anti-anxiety medicines.

In seeking to have the antitrust suit thrown out, Mylan argued that the federal courts lacked authority to consider the case. An appeals court in January refused to dismiss the suit, instead telling a trial judge to consider trimming an award that stems from a 2005 jury verdict against Mylan.

Mylan has faced antitrust allegations over its generic lorazepam and clorazepate for more than a decade. The company in 2000 agreed to pay $135 million to resolve complaints by the Federal Trade Commission, 32 states and a group of private drug purchasers. The FTC said Mylan reached exclusive supply agreements that in 1998 let the company raise the price of the two drugs by more than 2,500 percent.

At the Supreme Court, the legal issue concerned the mechanism used by the insurers to get the case into federal court, rather than state court. Federal judges have power to hear cases if all the participants hail from different states.

Mylan, based in Canonsburg, Pennsylvania, said that requirement wasn’t met because the insurers were also pressing claims on behalf of their 1,400 “self-funded” customers -- mostly large corporations that use their own money to provide health benefits directly to employees. Mylan said that some of those self-funded customers were from the same state as at least one of the defendants in the case.

A federal appeals court in Washington told a trial judge to consider whether some or all of the self-funded customers could be dismissed from the case.

In addition to Mylan, two other companies -- Cambrex Corp. (CBM) and Gyma Laboratories of America Inc. -- are defendants in the case. Mylan said in a July regulatory filing that it may have to pay “some or all” of the damages incurred by the other companies. Cambrex said in an August filing that it expects indemnification from Mylan for any damages.

The case is Mylan v. Blue Cross Blue Shield of Massachusetts, 10-1500.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net.

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