In October 2004, PAL member SEIU Health & Welfare Fund filed a class action lawsuit against Abbott Laboratories, alleging that Abbott’s 400% price increase for its HIV/AIDS drug Norvir violated federal antitrust laws. (In re Abbott Laboratories Norvir Antitrust Litigation, Case 4:04-CV-01511)

Abbott had endured a firestorm of criticism for this price increase, including protests, shareholder resolutions, boycott of Abbott products and clinical trials by hundreds of doctors, investigations by state Attorneys General, a formal petition to the FDA to force the licensing of a generic version of the drug, scathing newspaper editorials across the country, etc, but steadfastly refused to budge.

The class action lawsuit in California is essentially the only remaining challenge to this outrageous price increase. The case has been quietly proceeding for the past several years. The Court denied Abbott’s Motion to Dismiss in March 2005, and denied Abbott’s Motion for Summary Judgment in July 2006.

Just yesterday, the Court granted in large part the Plaintiffs’ Motion for Class Certification. Class Certification is the stage at which the Judge determines whether or not the lawsuit can proceed as a class action or not. Given that any individual patient’s financial harm is comparatively small, class actions are almost always the only way in which illegal pharmaceutical industry behavior such as that alleged in this case can be challenged. The cost of bringing an individual lawsuit to challenge actions such as this would outweigh that individual financial harm by orders of magnitude. Class Actions allow for thousand or even millions of individuals to combine their claims into one lawsuit that challenges the actions that caused harm to all of them.

Since the outcome of a class action can affect millions of people, most of whom are not directly involved in the suit, Judges must find that the case meets certain criteria, listed in Federal Rule of Civil Procedure 23.

The Order issued yesterday by the Court certified a class defined as:

All persons or entities throughout the United States and its territories who purchased or paid for, or who reimbursed another person or entity who purchased or paid for, Norvir as a booster to other protease inhibitors intended for consumption by themselves, their families, or their members, employees, plan participants and beneficiaries or insureds, and who paid all or part of the cost of Norvir during the period December 3, 2003 through such time in the future as the effects of Defendant’s illegal conduct, as alleged, have ceased. Excluded from the Class is Defendant and its subsidiaries and affiliates, all government entities (except for government-funded employee benefits funds), and all persons or entities that purchase Norvir: (i) for purposes of resale, or (ii) directly from Defendant.

The Court separated consumers and third-party payors (health plans, union benefit funds and others that pay for drugs on behalf of their members) into separate subclasses, represented by separate counsel.

Class certification is a watershed moment for a class action. If Class certification is denied, that is often the end of the case, since most class actions cannot feasibly be pursued as individual lawsuits. The Judge’s granting of class certification is an important intermediate success in this case. We will continue to report on developments in this case as it moves forward.

The Judge’s Order granting class certification can be found here.