Jazz Pharmaceuticals has agreed to pay $145 million to settle antitrust allegations related to its narcolepsy drug Xyrem, while Hikma Pharmaceuticals will contribute an additional $50 million in a related settlement, bringing the total resolution to $195 million. Both settlements remain subject to court approval.
The class action lawsuit, consolidated in the U.S. District Court for the Northern District of California, was brought by multiple plaintiffs including the A.G.C. Building Trades Welfare Plan, the city of Providence, Rhode Island, and the New York State Teamsters Council Health and Hospital Fund.
Allegations of Anti-Competitive Practices
Plaintiffs alleged that Jazz engaged in anti-competitive behavior by entering into complex reverse payment agreements with generic drug manufacturers to delay market entry of Xyrem competitors. According to court filings, Jazz allegedly increased Xyrem's price by more than 800% between 2007 and 2014 while maintaining market exclusivity.
The lawsuits claimed these actions violated state and federal antitrust policies, as well as consumer protection and unfair competition laws. Hikma, which received FDA approval for a generic version of Xyrem in 2017, was accused of conspiring with Jazz to postpone the release of its lower-cost alternative.
"This agreement protects the company's interests and provides clarity to our stakeholders," said Hikma's general counsel, Sam Park, in a statement, while maintaining the company did nothing wrong.
About Xyrem and Its Market Impact
Xyrem (sodium oxybate) is an orally administered central nervous system depressant approved by the FDA in 2002 for treating cataplexy—sudden muscle weakness triggered by strong emotions—and excessive daytime sleepiness in patients with narcolepsy.
The drug achieved blockbuster status as recently as 2021, generating approximately $1.3 billion in sales. However, revenue has steadily declined since then, with Xyrem bringing in $233.8 million in 2024. Jazz did receive an additional $217.6 million in royalties from approved generics last year.
Settlement Details and Next Steps
Jazz will fund its $145 million settlement with cash on hand and record the charge in the first quarter of this year. The company continues to deny all allegations of wrongdoing and insists its patent settlement agreements with generic developers were "pro-competitive."
In its SEC filing, Jazz noted it would "defend against these claims vigorously" if the court rejects the settlement proposal, stating it "remains confident in its defenses to the other claims brought by plaintiffs."
Attorneys representing the class described the settlements as "the result of hard-fought and adversarial litigation" in court filings. They have indicated they plan to seek legal fees amounting to approximately one-third of the total $195 million in combined settlements.
The settlements, if approved by Chief U.S. District Judge Richard Seeborg, would release Jazz, Hikma, their affiliates, and employees from claims presented in the lawsuits.
In a parallel case, generic manufacturers Amneal Pharmaceuticals and Lupin Ltd. previously settled with a group of insurers and third-party payors from 31 states for $3.4 million, establishing a legal fund to continue proceedings against Jazz and Hikma before this larger settlement was reached.
