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AMAG Pharmaceuticals Inc. has reached an agreement to pay $7.5 million to resolve a class action lawsuit filed by a group of women who accused the company of misleading consumers about the efficacy of its drug, Makena, in reducing the risk of preterm births. The proposed settlement, filed in New Jersey federal court on Thursday, is the result of more than five years of litigation.

The class action centered on AMAG's hydroxyprogesterone caproate product, Makena, which was initially approved by the FDA in 2011 under an accelerated approval pathway. The approval was contingent upon a follow-up study to confirm the drug's effectiveness. However, the study, which took nearly a decade to complete, revealed that Makena was no more effective than a placebo in preventing preterm births.

The plaintiffs alleged that AMAG continued to market the drug despite knowing it was ineffective, leading to significant sales and high prices. The FDA ultimately withdrew its approval of Makena in April 2023 after a review by the Center for Drug Evaluation and Research.

The settlement provides a $7.5 million cash fund for individuals who were prescribed or incurred out-of-pocket costs related to Makena between March 8, 2019, and the date of preliminary approval. The settlement class includes an estimated 65,000 to 81,000 members, with total damages potentially reaching $15.7 million.

"This settlement represents a fair and reasonable resolution after years of diligent litigation," said class counsel. "While we believe our case was strong, this settlement offers certainty and fairness to the class, minimizing the risks of continued litigation and delay."

AMAG Pharmaceuticals has agreed to the settlement to avoid prolonged litigation, although the company has not admitted any wrongdoing.

Under the terms of the settlement, class counsel may seek up to one-third of the settlement amount for attorney fees and expenses, along with a service award of $5,000 for each named plaintiff. The settlement fund will also cover litigation expenses, totaling more than $100,000.

The settlement agreement will now proceed for preliminary court approval. If approved, the settlement will offer compensation to those who were impacted by Makena’s misleading marketing and its subsequent removal from the market.