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In a major development in the sweeping multidistrict litigation over generic drug price-fixing, counsel for consumers, insurers, and end-payors urged a Pennsylvania federal court on Tuesday to finalize Sandoz’s $275 million settlement, while the drugmaker slammed state objections as an overreach cloaked in “paternalistic” motives.

The proposed settlement would resolve claims that Sandoz Inc. and its subsidiaries conspired with rival drugmakers to inflate prices of generic medications, burdening millions of consumers and insurers across the U.S.

A Record-Setting Settlement in the MDL

If approved, the $275 million fund would mark the largest settlement to date between a defendant and a plaintiff group in the massive generic pharmaceuticals antitrust MDL pending before U.S. District Judge Cynthia M. Rufe.

The deal, announced in December and preliminarily approved in February, would benefit consumers and payors across all 50 states who allegedly overpaid for Sandoz’s generic drugs from 2009 to 2019.

Excluded are government entities, fully compensated Medicaid users, and drug resellers.

State AGs Seek to Block the Deal

A coalition of state attorneys general filed objections in May, arguing the agreement is overly broad and threatens state consumer protection powers. The states claim it preempts their ability to seek relief for harmed residents and favors insurers over individual consumers.

Sandoz, however, fired back Tuesday, saying the states have no standing to object, as they are not part of the settlement class. In its filing, Sandoz argued the objections represent a misguided attempt to override private class action settlements and interfere with established legal precedent.

“The States’ objections are driven by a paternalistic desire to control private class action settlements,” Sandoz asserted. “This would give states an effective veto over all class settlements involving consumers.”

The company emphasized that courts have long upheld the ability of private settlements to release overlapping claims, so long as they don’t block sovereign enforcement actions — which, Sandoz contends, this deal does not.

Settlement Mechanics and Opt-Out Dynamics

The $275 million fund may be reduced by up to $45 million to account for opt-outs. According to filings, only one consumer requested to opt out, but over 50 entities filed exclusions, including municipalities, businesses, and insurers.

Class counsel has requested up to one-third of the fund ($67.7M–$82.7M) in attorneys’ fees, plus $26 million for expenses and $500,000 for service awards. An additional $750,000 is allocated for administrative costs. The remaining funds would be distributed pro rata based on drug purchase data from class members.

Parallel Settlements and Trials Ahead

Sandoz previously paid $265 million to settle with pharmacies and direct purchasers. The company, spun off from Novartis AG, has denied wrongdoing but says these settlements reflect a break from legacy practices.

Meanwhile, the broader MDL continues, with the first jury trials scheduled for August. Separate state actions in Connecticut and a DOJ prosecution of Teva Pharmaceuticals further complicate the sprawling litigation landscape.