In Re Synthroid Marketing Litigatio

264 F.3d 712 (7th Cir. 2001)

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Nature of the Case

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Facts

Hypothyroidism requires hormone-replacement therapy based on levothyroxine sodium. Synthroid was the first orally administered levothyroxine product. This synthetic derivative of thyroxine is a 'narrow therapeutic index' drug, meaning that dosage levels must be established for each recipient by trial and error, which may take several months. Too much or too little can cause heart, brain, psychological, and reproductive problems. The drug is not patented and is available from many vendors. Even so, Synthroid still represents more than two-thirds of sales. Its manufacturer asserts that no other thyroid hormone drug is bioequivalent to Synthroid and warns physicians that switching brands may cause the side effects associated with incorrect levels of thyroid hormones in the blood unless the patient goes through a new monitoring and calibration process. Eventually, the truth came out that that Synthroid and its rivals are interchangeable. Lawyers across the country began filing class action suits. They sought relief under a variety of state and federal law theories, including antitrust, RICO, and state consumer-fraud statutes. These theories had in common the contention that Knoll, the manufacturer of Synthroid, misled physicians into keeping patients on Synthroid despite knowing that the physicians could have switched their patients to less costly but equally effective drugs. These suits were transferred to the Northern District of Illinois for consolidated pretrial proceedings under 28 U.S.C. § 1407. The court split the plaintiffs into two classes: one of consumers and the other of insurance companies (also known as third-party payors or TPPs). The parties submitted a second proposed settlement, under which Knoll and its former parent BASF Corporation would pay approximately $88 million to consumers and $46 million to the insurance companies in exchange for a release of all claims. The district court rejected motions to intervene filed by several dissatisfied consumers and approved the settlement. The court then awarded attorneys' fees from these common funds at a level significantly below what the lawyers had requested. These appeals resulted.