CVS Sues Major Drug Companies — Over Legal Costs for Zantac Lawsuits

CVS Sues Major Drug Companies — Over Legal Costs for Zantac Lawsuits

In September 2019, CVS pulled heartburn medication Zantac from its shelves, after the U.S. Food and Drug Administration (FDA) announced that it learned that some ranitidine — acid-reducing and heartburn medicines, including those known by the brand name Zantac — contained low levels of an impurity that could cause cancer.

At the time, Zantac and its generic counterpart were not part of a recall, and the FDA did not recommend that patients stop taking ranitidine products. 

In 2020, the FDA then requested the removal of all ranitidine products (Zantac) from the market, citing new FDA studies that "showed risk to public health."

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Now, Rhode Island-headquartered CVS has sued drug manufacturers Boehringer Ingelheim, Chattem, and GlaxoSmithKline (GSK) — saying CVS had entered into agreements with those companies that should have indemnified CVS from the costs of legal actions over the sale of the drug.

Moreover, CVS claims that the drug companies “agreed that they owed CVS a defense based upon the terms of the Agreements and their common law obligations, but declined to defend CVS in [multi-district litigation] and have refused to pay CVS for its defense costs without justification."

In an 11-page complaint filed in U.S. District Court in Rhode Island on Thursday, CVS said it is seeking declaratory judgment concerning what it says is its “right to reimbursement for its defense costs of the Zantac lawsuits” — as well as alleges breach of contact.

 

About Suit 

In the lawsuit, CVS’ attorney Keith J. McCarthy claims the following:

"CVS’ merchandising and legal departments operated from and conducted negotiations with the Defendants regarding contracts at issue related to the Zantac Products from these headquarters. All Defendants sold Zantac Products to CVS in the State of Rhode Island. These Zantac Products were ultimately sold to consumers through CVS stores inside and outside of Rhode Island. 

In connection with its purchase and distribution of particular pharmaceutical products manufactured by Defendants, specifically branded prescription and over the counter Zantac products (“the Zantac Products”), CVS entered into agreements with Defendants that require them to, among other things, defend, indemnify and/or hold harmless CVS for claims or litigation arising from the sale of Defendants’ Zantac Products."

McCarthy goes on to provide what CVS says are examples of such agreements, citing GSK in the first example.

"For example, on or about May 25, 1992, and again on December 22, 2000, CVS and GSK entered into a Guarantee which states: In consideration of purchases heretofore or hereafter made by CVS … from [GSK], [GSK] agrees, upon receipt of written notice in time for [GSK] to defend the action or take other appropriate measures to a) indemnify, and hold [CVS] harmless from liability for any claim arising out of [CVS’s] sale of any [GSK] product purchased by [CVS] from [GSK], and to b) assume the responsibility and expense of defending and/or settling any such claim; provided that [GSK] shall, at its option, retain sole control of all phases of such defense and/or settlement, including, but not limited to, selection of Counsel and terms of settlement; and provided further that [CVS] agrees to cooperate with [GSK] in all reasonable ways in connection with the claim or litigation."

McCarthy continues:

"A number of lawsuits have been filed across the country alleging ingestion of Zantac heartburn medication caused harmful health side effects and economic damages. One such lawsuit is the United States Judicial Panel on Multidistrict Litigation for Zantac (MDL No. 2924) (the “MDL”), which involves more than 2,450 plaintiffs alleging that they developed or had a significantly higher risk of developing various types of cancer or sustained economic loss after ingesting the Zantac Products. CVS and Defendants, among a number of other manufacturers and retailers, are named defendants in the MDL. 

CVS requested that Defendants provide CVS with a defense in the MDL. Defendants agreed that they owed CVS a defense based upon the terms of the Agreements and their common law obligations, but declined to defend CVS in the MDL and have refused to pay CVS for its defense costs without justification. Summary judgment entered in Defendants’ favor in the MDL in December 2022, and multiple appeals are pending in the 11th Circuit (the 11th Cir. Appeals and the “MDL” are collectively referred to as the “Zantac Lawsuits”). 

Following Defendants’ rejection of CVS’s tenders of defense in the Zantac Lawsuits, and in an effort to conserve costs and realize other benefits, CVS, along with several other retailers, hired outside counsel for representation in the Zantac Lawsuits. Counsel incurred, and continues to incur, legal fees and other costs and expenses in its representation of CVS in the Zantac Lawsuits. 

Although Defendants have each acknowledged the validity and enforceability of the Agreements with CVS, and have likewise each acknowledged their contractual and common law defense and indemnification obligations to CVS, even going so far as to discuss entering into a defense cost sharing agreement, to date, Defendants have refused to reimburse CVS for any of the costs, fees and expenses incurred in connection with the Zantac Lawsuits."