Ahead of a planned trial next month, Jazz Pharmaceuticals is moving to resolve antitrust allegations surrounding its key narcolepsy drug Xyrem with a cool $145 million settlement.

Early this week, the company inked a settlement agreement with a group of indirect purchaser plaintiffs who took the company to court over an alleged "pay-for-delay" arrangement to thwart generic competition to Xyrem. In 2020, the allegations were consolidated into a multidistrict litigation (MDL) case in a North Carolina federal court.

Jazz plans to pay the settlement in a lump sum using cash on hand, but it continues to deny all alleged wrongdoing and “remains confident” in its defenses that the patent settlements at the center of the purchasers' complaints “were and are pro-competitive,” the company noted in a Securities and Exchange Commission filing.

The settlement is still subject to court approval and will resolve the “majority” of claims at issue in the MDL, according to Jazz, which finds the agreement “in its best interests.”

The MDL was set to head to trial May 19 and involves Jazz along with generic drug maker Hikma Pharmaceutical, which was granted permission to launch the first Xyrem copycat in early 2023. Other generic drug makers Amneal and Lupin, meanwhile, exited the MDL after coughing up a combined $3.4 million for a settlement fund (PDF) meant for use in the continuing litigation against Hikma and Jazz. 

Jazz and Hikma came to an patent settlement in 2017, ending a yearslong dispute between the two. The terms of the settlement stipulated that Hikma would be allowed market an "authorized generic" version of Xyrem through Jazz's restricted distribution program, which was established to mitigate risks associated with the drug. As part of that deal, Hikma agreed to pay Jazz a "meaningful royalty" on net sales of its product.

In the antitrust suit, plaintiffs who purchased the branded drug claimed the deal was part of a “pay-for-delay” reverse payment agreement between Jazz and Hikma. They argued the deal allowed Jazz to restrict true generic competition to Xyrem as it hiked up the price of its medicine.

Authorized generics are not the same as true generic drugs, according to the FDA. Instead, they're essentially "approved brand name" products that are "marketed without the brand name" on their labels, the agency explains. While Hikma and Amneal have launched authorized generics of Xyrem, full generic competition has not yet hit the market.

Hikma, which is not involved in the settlement, maintains that it “enabled patients to obtain a lower cost authorized generic version of this important medicine years before patent expiration as a result of our settlement with Jazz,” a company spokesperson told Fierce Pharma. “We intend to continue vigorously defending ourselves against plaintiff’s baseless claims.”

Not included in this settlement class are bigger insurance companies including UnitedHealthcare, Blue Cross Blue Shield and Humana. Aetna, for one, filed a separate action that does not yet have a trial date.

In its annual report, Jazz touts patents on Xyrem stretching into the next decade. While sales on the branded medicine dropped by 59% to $233.8 million last year amid the authorized generic launches, the company's royalties associated with the copycats grew significantly to $217.6 million.

Meanwhile, Jazz also has a newer low-sodium version of the drug called Xywav. That drug pulled down a whopping $1.47 billion last year, an increase of 16% from the prior year.