In a groundbreaking case, Oregon Attorney General Dan Rayfield reached a settlement involving a monopoly on testosterone replacement gels. The $9.25 million settlement includes $6,197,500 in disgorged profits and penalties along with attorney fees and costs.

The drug companies, AbbVie and Besins, were gaming the system – preventing competitors from manufacturing generic versions of the gels, by filing lawsuits to extend the amount of time they could charge customers high prices.

“These are the sneaky legal tricks that pharmaceutical companies will use to keep drug prices high for as long as they can,” Rayfield said. “It’s unacceptable and a direct attack on people who are just trying to get by. It’s a violation of trust that should exist between consumers and the companies that provide life-changing medications.”

The companies were using what’s known as “sham patent litigation” – falsely claiming the other drug manufacturers were infringing on their patents. AbbVie and Besins raked in billions of dollars in profits in the meantime, while patients, insurance companies and Medicaid all paid high prices for the testosterone gels.

Disgorged profits are funds that were received through illegal or unethical transactions and paid back with interest or penalties.

Oregon filed its case after the Federal Trade Commission (FTC) won a similar case and obtained a $448 million disgorgement remedy—that the U.S. Supreme Court later threw out. The court claimed the FTC Act did not provide for a disgorgement remedy. This removed a powerful federal tool to force companies to return profits based on inflated prices.

Oregon does have that remedy in place and was the only state to file an action seeking to recover the profits from these drug companies.

“We’ve seen that the federal government is scaling back a number of restrictions,” said Rayfield. “The state attorneys general have to stand up and fill the hole that is left to protect our consumers.”

Some of the settlement will go to Oregon Medicaid, which paid the inflated prices for the testosterone gel, and part of it will go to the protection and education fund for the Oregon Department of Justice. Some will also be bookmarked for the antitrust and consumer protection divisions.

AG Rayfield thanks the tenacious team on this case at Oregon DOJ led by Senior Assistant Attorney General Brian De Haan and Special Assistant Attorney General Chris Kayser.