Colorado must face Teva’s lawsuit over free allergy pen law

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By Diana Novak Jones

CHICAGO (Reuters) -Colorado must face Teva Pharmaceutical Industries’ lawsuit challenging a state law requiring it to provide free generic EpiPens to pharmacies, a federal appeals court said Friday.

A unanimous three-judge panel of the Denver-based 10th U.S. Circuit Court of Appeals upheld a lower court’s ruling rejecting Colorado’s motion to dismiss the generic drugmaker’s lawsuit. In an opinion authored by U.S. Circuit Judge Bobby Baldock, the panel agreed that Teva’s claim that Colorado is violating federal law is enough to overcome the state’s general protection from lawsuits provided by the U.S. Constitution.

Representatives for Teva did not immediately respond to a request for comment on the ruling.

A spokesperson for Colorado Attorney General Phil Weiser declined to comment.

Spurred by dramatic increases in the cost of Viatris’ EpiPens in recent years, Colorado joined a number of states in passing laws seeking to cap the cost of branded and generic versions of the auto-injectors, which are handheld devices that treat life-threatening severe allergic reactions by automatically injecting a dose of the drug epinephrine. Colorado’s law drew multiple lawsuits from pharmaceutical companies, who said it unconstitutionally took their property by forcing them to reimburse sellers or give away their product.

Tel Aviv-based Teva sued Colorado in 2023, just before its law went into effect. It requires all pharmacies to sell the auto-injectors at a cost of no more than $60 for a two-pack. Teva makes a generic version of the drug, which it normally sells for around $300 for a two-pack, roughly half the wholesale cost of the branded version, according to court records.

The law also requires pharmacies to provide the injectors with the $60 price cap to people whose insurance does not cover them, and manufacturers in turn to provide the pharmacies with a free replacement or reimbursement for each injector sold under that requirement. If manufacturers don’t comply, they risk facing fines.

The company argued that the law was an illegal taking of its property under the 5th Amendment of the U.S. Constitution.

Colorado moved to dismiss the lawsuit, arguing that the state has immunity from such claims under the U.S. Constitution’s Eleventh Amendment, but the trial court sided with Teva.

The 10th Circuit panel agreed with the lower court’s reasoning that an exception to Colorado’s sovereign immunity applies in the case because Teva is alleging Colorado has committed an ongoing violation of federal law and isn’t seeking monetary damages. Teva has asked for an injunction barring Colorado from enforcing the law’s provision that it reimburse or resupply pharmacies for the auto-injectors they dispense.

The panel sent the lawsuit back to the lower court, where it can move forward. The ruling will likely restart a similar lawsuit challenging the law brought by Amneal Pharmaceuticals, which had been on hold until the 10th Circuit issued its opinion, court records show.

The case is Teva v. Weiser, case number 24-1035 in the 10th U.S. Circuit Court of Appeals.

For Teva: Cole Carter and Jay Lefkowitz of Kirkland & Ellis

For Colorado: Pawan Nelson and Jennifer Johnson of the Colorado Department of Law

(Reporting by Diana Novak Jones)