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GlaxoSmithKline Faces Antitrust Suit Over Alleged Inhaler “Hop”

Missouri resident Elliot Conrad Dale recently filed an antitrust lawsuit against GlaxoSmithKline (“GSK”), claiming GSK employed a “device hopping” scheme to ensure uninterrupted patent and regulatory protection for its brand-name asthma inhalers Ventolin and Arnuity Ellipta.  The complaint, filed in the Western District of Missouri on behalf of putative nationwide and state antitrust classes, alleges violations of Section 2 of the Sherman Antitrust Act, which prohibits the unlawful maintenance of monopoly power, and 28 state antitrust acts.  Alleging that GSK’s practices stifled generic competition, Plaintiff seeks treble damages and injunctive relief. 

Plaintiff alleges that GSK discontinued selling its branded inhalers—which consist of both prescription medication and the apparatuses required for administration—but placed the same active ingredients into new “follow on” branded inhalers.  The complaint alleges that, but for the discontinuance of its earlier branded inhalers and introduction of a new branded version, a generic inhaler would have been automatically switched in for the earlier branded version. Accordingly, GSK’s switch to the new inhaler allegedly neutralized generic competition.  According to Plaintiff, this means GSK will be able to enjoy over 60 years of protection from generic competition for its Ventolin inhaler line, and over 35 years of protection for its Arnuity Ellipta inhaler line.  This allegedly allows GSK to charge “supra-competitive and artificially inflated prices.”

This is not the first “product hopping” case in the pharmaceutical sector.  The question often raised in these cases is whether the brand manufacturer has redesigned a product with the intent of circumventing a limited patent exclusivity period in a manner that impedes competition and coerces consumers within a given market to be prescribed the new product.  In a case involving Actavis’s Namenda IR, a drug designed to treat Alzheimer’s disease, the Second Circuit held the perpetuation of patent exclusivity through successive products is not anticompetitive per seNew York v. Actavis, New York ex rel. Schneiderman v. Actavis PLC, 787 F.3d 638, 643, 653 (2d Cir. 2015). However, the Actavis court held, a brand manufacturer may run afoul of Section 2 if it withdraws its product in conjunction with other coercive conduct, such as timing the withdrawal with the introduction of a therapeutically equivalent drug in order to avoid falling off the “patent cliff.”  Id. at 654–55.  Such a “hard switch” could lead to antitrust liability if physicians and patients have no ability to choose between the existing product about to face generic competition and the newly introduced product, and the new product offers no meaningful clinical benefits.  Id.

As in many Section 2 cases, the parties are likely to dispute the relevant market in which the defendant allegedly has monopoly power.  In Actavis, the relevant market was defined as the memantine molecule, first manufactured by Actavis as Namenda.  By contrast, the complaint against GSK alludes to a more general “inhaler” market.  Whether reasonable substitutes exist is a question that may impact the case as it moves forward.

Other issues likely to be important in the GSK case include the timing of the alleged switch to what Plaintiff has called GSK’s “follow-on” inhalers, the business justification for those new products, and pricing trends for inhalers in the relevant market.  We will continue to follow this lawsuit as it develops.