Industry: Health Care
The Federal Trade Commission staff recently issued a report detailing the number of “potential pay-for-delay settlements” that took place in fiscal year 2013. The FTC is a staunch opponent of so-called “pay-for-delay”—also known as “reverse payment”—settlements.
Last week, we briefly reported on the injunction granted by the U.S. District Court for the Southern District of New York in the New York Attorney General’s “product hopping” suit against Actavis and its subsidiary, Forest Laboratories LLC. On Monday, the court held a hearing on the injunction and released a copy of its decision (portions of which are redacted from public view).
In July of this year, the European Commission imposed fines on French pharmaceutical company Servier and five generic drug makers, including Lupin Ltd., totaling €427.7 million. The fines were the result of a five-year investigation into alleged anticompetitive agreements that prevented generic versions of perindopril, Servier’s best-selling blood pressure medication, from entering the market.
Yesterday, Judge Robert Sweet granted the New York Attorney General’s request to block Actavis and its New York-based subsidiary Forest Laboratories LLC from pulling Namenda, a dementia drug commonly used to treat Alzheimer’s, off the market. In this “product hopping” case brought in the Southern District of New York, the Attorney General has alleged that the defendants are attempting to force prescribers and patients to switch to a new extended-release version of Namenda before a generic version of the drug can be introduced into the market.
District Court Allows Monopolization Claims to Move Forward on Allegations of Direct Evidence of Monopoly Power
Traditionally, plaintiffs asserting claims under Sections 1 and 2 of the Sherman Act allege the existence of one or more product markets relevant to the defendants’ anticompetitive conduct and the defendants’ shares of those markets in order to state a plausible claim of defendants’ market power and/or monopoly power in a product market. But plaintiffs can also convince courts they can proceed to trial by alleging “direct evidence” of defendants’ market power.
After six weeks of trial and two days of deliberation, the jury has returned its verdict in favor of the defendants in In re: Nexium. This trial began as a challenge to the allegedly anticompetitive effects of the settlements of prior patent infringement litigations between AstraZeneca and Teva and between AstraZeneca and Ranbaxy concerning AstraZeneca’s Nexium.
Court Allows “Product Hopping” Claims to Proceed in Suboxone Litigation Based on Allegations of Removal of Prior Formulation and Disparagement of Generic Competition
We’ve previously discussed antitrust claims related to “product hopping”—allegations that pharmaceutical manufacturers have reformulated or otherwise altered their products to prevent automatic generic substitution. Earlier this week, the district court for the Eastern District of Pennsylvania in In re Suboxone Antitrust Litigation denied a motion to dismiss similar allegations regarding the drug Suboxone, which is used to treat opioid dependence.
Today, the Nexium district court will hear arguments on the Ranbaxy defendants’ motion for a mistrial. As we have previously reported, In re: Nexium is the first pay-for-delay case to go to trial since the Supreme Court’s Federal Trade Commission v. Actavis decision.
What’s Next for In re: Nexium: Defendants’ Motions for Directed Verdicts Likely to Turn on Sufficiency of Expert Testimony
As we previously reported, the In re: Nexium trial is the first pay-for-delay trial in the wake of the Supreme Court’s Federal Trade Commission v. Actavis decision. But if the Nexium defendants have it their way, plaintiffs’ case will be decided by the court as a matter of law instead of by the jury.
Drug manufacturers Impax Laboratories and Lannett Company have come under public scrutiny and, more recently, criminal investigation for their recent generic drug price increases. The companies disclosed in recent SEC filings that the U.S. Department of Justice has issued grand jury subpoenas to Impax and Lannett employees seeking information related to their communications with competitors concerning “the sale of generic prescription medications.”
FTC Commissioner Julie Brill discussed the agency’s competition and consumer protection priorities in her keynote address last Thursday at the ABA’s Antitrust Fall Forum at the National Press Club in Washington. Brill led off with an ode to the antitrust ideals of the Progressive Era – with plenty of references to Justice Brandeis – and focused primarily on health care efforts, emphasizing that the FTC and the Affordable Care Act have the same goals of “promoting high quality and cost-effective health care.”
How does a court explain the complicated area of law at the intersection of patent settlements and antitrust law to a group of lay-jurors in the wake of Actavis? The district court’s approach to preliminary jury instructions in the on-going Nexium “reverse payment” trial provides one solution. The instructions also raise questions concerning the significance of direct evidence of market power that we previously discussed in connection with the Amex and Cephalon cases.
Much has happened since our last post on the Nexium “pay for delay” class action lawsuit. Jury selection began in the District of Massachusetts on Monday, October 20, 2014. The day prior, one of the generic drug makers, Dr. Reddy’s Laboratories (“DRL”), settled with the plaintiffs and agreed to cooperate in plaintiffs’ case against AstraZeneca, Teva Pharmaceutical Industries, and Ranbaxy Inc.
The Canadian Competition Bureau intends to take a tough approach to so-called “pay-to-delay” settlements, potentially anti-competitive agreements in which generic drug manufacturers agree to delay the launch of a low-cost generic medicine in exchange for settlement of patent litigation with their brand-name drug competitor. Canadian Competition Bureau commissioner John Pecman delivered this message in his white paper, “Patent Litigation Settlement Agreements: A Canadian Perspective,” which he presented at a George Mason University pharmaceutical industry conference on September 23rd.
Reverse Payments, Actavis, and the Lower Courts at Sea, Part 2: The Brewing Conflict Over Non-Cash Settlements
Our first post in this series was titled “What Is a Reverse Payment?” As the recent cases discussed in today’s post show, the courts are struggling with a fundamental component of that question: What, for that matter, is a payment?
Among the issues left unresolved by the Supreme Court’s Actavis opinion is the question of whether a reverse payment settlement can run afoul of antitrust laws when no actual cash changes hands. Instead, these arrangements might include a promise by the brand name manufacturer to delay the introduction of an authorized generic, a settlement of unrelated litigation on terms beneficial to the generic manufacturer, or a licensing agreement whereby the generic manufacturer gains rights to market the brand name product overseas. These can be of tremendous value to the generic manufacturer, but they are different from the “pay[ment of] many millions of dollars” that was the focus of Justice Breyer’s opinion for the Actavis majority.
Previously, we discussed a recent lawsuit that alleged “product hopping” by a brand pharmaceutical manufacturer as part of a broader pay-for-delay claim. On Monday, the New York Attorney General filed a suit in the U.S. District Court for the Southern District of New York regarding Forest Laboratories’s Alzheimer’s drug Namenda, in which alleged product hopping plays the central role.
In the seminal decision, Aspen Skiing Co. v. Aspen Highlands Skiing Corp 472 U.S. 585, 611 (1985), the U.S. Supreme Court affirmed a jury verdict for a plaintiff on a Section 2 claim and set forth the standard for unilateral refusal-to-deal claims. More recent U.S. Supreme Court and Second Circuit cases suggest that Aspen Skiing may reflect the “outer boundary” of liability under Section 2. What are the markers of that boundary?
The Pennsylvania Employees Benefit Trust Fund (“PEBTF”) recently filed a purported class-action antitrust complaint relating to the brand name drug Opana ER, an extended-release formulation of a medication used to treat pain and other conditions. The core of PEBTF’s allegations are that the brand manufacturer paid more than $100 million to prevent the launch of a generic version for approximately two and a half years. But PEBTF also alleges that the manufacturer reduced generic competition even further by introducing a crush-resistant version of the drug (which helps prevent abuse) called Opana ER CRF.
The FTC has submitted an amicus brief in Mylan Pharmaceuticals Inc. v. Celgene Corp., 2:14-CV-2094 (D.N.J.), offering support in favor of Mylan’s claims. Mylan sued Celgene in April 2014, bringing claims related to its attempts to develop generic versions of Revlimid and Thalomid, brand drugs used to treat certain forms of cancer.
On June 30, 2014, the FTC announced in a series of orders that it would consent to Actavis PLC’s acquisition of Forest Laboratories only under certain conditions. Under a February 2014 Merger Agreement, Actavis plans to acquire Forest for approximately $25 billion. The FTC filed a complaint alleging that the proposed merger would negatively impact the market for four drugs, resulting in violations of Section 7 of the Clayton Act and Section 5 of the FTC Act.
Direct Evidence of Patent Holder’s Pricing Power Doesn’t Lead to Summary Judgment on Existence of Monopoly Power
We wrote earlier about the DOJ’s efforts to use direct evidence to show that the rules Amex imposes on merchants harm competition. The district court’s decision denying summary judgment to the plaintiff in Apotex v. Cephalon presents an apparently novel attempt to use direct evidence of market power to prove an antitrust case at the summary judgment stage and avoid tricky issues of market definition.
The intersection of IP and antitrust has always been fraught. The raison-d’être of the Sherman, Clayton, and FTC Acts is to bust trusts and promote competition. Meanwhile, intellectual property laws create lawful exclusionary rights.
This series will explore one particular point of tension: the battle over “reverse payment settlements” pursuant to which the plaintiff in a patent infringement action agrees to “pay” the alleged infringer to keep the infringer’s product off the market for a period of time. In these “pay-for-delay” arrangements, the province of the pharmaceuticals industry, the settling parties are a brand-name drug manufacturer and the maker of a generic equivalent.
A panel of the U.S. Court of Appeals for the First Circuit heard oral argument this week in In Re: Nexium (Esomeprazole) Antitrust Litigation in an appeal of a lower court’s decision certifying a class of drug consumers and third-party payors challenging AstraZeneca’s “pay-for-delay” patent suit settlements, as reported by the National Law Journal.
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