On April 13, 2021, the Court of Appeals for the Fifth Circuit issued its long-anticipated decision in Impax v. FTC, marking the first time an appellate court has weighed in on the merits of a so-called reverse payment case prosecuted by the Federal Trade Commission (“FTC”) since the Supreme Court’s Actavis decision in 2013. The case resulted in a validation of the FTC’s approach to policing reverse payment agreements. Specifically, the Court affirmed the Commission’s conclusions that (1) large, unjustified reverse payments are anticompetitive regardless of the strength of the underlying patent litigation, and (2) reverse payment settlements are more anticompetitive than procompetitive if a less-restrictive alternative exists, and that a less-restrictive alternative can be an agreement without a payment that results in an earlier generic entry.
Stop me if you’ve heard this one before: the FTC is suing pharmaceutical manufacturers Endo and Impax over an alleged “reverse payment” agreement to reduce competition in the market for Opana ER, an oxymorphone extended release product. In fact, the FTC’s complaint follows quickly on the heels of the Commission’s decision that a 2010 agreement between the same manufacturers to settle Impax’s patent litigation against Endo for a $112 million payment constituted an illicit “reverse payment” that delayed the entry of Impax’s generic version of Opana ER. (Click here for background on that decision.) Oral argument on Impax’s appeal of the FTC’s decision happened six months ago; the Fifth Circuit’s decision will mark the first time a Circuit Court weighs in on the FTC’s interpretation of the Supreme Court’s 2013 decision in FTC v. Actavis. (Click here for analysis of the oral argument)
For years, antitrust commentators have warned of threats to innovation and competition posed by “thickets” of patents—the “dense web[s] of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology.” See Carl Shapiro, “Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard-Setting” (March 2001), available at https://www.nber.org/chapters/c10778.pdf. At least one judge on the Federal Circuit has also noted concern about this issue. E.g. Intellectual Ventures I LLC v. Symantec Corp., 838 F.3d 1307, 1328-29 (Fed. Cir. 2016) (Mayer, J., concurring) (calling for elimination of “generically-implemented software patents” to “clear the patent thicket”).
On June 9, the United States Court of Appeals for the Fifth Circuit heard oral argument in Impax Laboratories, Inc., Etc. v. Federal Trade Commission. The appeal by pharmaceutical manufacturer Impax marks the first time a court will review the Federal Trade Commission’s (“FTC”) interpretation of the Supreme Court’s watershed decision on reverse payment settlements, FTC v. Actavis, 570 U.S. 136 (2013).
With the Democratic primary process in full swing, we thought it fitting to take a look at where the candidates stand with respect to antitrust issues. As it turns out, this is a fairly active election cycle for antitrust, with most Democratic candidates invoking antitrust laws (and proposed laws) in connection with their visions for the future. The increased focus on antitrust has not been lost on other observers.
Yesterday we discussed 2019’s most significant developments in challenges to reverse-payment settlements. Today we continue our analysis of recent trends in pharmaceutical antitrust actions with a discussion of cases addressing class certification requirements in the reverse-payment context.
2019 witnessed a number of developments in challenges to reverse-payment settlements. In its first decision on a pay-for-delay settlement since the Supreme Court’s seminal 2013 decision in FTC v. Actavis, the FTC took an aggressive approach to evaluating a plausible restraint on trade and analyzing proffered procompetitive benefits, reversing the ALJ who heard the case. In the Southern District of New York, an attempt by direct purchasers to plead a conspiracy arising out patent-infringement settlements without an alleged reverse payment failed. And, in the class certification context, district courts grappled with Rule 23(b)(3)’s predominance requirement. These notable cases in antitrust actions concerning the pharmaceutical industry are discussed below.
Recently, Judge Goldberg in the Eastern District of Pennsylvania certified two classes of plaintiffs asserting antitrust claims based on alleged “product hopping” by the manufacturer of branded tablets treating opioid addiction. In re: Suboxone (Buprenorphine Hydrochloride and Nalaxone) Antitrust Litig., 13-md-2445, 2019 U.S. Dist. LEXIS 166524 (E.D. Pa. Sept. 26, 2019). While declining to certify a class of end payors seeking injunctive relief, the court nevertheless certified (1) a damages class of direct purchasers of Suboxone tablets under Rule 23(b)(3) and (2) an issues class of end payors certified under Rule 23(c)(4). The court held that certification of the latter class would materially advance the litigation because the issue of alleged anticompetitive conduct—which focuses only on the conduct of defendants—is “wholly severable” from the issues of antitrust impact and damages, which could raise individualized issues.
In re Asacol: First Circuit Sharply Limits Certification of Antitrust Classes Containing Uninjured Members
In a recent decision, the U.S. Court of Appeals for the First Circuit held that Rule 23’s “predominance” requirement barred certification of a class of all indirect purchasers of a prescription drug because the class included members who were uninjured by the alleged anti-competitive activity – they were “brand loyal” and would not have purchased a cheaper generic product even were it available. Asacol makes it more difficult to certify antitrust class actions in the First Circuit and its effects may extend further if the First Circuit’s reasoning is adopted by other circuits.
The Third Circuit recently denied a petition for rehearing en banc a panel’s earlier decision in the In re Flonase Antitrust Litigation. In that case, the panel decision addressed the degree to which class settlements can bind non-participating U.S. state class members. After vigorous briefing on the issue, the panel found that the state of Louisiana had not waived its sovereign immunity, and therefore could not be bound by a class settlement that enjoined class members from subsequently bringing separate suits. This is a case with potentially wide reaching implications, as it could impact the negotiation of settlements in class actions that include states as class members.
On January 10, 2018, in In re Lantus Direct Purchaser Antitrust Litig., the District Court for the District of Massachusetts dismissed the antitrust case against Sanofi-Aventis U.S. LLC (“Sanofi”), the manufacturer of Lantus and Lantus SoloSTAR, which use the insulin product glargine to treat Type I and Type II diabetes. The plaintiffs in the multi-district litigation, a group of purchasers of the Lantus products, alleged that Sanofi unlawfully prolonged its monopoly for the glargine products after the expiration of the relevant patent in two ways. First, the plaintiffs alleged that Sanofi improperly listed six patents in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (the “Orange Book”). Second, the plaintiffs alleged that Sanofi pursued sham litigation against Eli Lilly in which Sanofi asserted claims of patent infringement without any reasonable basis. That litigation was settled by Sanofi and Lilly shortly before trial.
Senators and court complain of ‘anti-competitive’ transfer of patent rights to American Indian tribe
We have previously discussed antitrust implications of pharmaceutical companies’ efforts to maximize patent protection for their drugs. Consumers and generic drug makers, for instance, have alleged antitrust violations based on “product hopping” and “pay-for-delay” settlements. Recently, a patent owner’s creative technique to avoid possible invalidation of its patent by the Patent and Trademark Office has drawn sharp criticism from lawmakers and one district court.
The Third Circuit recently affirmed the grant of summary judgment to GlaxoSmithKline (“GSK”) in the nearly 10-year-old Wellbutrin XL Antitrust Litigation, which challenged the lawfulness of settlement agreements resolving patent disputes over Wellbutrin XL. In determining that GSK had not violated the Sherman Act, the court determined that GSK’s settlement of patent infringement lawsuits did not reflect that GSK had engaged in sham litigation, or that GSK made unlawful “reverse payments” to settle that litigation. To reach these conclusions, the court carefully picked apart years of evidence
Last week Markus Meier, the Acting Director of the Bureau of Competition at the Federal Trade Commission, gave testimony to the House Judiciary Committee concerning “Antitrust Concerns and the FDA Approval Process.”
European competition authorities announced this week an investigation into Aspen Pharmacare’s recent price hikes of five cancer drugs. The European Commission said in a press release that it had “information indicating that Aspen has imposed very significant and unjustified price increases of up to several hundred percent.” The Commission is also looking into reports that the South African-based generic drug-maker withdrew or threatened to withdraw the drugs from countries that would not accept these price hikes. If the investigation demonstrates that Aspen abused its alleged dominant market position to increase prices, the Commission could order fines of up to 10 percent of the company’s yearly revenue.
Last Monday Sanofi brought an antitrust suit against Mylan, alleging that Mylan engaged in illegal conduct to suppress competition in the epinephrine auto-injector (“EAI”) market, which is dominated by Mylan’s billion-dollar EpiPen® product. In particular, Sanofi alleges that Mylan has had a virtual monopoly in the EAI market, but felt threatened when Sanofi entered the market in 2013 with its Auvi-Q® product, which Sanofi touted for its smaller size and voice instructions (as opposed to EpiPen®’s written instructions).
Second Circuit Declares That, to Survive Motions to Dismiss, Antitrust Allegations Require Factual Support for All “Necessary Premises”
Last Wednesday, the Second Circuit Court of Appeals partially vacated the judgment of the district court in In re Actos End-Payor Antitrust Litigation.
Federal District Court finds brand-name manufacturer’s alleged regulatory delay tactics a valid theory of attempted monopolization
In a recent decision denying the defendant’s motion to dismiss, Judge Mitchell Goldberg of the Eastern District of Pennsylvania allowed the manufacturer of a generic version of Suboxone to proceed upon an interesting theory of attempted monopolization by the brand-name manufacturer Indivior (formerly, Reckitt). Amneal, the generic manufacturer, alleges that Indivior purposefully delayed what was supposed to be a joint effort to develop a combined risk management strategy for all versions of Suboxone.
DOJ and State AG Investigations Into Generic Pricing Lead to Suits Against Manufacturers and Employees
As we have previously reported, (click, here, here, here, and here to read more), generic drug manufacturers have recently come under intense scrutiny from state and federal regulators for their price hikes. Last week, the Department of Justice and twenty state attorneys general instituted criminal and civil proceedings in connection with alleged generic drug price manipulation.
It has been over three years since the Supreme Court’s Actavis decision. Since then, numerous putative class actions alleging harm to competition as a result of “reverse-payment” settlements have flooded the courts. The complexity of these cases, along with the vague guidance provided by the Supreme Court, has given rise to intricate questions about how courts should apply Actavis and scrutinize settlements of Hatch-Waxman litigation.
How explicitly must a complaint sounding in antitrust allege causation? At oral argument last week, the Court of Appeals for the Second Circuit evaluated the sufficiency of the plaintiffs’ allegations that certain Takeda entities, in their representations to the FDA, falsely described patents for the antidiabetic drug ACTOS in order to delay the entry of generic competitors into the market—specifically, whether the plaintiffs had pleaded enough facts to show that these representations plausibly caused the delay.
It is not every day that antitrust plaintiff classes fail to win certification due to lack of numerosity under Federal Rule of Civil Procedure 23(a)(1). Yet this week, absence of numerosity was the reason a Third Circuit panel reversed an order from the Eastern District of Pennsylvania certifying a class of 22 plaintiffs. The putative class included direct purchasers allegedly injured by reverse-payment agreements between Cephalon and four generic manufacturers of Cephalon’s narcolepsy drug Provigil.
On August 23, 2016, the District Court for the Eastern District of Missouri allowed claims by a compounding pharmacy to proceed, denying a motion to dismiss filed by the defendant pharmacy benefit manager (“PBM”). In Precision Rx Compounding LLC, et al. v. Express Scripts Holding Co., et al., No. 16-cv-0069 (E.D. Mo.), the plaintiff Precision Rx is a compounding pharmacy and the defendant, Express Scripts, is a PBM that contracts with health plan administrators and insurance payors to manage pharmacy benefit plans.
On August 8, the District of Connecticut issued a noteworthy ruling on how to approach defining the relevant market definition in a pay-for-delay suit.
Earlier today, the Third Circuit Court of Appeals upheld the decision of the District of New Jersey trial court dismissing the antitrust claims lobbed against Sanofi-Aventis by its rival pharmaceutical company Eisai.
Today the FTC filed a complaint in the U.S. District Court for the Eastern District of Pennsylvania against Endo Pharmaceuticals for entering into “pay-for-delay” agreements with two different generic manufacturers that restricted generic competition for two of its patented drugs, Opana ER and Lidoderm. The FTC alleges that Endo paid Impax, a generic drug manufacturer, $40 million to keep a generic version of Opana ER off the market for over 2 years, and that Endo and its partner Teikoku gave Watson (now Allergan) Lidoderm patches worth hundreds of millions of dollars “at no cost” for Watson to sell through its distribution subsidiary in exchange for abandoning its patent challenge.
Courts continue to evaluate the degree to which “reverse payments” are permitted post-Actavis. In the latest of these decisions, issued on February 22, 2016, the First Circuit held that non-cash payments may run afoul of the antitrust laws.
Generic drug manufacturers have come under scrutiny from state and federal regulators for recent generic drug price hikes. These investigations have expanded to include Turing Pharmaceuticals and its former CEO, Martin Shkreli.
FTC Asserts That Its Failure to Object to a “Reverse Payment” Settlement Should Not Be Interpreted as Approval
On November 17, 2015, the FTC submitted an amicus brief to the Third Circuit Court of Appeals in In re Effexor XR Antitrust Litigation, where the district court had dismissed the plaintiffs’ claims of antitrust violations based on an alleged reverse payment under FTC v. Actavis, Inc., 133 S. Ct. 2223 (2013). In its brief, the FTC argues that its failure to object to a pharmaceutical patent settlement should play no role whatsoever in evaluating the legality of alleged reverse payments, and urged the Third Circuit to reverse the district court’s decision to the extent it relied on such considerations.