Industry: Pharmaceutical

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. 

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”).

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.

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.

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.

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.

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

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 Wednesday, the Second Circuit Court of Appeals partially vacated the judgment of the district court in In re Actos End-Payor Antitrust Litigation. 

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.

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.

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.  

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.

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.

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.