The past year has continued to see an increase in US case law developments in the area of pharmaceutical antitrust. This article focuses on four areas of pharmaceutical antitrust litigation that have been most active:
• US trial and appellate court decisions adjudicating antitrust claims under the rule of reason test announced by the US Supreme Court in Federal Trade Commission (FTC) v Actavis for innovator and generic settlements of pharmaceutical patent litigation involving alleged reverse payments or 'pay-for-delay';
• product-hopping antitrust claims against innovator pharmaceutical companies that introduce new versions of brand-name drugs facing generic competition;
• challenges to pharmaceutical manufacturers' pricing practices; and
• recent challenges regarding certain contracting practices (eg, exclusive dealing and bundling), including the first antitrust challenge concerning biosimilar competition, and the risk evaluation and mitigation strategies programme.
Reverse payment case law under Actavis
The US Supreme Court's June 2013 decision in FTC v Actavis opened a floodgate for more than 25 separate antitrust cases that have been filed or revived under the Supreme Court's newly announced rule of reason approach to claims that an innovator pharmaceutical company provided financial inducement to a potential generic competitor to settle patent litigation concerning the innovator's drug product, or to obtain a later settlement entry date than the generic company otherwise would have accepted, absent the innovator's financial inducement. The majority opinion in Actavis rejected the deferential 'scope of the patent' test under which parties could settle for any entry date within the patent's term regardless of any contemporaneous financial consideration from the innovator to the generic, but the majority opinion likewise rejected the FTC's proposed 'quick look' rule of presumptive unlawfulness for any alleged reverse payment settlement. Instead, the Supreme Court charted a middle course, holding that 'the FTC must prove its case as in other rule-of-reason cases.'
Actavis was categorical only in its rejection of the more presumptive rules that had been proposed to the court. Actavis's adoption of the rule of reason followed from the Supreme Court's decidedly non-committal view that 'reverse payment settlements such as the agreement alleged in the complaint before us can sometimes violate the antitrust laws.'
While the Supreme Court repeatedly inveighed against 'large and unjustified' payments as the competitive concern, the justices nonetheless expressly reserved an option for innovators to provide financial settlement consideration to generic companies beyond the value of early entry alone:
Where a reverse payment reflects traditional settlement considerations, such as avoided litigation costs or fair value for services, there is not the same concern that a patentee is using its monopoly profits to avoid the risk of patent invalidation or a finding of noninfringement.
Actavis expressly delegated to the lower courts the task of figuring out how to apply the rule of reason to alleged reverse payment settlements, and in the few years since, we have seen conflicting district court decisions, the first jury verdict under Actavis, the first appellate decisions and record-setting settlements with private plaintiffs as well as the FTC. As discussed below, the only certainty thus far under Actavis is that the reverse payment waters are far from settled.
Pleading standards under Actavis
Following the Supreme Court's Actavis decision, two federal district courts concluded that a 'payment' under Actavis must be a cash transfer from a brand to a generic competitor, and thus rejected allegations that a no-authorised generic agreement (no-AG) was subject to Actavis.
this no-AG agreement falls under Actavis's rule because it may represent an unusual, unexplained reverse transfer of considerable value from the patentee to the alleged infringer and may therefore give rise to the inference that it is a payment to eliminate the risk of competition.
The Third Circuit reasoned that the no-AG agreement could potentially be worth hundreds of millions of dollars to the generic challenger and such an agreement 'may be as harmful as those resulting from reverse payments of cash'.
Like the Third Circuit, the US Court of Appeals for the First Circuit in Loestrin subsequently held that a similar no-AG agreement was subject to Actavis, explaining that a 'payment' includes 'a much broader category of consideration than cash alone'.
Other federal district courts have also denied motions to dismiss, concluding that a 'payment' under Actavis may include no-AG agreements as well as other non-cash transfers that have value, such as co-promotion, licensing and distribution agreements.
In contrast, the US District Court for the Eastern District of Pennsylvania dismissed allegations that a settling generic company received a 'payment' under Actavis by paying the brand company too little for a product or service. In FTC v AbbVie, a patent settlement for AndroGel signed contemporaneously with a supply agreement in which the generic company, Teva, paid the brand company, Abbott, to supply an authorised generic version of Tricorat a price based on Abbott's cost, plus a royalty on Teva's profits.
Another issue that litigants have grappled with following Actavis is how precise must a plaintiff allege monetary estimates of value transferred between the patentee and generic challengers. For example, the US District Court for the Northern District of California in Lidoderm held that the plaintiffs sufficiently alleged a 'payment' where the 'settlement states that the patentee shall give the infringer Brand Product of value totalling US$12 million per month' for a term of eight months.
In the consolidated Lipitor and Effexor appeals, the Third Circuit reversed the lower court's dismissals, rejecting a 'heightened pleading standard' where 'the size of the reverse payment must be determined by the net reverse payment, which accounts for litigation costs and other discounting measures and justifications for the payment'.
In a subsequent appeal in Lipitor, the Third Circuit affirmed the dismissal of reverse payment claims asserted under California's Cartwright Act.
Finally, two district courts have dismissed reverse payment claims for lack of approval by the US Food and Drug Administration (FDA). In Asacol, the US District Court for Massachusetts dismissed a reverse payment claim because the generic company still had not obtained FDA approval by the settlement entry date and, therefore, the plaintiffs could not claim antitrust injury even if the generic could have negotiated an earlier entry date.
Evaluating evidence and remedies under Actavis
Turning to the summary judgment context, two district courts have denied summary judgment where the plaintiffs' causation theories of earlier generic entry were at issue. In Solodyn, where the settlement and business agreements at issue allegedly totalled over US$63 million in payments,
In Lidoderm, the US District Court for the Northern District of California reached a similar result as to a no-AG agreement allegedly worth around US$250 million.
Unlike Solodyn and Lidoderm, the US District Court for the Northern District of Georgia in AndroGel, rejected the plaintiffs' at-risk launch theory because:
in relation to this particular case, arguments which depend on determining what the ultimate outcome of the underlying patent litigation would have been are simply too procedurally burdensome and speculative to serve as valid theories of causation under Actavis.
The court, however, permitted the plaintiffs' no-payment settlement theory because they offered certain expert opinions about why the brand company 'crafted the settlement with Actavis'.
Following summary judgment, the district court denied the direct purchaser plaintiffs' motion to certify a class of 33 proposed members for lack of numerosity. Despite the plaintiffs' argument about geographic dispersion of the class, the court reasoned that 'unlike the typical class action, in which there are a number of individual plaintiffs with relatively small claims, the plaintiffs' proposed class consists of very large, sophisticated companies with very large claims'.
In contrast, the US District Court for the Eastern District of Pennsylvania in Wellbutrin granted summary judgment to the defendants for lack of causation where the settlement allegedly included a US$35 million payment and a no-AG agreement allegedly worth US$200 million, rejecting the plaintiffs' at-risk launch and no-payment settlement theories.
Other summary judgment decisions have focused on whether business agreements executed contemporaneous with settlements are 'large and unjustified'. For example, the US District Court for the District of New Jersey in K-Dur denied summary judgment where the parties settled and Schering agreed to pay Upsher, the first ANDA filer, US$60 million for a licence to Niacor as well as other licences.
In Modafinil, the four settlement agreements at issue included various licensing agreements with royalty and milestone payments, ranging from US$25 million to over US$164 million.
Notably, in late 2017, the scope of the Cephalon injunction became the focal point of a summary judgment motion in FTC v Actavis. Following Teva Pharmaceutical Industries Ltd's acquisitions of Cephalon and Actavis Holdco US Inc, Actavis argued that the FTC's case against Actavis 'is now moot because it has since become covered by the Teva Injunction and any additional relief sought by the FTC is merely redundant'.
The FTC has outlined three potential types of relief it seeks in addition to the activities enjoined in the Teva Injunction: (1) a ban on no-AG agreements, (2) an advance notice provision, and (3) an extended injunction period beyond the expiration of the Teva Injunction. Contrary to Actavis' argument, the court explained, none of these remedies are redundant, and all three are well within the Court's authority to grant.
The court, however, cautioned that 'the mootness doctrine inquires into a court's authority to order a remedy, not the likelihood or appropriateness of that remedy under particular circumstances'.
In Nexium, the court denied summary judgment where the plaintiffs had calculated the reverse payment to be US$22 million and the business agreements at issue were negotiated contemporaneous with the settlement, 'essentially provided a steady flow of revenue to Ranbaxy' during the same period it agreed not to launch its generic Nexium product, and 'even if Ranbaxy had won its litigation instead of settling, Ranbaxy would not have secured such favourable arrangements'.
More recently, following a bench trial, the FTC's chief administrative law judge (ALJ) concluded that an alleged reverse payment between Endo and Impax was not anticompetitive. Endo and Impax had settled the underlying patent litigation and entered into a settlement and licence agreement (SLA) and a development and co-promotion agreement (DCA).
The ALJ concluded that the DCA 'was a bona fide product development collaboration, and that the US$10 million payment was justified by the profit-sharing rights given to Endo under the DCA'.
• Endo and Impax had an established business interest in Parkinson's disease;
• the parties previously entered into risky early stage collaboration agreements;
• Endo analysed the merits of the deal;
• Impax continued its development efforts years after executing the DCA; and
• Endo did not consider the upfront payment to be uncharacteristically large.
Despite finding that the SLA was 'large and unjustified', the ALJ concluded that any anticompetitive harm was outweighed by pro-competitive benefits. The ALJ held that the 'evidence shows that Endo's acquisition of additional patents, and successful assertion of those additional patents in litigation, has led to all generic manufacturers, other than Impax, being enjoined from selling a generic version of Opana ER until the last of Endo's patents expires in 2029' and 'absent the SLA, such after-acquired patents also would have been successfully asserted to enjoin Impax from selling generic Opana ER'.
Product-hopping antitrust cases
In recent years, plaintiffs have begun using the antitrust laws to challenge brand manufacturers' introduction of new versions of existing drugs. In these so-called product-hopping cases, plaintiffs allege that brand pharmaceutical manufacturers violate the antitrust laws by introducing new versions and discontinuing older versions of brand drugs in an alleged attempt to thwart generic competition.
Under the Hatch-Waxman Act, generic manufacturers seeking FDA approval to market a generic version of a drug can submit an abbreviated new drug application demonstrating that the generic is bioequivalent to the brand drug (ie, the generic product delivers the active ingredient into the bloodstream in a similar concentration over a similar amount of time as the brand drug), thereby forgoing the need to conduct the lengthy and expensive clinical trials undertaken by the brand manufacturer. Generic drugs with bioequivalence are typically AB-rated to the brand drug, which means that the drug is deemed pharmaceutically equivalent in terms of dosage strength and drug formulation (eg, capsule, tablet, oral liquid).
States have enacted drug substitution laws that govern when a generic version of a drug may or must be substituted for the brand drug by the pharmacist, many of which link the substitutability of the generic drug to its AB-rating. In lieu of traditional forms of marketing, generic manufacturers typically rely on these state substitution laws to automatically substitute their generic products for the brand product. To the extent the brand manufacturer introduces a newer, improved formulation of a drug that is not deemed pharmaceutically equivalent to the older version against which the generic drugs are AB-rated, generic manufacturers may not be able to take advantage of state substitution laws to automatically obtain sales when a physician writes a prescription for the newer version. Plaintiffs in product-hopping cases claim that this forecloses competition.
Pre-2015 cases: TriCor, Prilosec and Suboxone
Only a handful of decisions have dealt with product-hopping claims in the pharmaceutical context, most of which were at the motion to dismiss stage. In the earliest of these decisions, Tricor, the court rejected the defendants' assertions that any product change that is an improvement is per se legal under the antitrust laws.
In Prilosec, the court concluded that antitrust laws do not require new products to be superior to existing ones, and that consumer choice plays into the analysis of a product-hopping claim.
In Suboxone, the purchaser plaintiffs alleged that the defendants unlawfully shifted patients from Suboxone tablets to Suboxone film by falsely disparaging and fabricating safety concerns about the tablet, and by removing Suboxone tablets from the market just as generic versions of the tablets were set to enter the market. The court denied the defendants' motion to dismiss the product-hopping claims, holding that, 'what is clear from the case law is that simply introducing a new product on the market, whether it is a superior product or not, does not, by itself, constitute exclusionary conduct. The key question is whether the defendant combined the introduction of a new product with some other wrongful conduct [that stymies competition]'.
Two appellate decisions: Namenda and Doryx
Namenda I and Doryx were the first cases to address pharmaceutical product-hopping claims beyond the motion to dismiss stage. In Namenda I, the US District Court for the Southern District of New York granted a motion for a preliminary injunction on a limited record related to product-hopping claims as to the defendants' plan to transition patients from an older, twice-daily drug to a newer, once-daily formulation.
The defendants appealed the decision to the US Court of Appeals for the Second Circuit, raising an issue of first impression in the circuit courts regarding the circumstances under which product-hopping may violate the Sherman Act.
The Doryx court became the first to evaluate product-hopping claims, with the benefit of full discovery, at the summary judgment stage. In Doryx, the plaintiffs alleged that numerous product reformulations (including changes from capsules to tablets, changes to dosage strength and introduction of score lines), coupled with the subsequent discontinuation of older versions constituted anticompetitive product-hopping. The court denied the defendants' motion to dismiss on the grounds that it would be required to consider facts beyond the pleadings to decide the product-hopping issue.
Ultimately, after full discovery, the court granted summary judgment for the defendants and dismissed all claims, holding that the introduction of a reformulated drug and withdrawal of the older version was not exclusionary conduct where the generic was not foreclosed from competing.
Post-Namenda and Doryx: Solodyn, Asacol and Suboxone revisited
Since the Namenda and Doryx decisions, additional courts have addressed pharmaceutical product-hopping at the motion to dismiss stage. The Solodyn court dismissed the plaintiffs' product-hopping claim, holding that because the defendants kept the older strengths of Solodyn on the market until two years after the older strengths faced generic competition, the introduction of newer strengths did not limit customer choice and was therefore not anticompetitive.
In Asacol, the purchaser plaintiffs alleged that the defendants engaged in a product hop that thwarted generic competition for branded drug Asacol by first introducing and promoting Asacol HD (a high-dose version of Asacol), years later introducing the drug Delzicol with the same active ingredient and dose as Asacol, and shortly thereafter removing Asacol from the market prior to the entry of generic Asacol products. Relying on Namenda I, the Asacol court dismissed the plaintiffs' claims of a product hop between Asacol and Asacol HD because Asacol continued to be sold side-by-side with Asacol HD for several years after Asacol HD was introduced.
Subsequent to the 2014 motion to dismiss decision in Suboxone related to the purchaser plaintiffs' complaints, state plaintiffs filed complaints with similar claims, and the court revisited its product-hopping analysis in light of the Namenda, Doryx and Asacol decisions that had been rendered since the earlier Suboxone decision. The court reached the same result as it did in its previous decision in which it analysed the product-hopping claims in view of Tricorand Prilosec, determining that the conduct was more akin to the claims allowed to proceed in Namenda than to claims dismissed in Doryx and Asacol because the old Suboxone product was withdrawn prior to generic entry.
Challenges to pharmaceutical manufacturers' pricing practices
In recent years, enforcement agencies, private plaintiffs and legislators – with help from the media – have continued to pressure brand and generic pharmaceutical manufacturers regarding high drug prices. Federal and state investigations have resulted in criminal and civil enforcement actions, and private litigation has also ramped up, mostly in the form of claims alleging agreements to fix prices. The push for both state and federal legislation to address drug prices has also increased, with numerous states proposing (and some passing) various price-transparency laws, which require drug manufacturers to disclose certain information to justify their prices, while the federal government continues to wrestle with proposed legislation of its own. Over the past year specifically, as litigation regarding the alleged price fixing of generic drugs moves through the early stages of motions to dismiss and various discovery stays, much of the focus on drug prices has shifted to these potential legislative remedies.
This section analyses the major developments in the area of drug pricing since our last update, with a specific focus on:
• federal and state legislative and regulatory activity;
• federal and state enforcement actions and congressional investigations; and
• private litigation regarding drug prices.
Federal legislative and regulatory activity
Over the last year, pressure for legislation on drug prices has mounted at the federal level. And while there have been a number of bills introduced in the house and senate targeting issues concerning drug prices – including proposals such as allowing for the importation of drugs from foreign countries, allowing Medicare to negotiate prices under Part D, and providing incentives to increase competition in the generic marketplace – to date, none of those bills have been successful.
In May 2018, the Trump administration unveiled its plans to assist with lowering prescription drug prices in the United States.
• possibly allowing Medicare to pay different amounts for the same drug, depending on the illness treated;
• 'value-based purchasing' for federal programmes;
• making generic drugs free for some low-income elderly patients on Medicare;
• passing on a portion of the rebates typically paid to insurers or pharmacy benefit managers to consumers;
• raising prices for drugs in foreign countries to reduce prices in the United States; and
• lifting restrictions on pharmacists communicating to patients about less-expensive alternatives.
President Trump also targeted supposed efforts by brand manufacturers to limit the availability of brand drugs to generic manufacturers for testing, which he implied could delay potential generic competition. As discussed below, the FDA has also addressed similar alleged conduct related to the Risk Evaluation and Mitigation Strategy (REMS) requirements.
In the last year, a number of states have passed new laws targeting issues concerning drug pricing,
First, and likely most notable, is Maryland's HB 631, often referred to as the 'price gouging' law. In summary, HB 631, 'An Act concerning Public Health – Essential Off-Patent or Generic Drugs – Price Gouging – Prohibition', prohibits generic drug manufacturers, or wholesale distributors, from making 'unconscionable' increases in the price of an 'essential off-patent or generic drug'. The law authorised the Maryland Medical Assistance Program (MMAP) to notify the Maryland Attorney General of a price increase for a drug when:
• the wholesale acquisition cost (WAC) of a prescription drug increased by at least 50 per cent within the preceding one-year period, or when the price paid by MMAP would increase by at least 50 per cent within the preceding one-year period; and
• the WAC for either a 30-day supply or a full course of treatment exceeded $80.
The law provides the Maryland Attorney General power to bring civil claims for violations of the law.
The other notable state law development is Vermont's Senate Bill 175 that allows for the importation of prescription drugs from Canada, in an effort to reduce prescription drug prices in the state. Passed in May 2018, Senate Bill 175 requires:
[Vermont's] Agency of Human Services, in consultation with interested stakeholders and appropriate federal officials, [to] design a wholesale prescription drug importation program that complies with the applicable requirements of 21 USC § 384, including the requirements regarding safety and cost savings.
Senate Bill 175 includes a number of elements, but most notably the bill designates the state of Vermont to be a licensed drug wholesaler, or to contract with a licensed wholesaler, to use regulated Canadian prescription-drug suppliers to secure prescription drugs that meet FDA standards. While federal law generally bars importation of prescription drugs into the United States,
Federal and state enforcement actions
Following a two-year investigation into the pharmaceutical industry, the US Department of Justice (DOJ) filed criminal charges in December 2016 against two former Heritage Pharmaceuticals Inc executives.
Following the January 2017 guilty pleas by the two Heritage executives, the Connecticut Attorney General and 19 states filed a civil complaint in US District Court for the District of Connecticut against Heritage, Mylan, Teva and three smaller pharmaceutical corporations, charging that these companies colluded to dramatically increase the price of doxycycline hyclate and glyburide.
Another area of focus in the last year has been investigations into patient-assistance programmes, which generally provide cost-sharing assistance to insured patients with high prescription-drug expenses. These programmes, largely funded by drug manufacturers, are often criticised for being a means of inflating drug prices. Moreover, these programmes, originally criticised by the Department of Health and Human Services' Office of the Inspector General, have caught the attention of the DOJ, which subpoenaed more than 20 manufacturers regarding their patient-assistance practices in the last few years. Following these investigations, starting at the end of 2017, Aegerion Pharmaceuticals, Inc and United Therapeutics both reached settlements with the DOJ regarding their patient-assistance programmes.
To date, there have only been a handful of private litigations targeting high drug prices. The only case to reach the motion-to-dismiss stage involves the generic blood pressure medication propranolol hydrochloride – the generic equivalent of the branded drug Inderal. In that case, the direct and indirect purchasers' consolidated class action complaint alleges several generic drug manufactures entered separate price-fixing conspiracies for the capsule and tablet forms of generic propranolol. In April 2017, the court largely denied the defendants' motion to dismiss. The court held that a conspiracy could be inferred on the basis of 'conscious parallelism' where interdependent conduct was accompanied by circumstantial evidence and 'plus factors', which it concluded the plaintiffs had sufficiently pleaded, including:
• a motive to increase prices;
• that the price increases were against the defendants' own self-interest;
• that the defendants communicated at trade association meetings; and
• that there were ongoing state and federal investigations into the manipulation of generic drug prices, including the price of propranolol.
The court dismissed several state-law claims, finding that, among other things, indirect purchasers lacked standing to bring consumer-protection claims under the laws of those states in which they did not indirectly purchase, pay, or reimburse for propranolol. This litigation subsequently was transferred to the multi-district litigation in the US District Court for the Eastern District of Pennsylvania.
Brand name drug manufacturers also have been the target of putative class action lawsuits alleging collusive price fixing. In California, a proposed class of consumers filed an action against Novo Nordisk, alleging the company inflated the list price of Type 2 diabetes medicine, Victoza, in an effort to subsidise higher rebates to pharmacy benefit manager (PBM) OptumRX.
Similarly, in New Jersey, a proposed consumer class action alleged that Novo, Lilly and Sanofi increased insulin prices in lockstep, sharing the increased profits with the three largest PBMs, CVS Health, Express Scripts and OptumRX, through rebates.
In Massachusetts, a class action against Novo, Lilly and Sanofi alleged that these companies engaged in price fixing, raising their list price in lockstep to ensure that large PBMs received rebates.
Finally, over the past two years, more than 80 named plaintiffs, including proposed classes of direct and indirect purchasers, have filed private suits against more than 20 different generic manufacturers targeting alleged agreements to raise prices. These proposed classes, like the State attorneys general, allege that generic manufacturers engaged in a number of separate conspiracies through trade association conferences and other meetings to inflate the prices of almost 20 different generic drugs between 2012 and 2015, including digoxin, doxycycline, clobetasol, desonide, fluocinonide, econazole, levothyroxine and propranolol. In April 2017, the Judicial Panel on Multidistrict Litigation transferred and consolidated these actions in the US District Court for the Eastern District of Pennsylvania for pretrial proceedings.
Other antitrust concerns involving pharmaceuticals
In addition to the above areas that have been most active, antitrust concerns have arose in other areas as well. Specifically, antitrust allegations have recently been asserted regarding certain contracting practices (eg, exclusive dealing and bundling), biosimilar manufacturer responses to biosimilar competition, and with respect to the REMS programme.
Contracting practices in antitrust cases
Various contracting practices have come under antitrust scrutiny. For example, the plaintiffs in Restasis allege that in addition to anticompetitive conduct related to patent procurement and litigation, the brand company 'entered into an unlawful contract with the Saint Regis Mohawk Tribe (the Tribe) to transfer ownership of the follow-on patents to the Tribe and then petitioned the [Patent Trial and Appeal Board] to dismiss its review for lack of subject-matter jurisdiction based on the Tribe's sovereign immunity' in an attempt to maintain a monopoly and insulate the follow-on patents from review.
In Rotavirus, the plaintiffs claim that '[b]efore the threat of competition from GSK, Merck had contracts that offered “bundled” discounts that would condition prices on loyalty to a bundle of Merck vaccines. In preparation for GSK's introduction of a competing rotavirus vaccine, Merck added a condition to its contracts that required customers to buy all or nearly all of their pediatric rota virus vaccines from Merck or face substantial price penalties on all other Merck vaccines', thereby 'reducing GSK's incentive to compete based on price' and allowing Merck 'to charge artificially-inflated prices for rotavirus vaccine'.
Another notable example is the EpiPen antitrust litigation. Among other allegations, the plaintiffs allege that Mylan engaged in exclusionary rebates that 'caused PBMs to begin to restrict the epinephrine auto-injector category' and 'to block [Sanofi's epinephrine drug] Auvi-Q from the market'.
Biosimilar antitrust cases
The FDA and private litigants have also begun to raise antitrust concerns related to biologic manufacturers' contracting with insurers and providers.
In September 2017, in the first antitrust case between a biologic originator and a biosimilar manufacturer, Pfizer sued Johnson & Johnson and Janssen in the US District Court for the Eastern District of Pennsylvania. The complaint alleges that the defendants employed a 'multifaceted scheme to ensure that biosimilars would never become viable competitors' to Remicade by 'imposing a web of exclusionary contracts on both health insurers and healthcare providers (eg, hospitals and clinics) to maintain [their] stranglehold' in the marketplace.
REMS antitrust cases
In past years, the FTC and some private litigants have expressed concerns about brand pharmaceutical companies using the FDA's REMS programme to allegedly prevent some generic companies from obtaining certain drug samples needed for bioequivalence testing. While this has been an area of continuing interest for the FTC and private litigants,
The FDA, however, has recently taken several steps to combat purported misuse of the REMS programme. In July 2017, the FDA issued draft guidance – the Development of a Shared System REMS
1 FTC v Actavis, Inc, 133 S Ct 2223, 2237 (2013).
2 Id at 2227.
3 Id at 2236.
4 In re Lamictal Direct Purchaser Antitrust Litig, 18 F Supp 3d 560, 567–69 (DNJ 2014); In re Loestrin 24 LE Antitrust Litig, 45 F Supp 3d 180, 193 (DRI 2014).
5 King Drug Co of Florence, Inc v SmithKline Beecham Corp, 791 F.3d 388, 394 (3d Cir 2015). The Third Circuit also rejected the district court's alternative reason for dismissal – that the no-AG agreement was justified because the consideration exchanged was reasonably related to the removal of uncertainty created by the patent dispute – because 'without proper justification, the brand cannot pay the generic simply to eliminate the risk of competition'. Id at 411.
6 Id at 403–05.
7 SmithKline Beecham Corp v King Drug Co of Florence, Inc, 137 S Ct 446 (2016); Br of the US as Amicus Curiae, SmithKline Beecham Corp v King Drug Co of Florence, Inc, No. 15–1055 (October 2016).
8 Loestrin, 814 F.3d at 550.
9 Id at 552.
10 See, eg, Sergeants Benevolent Ass'n Health & Welfare Fund v Actavis, PLC, No. 15-cv-6549, 2016 US Dist LEXIS 128349, at *48–49 (SDNY 13 September 2016) (stating that case law 'suggests that early-entry terms are not reverse payments subject to antitrust scrutiny', but noting that there were allegations that 'the terms of the licenses were intentionally designed to keep competitors out of the market until the [brand] had successfully forced Namenda IR consumers to switch to Namenda XR'); In re Solodyn Antitrust Litig, No. 14-MD-2503, 2015 US Dist LEXIS 125999, at *33–43 (D Mass 14 August 2015) (holding that a settlement and licence agreement with upfront and milestone payments can constitute a 'payment' under Actavis); In re Aggrenox Antitrust Litig, 94 F Supp 3d 224, 242 (D Conn 2015) (holding that a '“payment” is not limited to cash transfers'); United Food & Commercial Workers Local 1776 v Teikoku Pharma USA, Inc, 74 F Supp 3d 1052, 1070 (ND Cal 2014) ('[A] no-authorised-generic term can constitute a payment'.); Time Ins Co v AstraZeneca AB, 52 F Supp 3d 705, 710 (ED Pa 2014) ('[R]everse payments deemed anticompetitive pursuant to Actavis may take forms other than cash payments'); In re Niaspan Antitrust Litig, 42 F Supp 3d 735, 751 (ED Pa 2014) ('[T]he term “reverse payment” is not limited to a cash payment'); In re Nexium (Esomeprazole) Antitrust Litig, 968 F Supp 2d 367, 392 (D Mass 2013) ('Nowhere in Actavis did the Supreme Court explicitly require some sort of monetary transaction to take place for an agreement between a brand and generic manufacturer to constitute a reverse payment').
11 Picone v Shire PLC, No. 16-cv-12396, 2017 US Dist LEXIS 178150, at *10 (D Mass 20 October 2017).
12 Id at *23.
13 Id at *35.
14 FTC v AbbVie Inc, 107 F Supp 3d 428, 430, 432–36 (ED Pa 2015).
15 Id at 436.
16 Findings of Fact and Conclusions of Law, FTC v AbbVie, Inc, No. 14-cv-5151 (ED Pa 29 June 2018), ECF No. 439.
17 United Food & Commercial Workers Local 1776 & Participating Emp'rs Health & Welfare Fund v Teikoku Pharma USA, Inc, 74 F Supp 3d 1052, 1070 (ND Cal 2014).
19 In re Opana ER Antitrust Litig, 162 F Supp 3d 704, 718 (ND Ill 2016).
20 In re Loestrin 24 Fe Antitrust Litig, 261 F Supp 3d 307, 338 (DRI 2017).
22 In re Lipitor Antitrust Litig, 868 F3d 231, 255 n.11 (3d Cir 2017).
23 Id at 256.
25 Petition for Writ of Certiorari, Pfizer Inc v Rite Aid Corp, No. 17–752, at 1 (S Ct 20 November 2017).
26 Pfizer Inc v Rite Aid Corp, No. 17–752, 2018 US LEXIS 1227, at *1 (S Ct 20 February 2018).
27 In re Lipitor Antitrust Litig, 722 F App'x 132, 135 (3d Cir 2016) (per curium).
28 In re Cipro Cases I & II, 61 Cal 4th 116 (Cal 2015).
29 Lipitor, 722 F App'x at 137.
32 In re Asacol Antitrust Litig, No. 1:15-cv-12730, 2016 US Dist LEXIS 94605, at *24 (D Mass 20 July 2016).
33 In re Solodyn (Minocycline Hydrochloride) Antitrust Litig, No. 14-md-2503, 2015 US Dist LEXIS 125999, at *41 (D Mass 14 August 2015).
34 In re Solodyn (Minocycline Hydrochloride) Antitrust Litig, No. 14-md-2503, 2018 US Dist LEXIS 11921, at *20–21 (D Mass 25 January 2018).
35 Id at *71–72.
36 Id at *62–69.
37 Id at *72.
38 Id at *74–81.
39 Settlement Agreement at 8, In re Solodyn (Minocycline Hydrochloride) Antitrust Litig, No. 14-md-2503 (D Mass 29 March 2018), ECF No. 1137.
40 See, eg, Complaint paragraph 11, Lidoderm, No. 18-cv-675 (ND Cal 31 January 2018), ECF No. 1.
41 United Food & Commercial Workers Local 1776 v Teikoku Pharma USA, 296 F Supp 3d 1142, 1156-58, 1160 (ND Cal 2017).
42 Id at 1163.
43 Id at 1163–64.
44 Notice of Motion and Motion at 2, In re Lidoderm Antitrust Litig, No. 14-md-2521 (ND Cal 20 March 2018), ECF No. 1004.
45 In re AndroGel Antitrust Litig (No. II), No. 09-md-2084, 2018 US Dist LEXIS 99716, at *49–50 (ND Ga 14 June 2018).
46 Id at *58.
47 Id at *59.
48 Id at *42–43.
49 In re AndroGel Antitrust Litig, No. 1:09-md-2084, 2018 US Dist LEXIS 117760, at *25 (ND Ga 16 July 2018).
51 Id at *26 n.23 (citing In re Modafinil Antitrust Litig, 837 F.3d 238, 255-59 (3d Cir 2016) (vacating certification order in which the proposed class consisted of very large companies, and rejecting arguments about negative claims and retaliation); King Drug Co of Florence v Cephalon, Inc, No. 2:06-CV-1797, 2017 US Dist LEXIS 137601, at *8–11 (ED Pa 28 August 2017) (denying certification for similar reasons)).
52 In re Wellbutrin XL Antitrust Litig, 133 F Supp 3d 734, 754 n.28, 757–69 (ED Pa 2015).
53 In re Wellbutrin XL Antitrust Litig, 868 F.3d 132, 165 (3d Cir 2017).
54 Id at 169.
55 Id at 168.
56 Id at 166–67.
57 Id at 167.
58 In re K-Dur Antitrust Litig, No. 01-cv-1652, 2016 US Dist LEXIS 22982, at *49–50 (DNJ 25 February 2016).
59 Id at *54–62.
60 Id at *72–80.
61 In re K-Dur Antitrust Litig, No. 01-cv-1652, ECF No. 1037, 1038, 1044, 1045.
62 King Drug Co of Florence v Cephalon, Inc, 88 F Supp 3d 402, 407–10, 418 (ED Pa 2015).
63 Id 419–21.
64 Stipulated Order for Permanent Injunction & Equitable Monetary Relief at 10, FTC v Cephalon, Inc, No. 2:08-cv-02141 (ED Pa 17 June 2015), ECF No. 405.
65 Mot in Supp of Direct Purchaser Class Pls' Unopposed Mot for Cert of a Settlement at 1, FTC v Cephalon, Inc, No. 2:06-cv-01797 (ED Pa 17 April 2015), ECF No. 795; Memo of Law in Supp of Mot for Cert of Class at 1, King Drug Co of Florence, Inc, No. 2:06-cv-01797 (ED Pa 3 February 2017), ECF No. 1032-1.
66 Order at 1, FTC v Cephalon, Inc, No. 2:08-cv-02141 (ED Pa 17 June 2015), ECF No. 376; FTC's Mem in Opp'n to Cephalon's Mot to Preclude the FTC's Disgorgement Claim at 5, FTC v Cephalon, Inc, No. 2:08-cv-02141 (ED Pa 17 June 2015), ECF No. 352.
67 Order of Dismissal, Apotex, Inc v Cephalon, Inc, No. 2:06-cv-2768 (ED Pa 7 July 2017), ECF No. 1265.
68 FTC v Actavis, Inc, No. 1:09-cv-955, 2017 US Dist LEXIS 84438, at *17 (ND Ga 1 June 2017).
70 Id at *19–20.
71 In re Nexium (Esomeprazole) Antitrust Litig, 42 F Supp 3d 231, 264 (D Mass 2014).
73 In re Nexium (Esomeprazole) Antitrust Litig, 842 F.3d 34 (1st Cir 2016).
74 Initial Decision at 85, In the matter of Impax Labs, Inc, FTC Dkt No. 9373 (18 May 2018).
75 Id at 114.
76 Id at 120.
77 Id at 132.
78 Id at 133–35.
79 Id at 132.
80 Id at 145.
81 Complaint Counsel's Notice of Appeal at 1, In the matter of Impax Labs, Inc, FTC Dkt No. 9373 (18 May 2018).
82 Abbott Labs v Teva Pharm USA, Inc, 432 F Supp 2d 408, 422 (D Del 2006).
83 Id at 423–24.
84 Walgreen Co v AstraZeneca Pharm LP, 534 F Supp 2d 146, 151 (DDC 2008).
85 Id at 152 (further holding that '[t]he fact that a new product siphoned off some of the sales from the old product and, in turn, depressed sales of the generic substitutes for the old product, does not create an antitrust cause of action').
86 In re Suboxone (Buprenorphine Hydrochloride and Naloxone) Antitrust Litig, 64 F Supp 3d 665, 682 (ED Pa 2014).
87 Id at 681–82.
88 Id at 682–84.
89 New York v Actavis, PLC, No. 14-7572, 2014 US Dist LEXIS 172918 (SDNY 11 December 2014).
90 Id at *107–08.
91 New York v Actavis, PLC, 787 F.3d 638, 643 (2d Cir 2015).
92 Berkey Photo, Inc v Eastman Kodak Co, 603 F.2d 263 (2d Cir 1979).
93 787 F.3d at 653–54.
94 See id at 653–59. In a subsequent, separate action, direct purchaser plaintiffs in Namenda II alleged that the defendants' mere announcement of their intent to remove the older drug from the market constituted a product hop because it coerced customers to switch to the newer drug. Notwithstanding that the court in Namenda I had prevented the defendants from withdrawing the older drug from the market, the court in Namenda II allowed the plaintiffs' product-hopping claims to survive the defendants' motion to dismiss (Sergeants Benevolent Ass'n Health & Welfare Fund v Actavis, PLC, No. 15-cv-6549, 2016 US Dist LEXIS 128349 (SDNY 13 September 2016)), and the Namenda II court subsequently held that the defendants were precluded from arguing certain issues related to the product-hopping allegations that were already determined by the Namenda I court (In re Namenda Direct Purchaser Antitrust Litig, No. 15-cv-7488, 2017 US Dist LEXIS 83446, at *50–51 (SDNY 23 May 2017)).
95 Mylan Pharms, Inc v Warner Chilcott plc, No. 12-3824, 2013 US Dist LEXIS 152467 (ED Pa 12 June 2013).
96 Id at *11.
97 Mylan Pharms, Inc v Warner Chilcott Pub, No. 12-3824, 2015 US Dist LEXIS 50026 (ED Pa 16 April 2015); see also id at *42 (noting that it had denied the motion to dismiss in order to consider the legality of the novel product-hopping theory with the benefit of a fully developed record, and that the record on summary judgment now underscored that the defendants did not violate the Sherman Act); see also id at *34.
98 Id at *42.
99 Id at *40.
100 Mylan Pharms, Inc v Warner Chilcott Pub, 838 F.3d 421 (3d Cir 2016).
101 In re Solodyn (Mincocycline Hydrochloride) Antitrust Litig, No. 14-md-2503, 2015 US Dist LEXIS 125999 (D Mass 14 August 2015).
102 In re Asacol Antitrust Litig, No. 15-cv-12730 (D Mass 10 February 2017), ECF No. 279.
103 In re Asacol Antitrust Litig, No. 15-md-2503, 2016 US Dist LEXIS 94605 (D Mass 20 July 2016).
104 Wisconsin v Indivior Inc (In re Suboxone (Buprenorphine Hydrochloride & Naloxone) Antitrust Litig), No. 13-md-2445, 2017 US Dist LEXIS 627 (ED Pa 8 September 2017).
105 'Drug Pricing Legislative Summary', ASHP, 7 February 2018.
106 J Carlisle Larsen, 'New Bill in Congress Seeks to Make Drug Price Increases More Transparent', Wisconsin Public Radio, 9 June 2017, www.wpr.org/new-bill-congress-seeks-make-drug-price-increases-more-transparent.
107 Ed Silverman, 'McCain and Baldwin to Trump: Hold Pharma's Feet to the Fire on Drug Prices', Stat, 11 February 2018, https://www.statnews.com/pharmalot/2018/02/11/baldwin-mccain-trump-drug-prices-letter/.
108 'Remarks by President Trump on Lowering Drug Prices', Whitehouse.gov, 11 May 2018, https://www.whitehouse.gov/briefings-statements/remarks-president-trump-lowering-drug-prices/.
109 Dep't of Health and Human Serv, American Patients First, The Trump Admin Blueprint to Lower Drug Prices & Reduced Out-of-Pocket Costs (2018), https://www.hhs.gov/sites/default/files/AmericanPatientsFirst.pdf.
110 Katie Thomas, ‘6 Takeaways From Trump’s Plans to Try to Lower Drug Prices’, NY Times, 11 May 2018, https://www.nytimes.com/2018/05/11/health/trump-drug-prices.html.
111 See, eg, 'State Legislative Action to Lower Pharmaceutical Costs', National Academy for State Health Policy, 22 June 2018, https://nashp.org/state-legislative-action-on-pharmaceutical-prices/; 'Update: What's New in State Drug Pricing Legislation?', National Academy for State Health Policy, https://nashp.org/update-whats-new-in-state-drug-pricing-legislation/.
112 Serra J Schlanger & Alan M Kirschenbaum, 'Fourth Circuit Finds Maryland Price Gouging Law Unconstitutional', FDA Law Blog, 16 April 2018, www.fdalawblog.net/2018/04/fourth-circuit-finds-maryland-price-gouging-law-unconstitutional/.
113 Ass'n for Accessible Meds v Frosh, 887 F.3d 664, 672 (4th Cir 2018).
114 S 175, 2018 Leg, 1st Spec Sess, Section 4651(a) (Vt 2018), https://legislature.vermont.gov/assets/Documents/2018/Docs/ACTS/ACT133/ACT133%20As%20Enacted.pdf
115 21 USC Section 381(d)(1).
116 Thomas Sullivan, ‘Vermont’s Next Act: Wholesale Prescription Drug Importation Program’, Policy & Medicine, 21 May 2018, https://www.policymed.com/2018/05/vermonts-next-act-wholesale-prescription-drug-importation-program.html.
117 'Former Top Generic Pharmaceutical Executives Charged with Price-Fixing, Bid-Rigging and Customer Allocation Conspiracies', DOJ Press Release, 14 December 2016, www.justice.gov/opa/pr/former-top-generic-pharmaceutical-executives-charged-price-fixing-bid-rigging-and-customer.
118 Def Glazer's Information, United States v Glazer, No. 2:16-cr-00506 (ED Pa filed 12 December 2016), ECF No. 1; Def Glazer's Plea Agreement, United States v Glazer, No. 2:16-cr-00506 (ED Pa filed 9 January 2017), ECF No. 18; Def Malek's Information, United States v Malek, No. 2:16-cr-00508 (ED Pa filed 13 December 2016), ECF No. 1; Def Malek's Plea Agreement, United States v Malek, No. 2:16-cr-00508 (ED Pa filed 9 January 2017), ECF No. 17.
120 'AG Jepsen: States Reach Settlements, Cooperation Agreements with Two Former Executives in Generic Drug Multistate Investigation', Press Release from State of Connecticut Office of Attorney General George Jepsen, 24 May 2017.
121 Antonio José Vielma, ‘Two executives charged in generic drug price-fixing federal investigation: Report’, CNBC (14 December 2016), www.cnbc.com/2016/12/14/us-files-first-charges-in-generic-drug-price-fixing-probe-report.html (quoting Heritage’s full statement).
122 Pls States' Compl, Connecticut v Aurobindo Pharma USA, Inc, No. 3:16-cv-2056 (D Conn filed 15 December 2016), ECF No. 1.
123 'Drug Maker Aegerion Agrees to Plead Guilty; Will Pay More Than $35 Million to Resolve Criminal Charges and Civil False Claims Allegations', DOJ Press Release, 22 September 2017, https://www.justice.gov/opa/pr/drug-maker-aegerion-agrees-plead-guilty-will-pay-more-35-million-resolve-criminal-charges-and; 'Drug Maker United Therapeutics Agrees to Pay $210 Million to Resolve False Claims Act Liability for Paying Kickbacks', DOJ Press Release, 20 December 2017, https://www.justice.gov/opa/pr/drug-maker-united-therapeutics-agrees-pay-210-million-resolve-false-claims-act-liability.
124 In re Propranolol Antitrust Litig, 249 F Supp 3d 712 (SDNY April 2017).
125 Matthew Guarnaccia, 'JPML Sends Generic Drug Price-Fixing Suits To Pennsylvania', Law360, 7 April 2017, www.law360.com/articles/911309/jpml-sends-generic-drug-price-fixing-suits-to-pennsylvania.
126 Class Action Compl & Demand for Jury Trial, Ruth Johnson v Optumrx Inc, No. 8:17-cv-00900 (CD Cal 23 May 2017), ECF No. 1.
127 Class Action Compl & Demand for Jury Trial, Boss v CVS Health Corporation, No. 3:17-cv-01823 (DNJ 17 March 2017), ECF No. 1.
128 Compl & Demand for Jury Trial, Lehigh Cnty Employees' Retirement Sys v Novo Nordisk A/S, No. 3:17-cv-00209 (DNJ 1 November 2017), ECF No. 1.
129 Am Class Action Compl, In re Insulin Pricing Litig, No. 3:17-cv-00699 (DNJ 17 March 2017), ECF No. 18.
130 See Transfer Order, In re Generic Digoxin & Doxycycline Antitrust Litig, MDL No. 2724, ECF No. 291, 6 April 2017; In re Generic Drug Pricing Antitrust Litig, MDL No. 2724.
131 Compl paragraph 7, WalGreen Co v Allergan, Inc, No. 18-cv-2907 (EDNY 16 May 2018), ECF No. 1.
132 In re Restasis (Cyclosporine Ophthalmic Emulsion) Antitrust Litig, No. 18-md-2819 (EDNY).
133 Compl paragraphs 4, 6, In re Rotavirus Vaccines Antitrust Litig, No. 18-cv-1734 (ED Pa 15 June 2018), ECF No. 12.
134 Compl paragraphs 1–9, 178–79, In re EpiPen (Epinephrine Injection, USP) Marketing, Sales Practices, and Antitrust Litig, No. 17-md-2785 (D Kan 17 October 2017), ECF No. 60.
135 Memorandum and Order, In re EpiPen (Epinephrine Injection, USP) Marketing, Sales Practices, and Antitrust Litig, No. 17-md-2785 (D Kan 21 December 2017), ECF No. 98.
136 Id at 41.
137 See Scott Gottlieb, Commissioner, US Food & Drug Admin, Remarks at America's Health Insurance Plans' (AHIP) National Health Policy Conference: Capturing the Benefits of Competition for Patients (7 March 2018), https://www.fda.gov/NewsEvents/Speeches/ucm599833.htm.
138 Part of the Patient Protection & Affordable Care Act HR 3590, 111st Cong (1st Sess 2009).
139 What Does It Mean to Have 'No Clinically Meaningful Differences'?, Biosimilar and Interchangeable Products, FDA, https://www.fda.gov/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ApprovalApplications/TherapeuticBiologicApplications/Biosimilars/ucm580419.htm.
140 The BPCIA provides for an 'interchangeable' designation but FDA has not yet issued final guidelines for that designation. FDA, Considerations in Demonstrating Interchangeability with a Reference Listed Product, Draft Guidance for Industry (2017).
141 Complaint at paragraph 1, Pfizer v J&J, No. 17-cv-4180 (ED Pa 20 September 2017), ECF No. 1.
142 See, eg, FTC Br as Amicus Curiae, Mylan Pharms Inc v Celgene Corp, No. 2:14-cv-02094, 2014 WL 2968348 (DNJ filed 3 April 2014); FTC Br as Amicus Curiae, Actelion Pharms Ltd v Apotex Inc, No. 1:12-cv-05743 (DNJ filed 14 September 2012); Mylan Pharms Inc v Celgene Corp, No. 2:14-cv-02094, 2014 WL 2968348 (DNJ filed 3 April 2014), ECF No. 245-1.
143 FDA, Development of a Shared System REMS Guidance for Industry, Draft Guidance for Industry (2018).
144 FDA, Waivers of the Single Shared System REMS Requirement, Draft Guidance for Industry (2018).
145 'Statement from FDA Commissioner Scott Gottlieb, MD, on new policies to reduce the ability of brand drug makers to use REMS programs as a way to block timely generic drug entry, helping promote competition and access', US Food & Drug Admin, 31 May 2018, https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm609365.htm.
146 'Reference Listed Drug (RLD) Access Inquiries', US Food & Drug Admin, May 2018, https://www.fda.gov/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ApprovalApplications/AbbreviatedNewDrugApplicationANDAGenerics/ucm607738.htm.
147 White & Case, LLP represents defendants in the following cases discussed in this academic article: FTC v Actavis (AndroGel), Aggrenox, Asacol, Doryx, Effexor, K-Dur, Lidoderm, Lipitor, Loestrin, Namenda I, Namenda II and Remicade. No statement in this article may be imputed to any client in those actions or any other client of White & Case LLP. No client of White & Case LLP contributed to this article.
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