Developments in Antitrust in Pharmaceutical Markets

This past year has seen continued scrutiny of the pharmaceutical markets by enforcement agencies and continued significant activity in the Courts. Every indication is that the pharmaceutical markets will see even more antitrust scrutiny and activity during the Obama administration. This article reviews a sample of some of the noteworthy antitrust developments in the pharmaceutical industry during the past year.

Brand-generic settlements

The Federal Trade Commission (FTC) continued to be concerned about settlement agreements between generic and brand manufacturers during Hatch-Waxman Act-related patent infringement litigation where consideration flows to the generic manufacturer, and where there is some restriction on the generic manufacturer’s ability to market its product (sometimes called ‘reverse payment’ settlements). The FTC has long considered settlement agreements like these to be anti-competitive and illegal, and to that end, has brought enforcement actions and filed amicus briefs supporting this position. Yet, notwithstanding the FTC’s efforts, the Second and Eleventh Circuits have found that such agreements can only be illegal under unusual circumstances, such as where the agreement exceeds the scope of the patent’s protection; the settlement was part of a fraud; or the underlying patent litigation was objectively baseless.1 The Supreme Court has not responded to the FTC’s request to consider this issue and has denied certiorari on this issue a number of times. During the past year, there have been four significant developments in this area: the Federal Circuit has joined the Second and Eleventh Circuits in finding that such agreements are generally legal; the FTC has continued its enforcement activity and filed a new action against such agreements; Department of Justice (DoJ) under the Obama administration has changed its position on these agreements and now supports the FTC position; and new legislation has been introduced to attempt to outlaw such agreements.

Federal Circuit joins Second and Eleventh Circuits in upholding the legality of such settlement agreements

In October 1991, Barr Laboratories, Inc (Barr), a generic manufacturer, had filed an Abbreviated New Drug Application (ANDA) with paragraph-IV certification in order to market a generic version of Bayer’s branded drug ciproflaxin hydrochloride (Cipro), which is used to treat bacterial infections. Bayer’s patent for Cipro was set to expire on 9 December 2003. Bayer sued Barr for patent infringement, and the parties eventually settled in 1996. Under the relevant settlement agreements, Bayer paid Barr US$49.1 million for Barr to not challenge the validity or enforceability of its patent. Bayer also paid Barr approximately US$349 million in exchange for Barr’s agreement not to manufacture a generic version of Cipro until at least six months before the Cipro patent expired. At that time, Barr would begin selling a generic product supplied by Bayer under a license with an 85 per cent royalty. Barr also affirmed the validity and enforceability of the Cipro patent and admitted infringement.

In 2005, the United States District Court for the Eastern District of New York granted summary judgment dismissing the claims of putative classes of direct and indirect purchasers of Cipro, holding that the Cipro patent gave Bayer the right to exclude competition entirely.2 As a result, the district court concluded that ‘any conduct within the scope of the patent,’ including Bayer’s agreement with generic manufacturers, was ‘exempt from antitrust scrutiny’.3 An appeal was filed with the United States Court of Appeals for the Federal Circuit. The FTC filed an amicus brief supporting reversal of the district court opinion.4

On 15 October 2008, the Federal Circuit affirmed the decision of the district court.5 The Federal Circuit held that such settlement agreements were not per se unlawful because ‘there was no basis for the district court to confidently predict that the agreements at issue here would be found to be unlawful under a rule of reason analysis’.6 The Federal Circuit adopted the district court’s analysis, which found that the settlement agreements provided nothing more than rights held under the patent and, in such a circumstance, the agreements were lawful unless there was evidence of sham litigation or fraud before the Patent and Trademark Office. The court found that its decision was also supported by the ‘long-standing policy in the law in favor of settlements’, which includes the settlement of patent infringement litigation.7 The court distinguished this case from the Sixth Circuit’s decision In re Cardizem CD Antitrust Litigation,8 where a settlement agreement was found to be per se illegal, noting that in the Sixth Circuit case the settlement agreement provided that the generic company would not market non-infringing versions of the generic drug, and would surrender its 180-day exclusivity period.9 The Federal Circuit in affirming the district court explained:

We conclude that in cases such as this, wherein all anti-competitive effects of the settlement agreement are within the exclusionary power of the patent, the outcome is the same whether the court begins its analysis under antitrust law by applying a rule of reason approach to evaluate the anti-competitive effects, or under patent law by analyzing the right to exclude afforded by the patent. The essence of the inquiry is whether the agreements restrict competition beyond the exclusionary zone of the patent. This analysis has been adopted by the Second and the Eleventh Circuits and by the district court below and we find it completely consistent with Supreme Court precedent. [...]

In addition, we agree with the Second and Eleventh Circuits and with the district court that, in the absence of evidence of fraud before the PTO or sham litigation, the court need not consider the validity of the patent in the antitrust analysis of a settlement agreement involving a reverse payment.10

The Supreme Court denied certiorari on 22 June 2009.11

In addition, a California Superior Court recently followed the Federal Circuit and held that the Bayer/Barr Cipro settlement did not violate the state’s antitrust law, the Cartwright Act, because the agreement did not fall outside the exclusionary scope of the patent; there was no evidence that Bayer instituted sham patent litigation, and the plaintiff could not establish that the agreement was otherwise unlawful.12 The court explained that the Cartwright Act and the federal Sherman Act ‘share similar language and objectives, and California courts often look to federal precedents under the Sherman Act for guidance.”13

New enforcement action: FTC v Watson Pharmaceuticals Inc

In January 2009, the FTC, in conjunction with the state of California, filed a complaint in the United States District Court of the Central District of California against Solvay Pharmaceuticals, Inc (Solvay) and the generic drug manufacturers Watson Pharmaceuticals, Inc (Watson) and Par Pharmaceuticals Companies, Inc (Par) regarding the testosterone-replacement drug AndroGel.14 Solvay holds the patent for AndroGel, which is set to expire in August 2020. In May 2003, Watson and Par, via its partner Paddock Laboratories, each filed ANDAs with the Food and Drug Administration (FDA) to seek approval to market generic versions of AndroGel. The generic companies made paragraph-IV certifications to Solvay that their generic products did not infringe Solvay’s patent related to AndroGel, and that the patent was invalid. In response to the paragraph-IV certifications, Solvay filed a patent infringement action against the generic drug companies in the United States District Court of the Northern District of Georgia. This lawsuit stayed approval of the generic Androgel until January 2006, at which point the FDA approved Watson’s generic version of Androgel.

In September 2006, the parties settled the patent litigation through two separate agreements whereby the generic companies agreed to not market generic Androgel until 31 August 2015, or earlier if another manufacturer launched a generic Androgel before then. This ensured that there would be non-infringing generic entry at least five years prior to the expiration of the patent. In addition, the parties entered into a co-promotion agreement whereby the generic companies would help Solvay promote Androgel in exchange for payments from Solvay. In its complaint, the FTC claims that Solvay’s patent was unlikely to have prevented the Watson and Par generics from entering the market.15 The FTC further claims that the two agreements constituted payments by the brand manufacturer to the generic manufacturers for delays so that the parties ‘would preserve monopoly rents that could be shared amongst them – at the expense of the consumer savings that would result from price competition’.16 These actions, the FTC claims, violated section 5(a) of the FTC Act and sections 1 and 2 of the Sherman Act.

The defendants moved the district court to transfer the case to the United States District Court for the Northern District of Georgia, where the original AndroGel patent litigation had proceeded. Defendants claimed inter alia that the FTC was trying to avoid the Eleventh Circuit and create a circuit split on the issue of the legality of this type of brand-generic settlement.17 On 8 April 2009, the court granted the transfer.18 The FTC had argued against the transfer because the court could determine the merits of the antitrust violations without directly assessing the likely outcome of the underlying patent litigation (which took place in the Georgia court).19 The court disagreed, stating that given the claims made by the FTC and the State of California, there is “no way to litigate this” without “some evaluation of the validity of the patent.”20 Therefore, the judge in the Northern District of Georgia, who was already familiar with the matter, was more appropriate to hear the case.21 Since the venue transfer, the defendants have filed a motion to dismiss, arguing that the FTC complaint failed to allege that Solvay’s patent was obtained by fraud or that the conduct prohibited under the settlements extended beyond the patent’s exclusionary scope, as required by the Eleventh Circuit.22 This action, together with the Cephalon action discussed in this column last year,23 clearly shows that the FTC will continue to aggressively pursue brand-generic settlement agreements where it believes consideration was given for delay in generic entry.

DoJ’s amicus brief in the Second Circuit

As we reported two years ago, DoJ has approached the generic-brand settlement issue differently than the FTC, at times even arguing against Supreme Court review when the FTC was arguing for review.24 However, under the new administration, DoJ seems to have moved closer to the position of the FTC. At the request of the United States Court of Appeals for the Second Circuit in a different Cipro case, Arkansas Carpenters Health & Welfare Fund v Bayer AG, DoJ filed an amicus brief urging the Second Circuit to overturn its decision in In re Tamoxifen Citrate Antitrust Litigation, 466 F.3d 187 (2d Cir 2006).25 The Second Circuit sent the DoJ a question as to ‘whether settlement of infringement lawsuits violates the federal antitrust laws when a potential generic drug manufacturer withdraws its challenge to the patent’s validity, which if successful would allow it to market a generic version of the drug, and the brand-name patent holder, in return, offers the generic manufacturer substantial payments.’26 The DoJ argued that such settlements were presumptively unlawful under section 1.27 DoJ claimed that the Second Circuit had been mistaken in its decision in In re Tamoxifen Citrate Antitrust Litigation, where the court held that such agreements only violate the antitrust laws if they do not extend the scope of the patent, or are not procured by fraud, or if the settlement was unreasonable.28 DoJ explained that its new position is that a plaintiff may establish a prima facie case of liability by showing a payment to the generic accompanied by the generic’s agreement to withdraw its patent challenge.29 Defendants may then rebut the presumption by showing reasonableness, such as a demonstration that the payment amount did not exceed litigation costs.30 Alternatively, defendants can show that the ‘settlement preserved a degree of competition reasonably consistent with what had been expected if the infringement litigation went to judgment’.31 DoJ further argues that any agreement that eliminated the ‘possibility of competition from the generic prior to the expiration of the patent’ was anti-competitive.32 It is not clear that the DoJ’s new position will have any real impact given that the courts have so far rejected similar arguments even with FTC support.

Proposed congressional legislation

Congress is again attempting to pass legislation prohibiting such agreements (prior attempts have been unsuccessful). In the House of Representatives, HR 1706 proscribes settlements where a generic supplier would receive ‘anything of value’ from the branded drug manufacturer and where the generic drug manufacturer also agrees to stop researching, developing, manufacturing, or selling the generic drug.33 On 3 June 2009, the bill was forwarded from the subcommittee to the full committee. The US House of Representatives Energy and Commerce Committee has also added a similar provision to the health-care reform package.34 Not surprisingly, the FTC has expressed strong support for this legislation.35 In the Senate, S 369 also would prohibit the practice of branded drug manufacturers entering into agreements to delay marketing a generic drug in connection with patent litigation settlements.36 On 13 February 2009, the bill was referred to the Committee on the Judiciary.

Authorised generics

For the past few years, the FTC has undertaken a study of the effects of authorised generics (AGs) on competition in the prescription drug marketplace. AGs are drugs approved by the FDA as brand-name drugs, but which the branded drug manufacturer subsequently chooses to market (or have marketed) as generic drugs. In June 2009, the FTC issued an interim report from this study (AG Report).37 The AG Report shows that retail prices for the generic drug product were 4.2 per cent lower and wholesale prices 6.5 per cent lower prior to the entrance of generics in the market when an AG competes with one ANDA generic drug product during the 180-day exclusivity period as compared to the prices when no AG enters the market.38 Moreover, the AG Report shows that the revenues of a sole ANDA generic drug manufacturer during the 180-day exclusivity period substantially dropped with AG entry, with estimated declines ranging from 47 per cent to 51 per cent.39 The FTC believes that this dramatic loss of profits increases the willingness of generic drug manufacturers to delay entry in return for a brand drug manufacturer’s agreement not to launch an AG during the generic drug’s 180-day market exclusivity.40

According to the AG Report, between 2004 and 2008, about 25 per cent of final settlement agreements between generic and brand pharmaceutical companies reviewed by the FTC contained provisions related to AGs.41 Seventy-six patent settlement agreements involved first-filer generics, and approximately one-quarter of those agreements involved an explicit agreement by the brand not to launch an AG to compete against the first filer, combined with an agreement by the first-filer generic to defer its entry past the settlement date by, on average, 34.7 months.42 The FTC believes these agreements may harm consumers because: generic drug products are not made available to consumers as quickly as would otherwise be the case, thereby increasing overall prescription drug costs; 43 and consumers lose the benefits of price discounts from AG competition during the 180-day marketing exclusivity.44

Thus, despite the evidence that the entrance of an AG in the market results in lower prices, the AG Report expressed concern about potential anticompetitive effects from AGs in the context of brand-generic settlement agreements. The AG Report concludes that ’[a]ny restrictions on pay-for-delay agreements should account for all viable forms of brand-generic payments to delay entry, including an agreement not to compete with an AG’.45

A new section to the Food, Drug, and Cosmetic Act, Section 505(t), requires that the FDA compile and publish on its internet site a complete list of all AGs, which is to be updated quarterly.46 On 28 July 2009, the FDA published a final rule amending regulations requiring NDA holders to submit annual reports that included the information concerning AGs.47 Among other things, this rule will require NDA holders to detail when each AG entered the market and the date each AG ceased being distributed.48

Meanwhile, Congress is seeking to limit the ability of branded drug manufacturers to market AGs. Specifically, Senator Rockefeller introduced S 501 on 26 February 2009, which would prohibit brand-name drug companies from selling AGs.49 The bill has been referred to the Committee on Health, Education, Labor, and Pensions.

FTC challenges to pharmaceutical mergers and acquisitions

The FTC continued to closely scrutinise mergers in the pharmaceutical industry. For example, the FTC filed a complaint to block CSL Limited’s US$3.1 billion acquisition of Talecris, alleging that the transaction lessened competition in the markets for four plasma-derivative protein therapies, including Immune globin (Ig), Albumin, Rho-D, and Alpha-1, which are used in the treatment of primary immunodeficiency diseases, chronic inflammatory demyelinating polyneuropathy, alpha-1 antitrypsin disease, and hemolytic disease of newborns.50 CSL is the world’s second-largest supplier of plasma-derivative protein therapies, whereas Talecris is the third-largest supplier. In its press release about the challenge to the acquisition, the FTC noted that prior to the acquisition, Talecris had been undergoing substantial expansion which would have increased competition in the market.51 In June 2009, CSL announced it was abandoning the acquisition.52

The FTC also challenged and entered a consent order related to Teva Pharmaceutical Industries Ltd’s (Teva) proposed US$8.9 billion acquisition of Barr Pharmaceuticals.53 The consent order required the manufacturers to make divestitures in numerous US markets where the acquisition would otherwise have reduced the number of competitors or created a monopoly in the market, including many instances where the number of competitors would have been reduced from four to three competitors. Under the consent order, Watson Pharmaceuticals and Qualitest Pharmaceuticals will acquire the rights to manufacture the divested products. In some of the markets, divestiture was necessary to protect ‘important and significant future competition’.54 The FTC defined the relevant drug product markets as including only the generic version of the drug and excluding the branded version of the drug as it had done in last year’s consent order related to Sun Pharmaceutical Industries Ltd’s acquisition of Taro Pharmaceutical Industries Ltd.55 The FTC explained that customers using the generic versions of the product are not likely to switch to the equivalent branded product because the branded product is significantly more expensive than the generic versions.56

In December 2008, the FTC issued a consent order regarding King Pharmaceuticals, Inc’s (King) proposed US$1.6 billion acquisition of Alpharma Inc (Alpharma).57 The consent order requires King to divest the rights to Alpharma’s branded oral long-lasting opiod analgesic (LAO) drug Kadian, which is used to treat chronic pain, to the generic drug company Actavis. The FTC determined that Alpharma and King ‘offered the only competitively significant branded morphine sulfate oral LAO’s’.58 The FTC made this determination notwithstanding the fact these products ‘also compete, to a lesser extent, with other oral LAO’s.’59 These other products ‘are based on distinct chemical compounds, but all of these products have the same mechanisms of action, similar indications, similar dosage forms and similar dosage frequency.’60 The largest of these other oral LAO’s was ‘four times larger’ than the merged product.61 Yet, the FTC chose to focus on the far narrower market and order a divestiture. Under the terms of the consent order, all rights to Kadian would be divested to Actavis (which had manufactured Kadian for King). The consent order also authorised the introduction of an authorised generic version of Kadian prior to the expiration of the patent.62

The FTC also entered a consent order related to Fresenius Medical Care Ag & Co KGaA’s (Fresenius) proposed acquisition of an exclusive sublicence from Luitpold Pharmaceuticals, Inc, a wholly owned US subsidiary of Japanese firm Daiichi Sankyo Company, Ltd (Daiichi).63 Fresenius is the largest provider of end stage renal disease (ESRD) dialysis services in the United States. Under the proposed sublicence, Fresenius would manufacture and supply the intravenous drug Venoferm, which is used to treat iron-deficiency anemia in patients with chronic kidney disease, to dialysis clinics.64 The FTC found that notwithstanding the fact that this agreement is vertical, it would allow Fresenius to increase Medicare reimbursement payments for Venofer.65 Fresenius would be able to report higher prices for Venofer used in its own clinics to the Centers for Medicare & Medicaid Services (CMS), resulting in a higher average selling price and therefore a higher Medicare reimbursement. The consent order prohibits Fresenius from reporting an intra-company transfer price to CMS that is higher than the level set forth in the order, which is based on current market prices. If a generic enters the market, Fresenius would be required to report its intra-company transfer price at the lower of the level set forth in the order or the lowest price at which Fresenius sells Venofer to any customer until 31 December 2011.66

In December 2008, the FTC, together with the state of Minnesota, filed a complaint in the United States District Court for the District of Minnesota challenging Lundbeck Inc’s (Lundbeck)67acquisition of the drug NeoProfen from Abbott Laboratories, Inc.68 NeoProfen is used to treat premature babies born with a congenital heart defect known as patent ductus arteriosus (PDA). In August 2005, Lundbeck acquired Indocin, the only drug then available to treat PDA. Subsequently, in January 2006, Lundbeck acquired the rights to NeoProfen, which was not yet approved in the United States. It is then alleged to have increased the price of Indocin from US$36 per vial to US$500 per vial. In April 2006, the FDA approved NeoProfen to treat PDA. Lundbeck began selling NeoProfen at US$483 per vial. The FTC has charged Lundbeck with violating section 7 of the Clayton Act and section 5(a) of the FTC Act in acquiring the rights to NeoProfen and with willfully maintaining its monopoly power. Lundbeck moved for summary judgment dismissing the claims, arguing that Indocin and NeoProfen are not in the same market and that it has no market power because of the entry of a generic manufacturer.69 In July 2009, the District Court denied Lundbeck’s motion, finding that there were genuine issues of material fact with regard to both claims.70

Heightened scrutiny for section 2 claims

Under the leadership of new Assistant Attorney General for the Antitrust Division Christine A Varney, DoJ has announced that it is pursuing a more aggressive enforcement strategy for section 2 claims. In September 2008, the FTC issued a report entitled Competition and Monopoly: Single-Firm Conduct Under Section 2 of the Sherman Act (September 2008 Report).71 The report arose out of joint hearings undertaken by DoJ and the FTC. In the report, DoJ expressed concern about the damage that overzealous enforcement could cause to consumers through the deterrence of competition and innovation.72 The September 2008 Report was criticised by a number of FTC Commissioners, who said it indicated ‘radically weakened enforcement of Section 2 of the Sherman Act’.73 On 12 May 2009, Ms Varney formally withdrew the September 2008 Report in a speech before the United States Chamber of Commerce.74 She criticised the September 2008 Report as ‘rais[ing] many hurdles to Government antitrust enforcement’.75 Ms Varney also disagreed with the September 2008 Report’s assessment that antitrust enforcers cannot distinguish between anti-competitive acts and lawful conduct, which could lead to ‘over-deterrence’.76 Specifically, she stated that DoJ would more vigorously enforce section 2 and that ’[r]einvigorated Section 2 enforcement will thus require the [Antitrust Division] to go “back to the basics”’77 and evaluate single-firm conduct based on the standards set forth in leading section 2 cases, from Lorain Journal v United States78 to Aspen Skiing Co v Aspen Highlands Skiing Corp.79 to United States v Microsoft.80 All industries, including the pharmaceutical industry, should feel the impact of this new enforcement priority.

Monopoly leveraging and price squeezing

In the past few years, there has been much confusion concerning the boundaries of claims related to alleged violations of section 2 of the Sherman Act concerning predatory pricing, monopoly leveraging, refusals to deal, and bundled discounts. In a recent decision, the United States Court of Appeals for the Ninth Circuit considered some of these issues in relation to pharmaceutical markets. In Doe 1 v Abbott Laboratories,81 the Ninth Circuit reversed the district court opinion and dismissed claims that Abbott Laboratories (Abbott) had leveraged its market power in the market for products that boost the effectiveness of protease inhibitors used to combat HIV, in order to monopolise the market for protease inhibitors. In that case, a plaintiff class of HIV patients sued Abbott, alleging that its drug Norvir gave it a monopoly in the market for booster drugs that improved the effectiveness of protease inhibitors used to fight HIV. They further alleged that, once other makers of protease inhibitors, like Bristol Meyers-Squibb and GlaxoSmithKline, were granted permission by the FDA to promote Norvir as a booster to be taken with their own protease inhibitors, Abbott increased the price of Norvir from US$1.71 to US$8.57 per 100mg. At the same time, Abbott did not raise the price of its own booster/inhibitor combination. A consumer who wanted to purchase a non-Abbott protease inhibitor therefore would pay significantly more for the Norvir booster than one taking the Abbott protease inhibitor. The plaintiffs argued that Abbott was thereby leveraging its Norvir monopoly in order to monopolise the protease inhibitor market, in violation of section 2 of the Sherman Act.

Abbott moved to dismiss and also moved for summary judgment because there was no adequate section 2 claim: there were no showing of antitrust injury, and Abbott lacked monopoly power in the protease inhibitor market. Abbott argued, among other things, for the application of the standard for evaluating bundled discounts articulated in Cascade Health Solutions v PeaceHealth,82 whereby bundled discounts are unlawful if, after attributing all of the discounts in the bundle to the competitive product, the competitive product is being sold below the average variable cost. The district court denied these motions and held, inter alia, that the section 2 claims for monopolisation and attempted monopolisation could proceed on a theory of monopoly leveraging based on Image Technical Services, Inc v Eastman Kodak Co, 125 F.3d 1195, 1202 (9th Cir 1997).83 The district court further held that Cascade does not apply to pharmaceutical products because of the nature of the products and the markets.84

The Ninth Circuit reversed solely on the basis of Pacific Bell Telephone Co v Linkline Communications, Inc, 129 SCt 1109 (2009).85 In Linkline, four independent service providers in California claimed that Pacific Bell/AT&T was squeezing them out of the retail market for high-speed DSL access to the internet by raising the wholesale prices it charged for its DSL transmission service (and on which the ISPs depended in order to reach consumers), while simultaneously cutting the price of its own retail DSL service (against which the ISPs competed). The Supreme Court held that a ‘price-squeezing’ claim like this did not state an independent claim under section 2.86 The Ninth Circuit understood that Linkline required courts to analyse the wholesale market and the retail market separately: ’[T]here is no independently cognizable harm to competition when the wholesale price and the retail price are independently lawful.’87 Based on Verizon Communications Inc v Law Offices of Curtis V Trinko,88 and Linkline, the Ninth Circuit understood held that ‘if a firm has no antitrust duty to deal with its competitors at wholesale, it certainly has no duty to deal under terms and conditions that the rivals find commercially advantageous’.89 Additionally, at the retail level, there could be no cognisable claim unless the claim met the traditional test for predatory pricing articulated in Brooke Group Ltd v Brown & Williamson Tobacco Corp, 509 US 209 (1993), that is, below-cost prices plus a dangerous probability of recouping those losses in the future.90

The Ninth Circuit felt that this ‘price-squeezing’ analysis was equally applicable to the monopoly leveraging claim in Abbott Labs. The court explained that the conduct in Abbott Labs ‘is the functional equivalent of the price squeeze the Court found unobjectionable in Linkline.’91 The court explained that Image Technical Services, a monopoly leveraging case, was distinguishable because it involved a refusal to deal, not a pricing claim.92 The Ninth Circuit felt that in light of this holding it did not need to consider the question of whether the holding from Cascade applied to pharmaceutical markets.93

This ruling suggests that at least in the Ninth Circuit, Linkline may control the analysis for section 2 claims related to the pricing of two products or in two markets. While the Ninth Circuit did not consider the issue of whether Cascade applies to pharmaceutical markets, the court appears to still require an allegation of some sort of below-cost pricing. This decision also is aligned with recent decisions such as Trinko and Linkline that narrowed the scope of section 2 claims. This trend may bring the courts into further conflict with DoJ, which as noted above intends to be more aggressive in pursuing section 2 claims.


1 See In re Tamoxifen Citrate Antitrust Litigation, 466 F.3d 187 (2d Cir 2006), cert denied, 551 US 1144 (2007); Schering-Plough Corp v Fed Trade Comm’n, 402 F.3d 1056 (11th Cir 2005), cert denied, 548 US 919 (2006).

2 In re Ciprofloxacin Hydrochloride Antitrust Litigation, 363 F.Supp.2d 514 (EDNY 2005).

3 Id at 524.

4 Brief of Amicus Curiae Federal Trade Commission, in Support of Appellants and Urging Reversal, In re Ciprofloxacin Hydrochloride Antitrust Litigation, 544 F.3d 1323 (Fed Cir 2008) (No. 2008-1097).

5 In re Ciprofloxacin Hydrochloride Antitrust Litigation, 544 F.3d 1323 (Fed Cir 2008).

6 Id at 1332.

7 Id at 1333.

8 332 F.3d 896 (6th Cir 2003), cert denied, 543 US 939 (2004).

9 In re Ciprofloxacin Hydrochloride Antitrust Litigation, 544 F.3d at 1335.

10 Id at 1336.

11 129 S Ct 2828 (2009).

12 Coordination Proceeding Cipro Cases I&II, No. JCCP4154, slip op at 1-2 (Cal. Super. Ct. Aug. 21, 2009).

13 Id at 3.

14 Complaint, Fed Trade Comm’n v Watson Pharm Inc, 611 F.Supp.2d 1081 (CD Cal 2009) (No. CV-09-00598).

15 Id at 24.

16 Id at 14.

17 Defendants’ Joint Motion to Transfer Venue to the Northern District of Georgia, Fed Trade Comm’n v Watson Pharm Inc, 611 F.Supp.2d 1081 (CDCal 2009) (No. CV-09-00598).

18 Fed Trade Comm’n v Watson Pharm, Inc, 611 F.Supp.2d 1081 (CDCal 2009).

19 Id

20 Id at 1088.

21 Id

22 Motion to Dismiss, Fed Trade Comm’n v Watson Pharm, Inc, No. 09-cv-00995 (NDGa 20 July 2009).

23 Michael S Lazaroff & Jaimi Gaffe, ‘Developments in Antitrust in Pharmaceutical Markets’, Global Competition Review – The Antitrust Review of the Americas 2009 56, 57 (Sept 2008).

24 Michael S Lazaroff, ‘Developments in Antitrust Law in Health Care Markets’, Global Competition Review – The Antitrust Review of the Americas 2008 78 (Sept 2007).

25 Brief for the United States in Response to the Court’s Invitation, Ark Carpenters Health & Welfare Fund v Bayer AG, No. 05-2851-cv (2d Cir 6 July 2009).

26 Id at 1.

27 Id at 10.

28 Id at 6.

29 Id at 23.

30 Id at 28.

31 Id at 30.

32 Id at 29-30.

33 HR 1706, 111th Cong (2009).

34 Amendment by Rep Rush to HR 3200, 111th Cong (2009).

35 J Thomas Rosch, Commissioner of Fed Trade Commission, Oral Statement Before the Subcommittee on Commerce, Trade, and Consumer Protection, Committee on Energy and Commerce, US House of Representatives (31 March 2009).

36 S 369, 111th Cong (2009).

37 Federal Trade Commission, Authorized Generics: An Interim Report (June 2009).

38 Id at ch 1, 7, 9.

39 Id at Executive Summary, 3.

40 Id at ch 2, 1.

41 Id.

42 Id.

43 Id at Executive Summary, 4.

44 Id.

45 Id at ch 2, 13.

46 21 USC §355(t).

47 74 Fed Reg 37163 (28 July 2009).

48 Id at 37165.

49 S 501, 111th Cong (2009).

50 Press Release, Federal Trade Commission, FTC Authorizes Suit to Stop CSL’s Proposed US$3.1 Billion Acquisition of Talecris Biotherapeutics (27 May 2009).

51 Id.

52 See Brendan Pierson, CSL, Talecris Call Off $3.1B Deal Amid FTC Pressure, Law 360 (8 June 2009).

53 Press Release, Federal Trade Commission, FTC Intervenes in Teva Pharmaceutical Industries’ Proposed $8.9 Billion Acquisition of Barr Pharmaceuticals (19 Dec 2008).

54 Analysis of Agreement at 4, In the Matter of Teva Pharmaceutical Industries Ltd. and Barr Pharmaceuticals, Inc, FTC File No. 081-0224 (23 Oct 2008) (Teva/Barr Analysis).

55 See Analysis of Agreement, In the Matter of Sun Pharmaceutical Industries Ltd, FTC File No. 071-0193 (13 Aug 2008).

56 Teva/Barr Analysis, supra note 54, at 2.

57 Press Release, Federal Trade Commission, FTC Intervenes in King Pharmaceuticals’ Acquisition of Rival Alpharma Inc (29 Dec 2008). The FTC approved the final consent order on 3 February 2009.

58 Id.

59 Analysis of Agreement at 1, In the Matter of King Pharmaceuticals, Inc and Alpharma Inc, FTC File No. 081-0240 (29 Dec 2008).

60 Id at 2.

61 Id.

62 Decision and Order, In the Matter of King Pharmaceuticals, Inc and Alpharma Inc, FTC File No. 081-0240 (3 Feb 2009).

63 Press Release, Federal Trade Commission, FTC Challenges Vertical Agreement Between Fresenius and Daiichi Sankyo (15 Dec 2008).

64 Analysis of Agreement at 1, In the Matter of Fresenius Medical Care AG & CO KGaA.

65 Id at 3.

66 Id at 3-4.

67 Lundbeck was previously known as Ovation Pharmaceuticals, Inc.

68 Press Release, Federal Trade Commission, FTC Sues Ovation Pharmaceuticals for Illegally Acquiring Drug Used to Treat Premature Babies with Life-Threatening Heart Condition (16 Dec 2008).

69 Motion of Defendant Lundbeck Inc/Ovation Pharmaceuticals, Inc for Summary Judgment, Fed Trade Comm’n v Lundbeck, Inc, 2009 WL 2215006 (DMinn filed 22 May 2009).

70 Fed Trade Comm’n v Lundbeck, Inc, 2009 WL 2215006 (DMinn July 21, 2009).

71 Department of Justice, Competition and Monopoly: Single-Firm Conduct Under section 2 of the Sherman Act (Sept. 2008).

72 See id at 13-15.

73 Statement of Commissioners Harbour, Leibowitz and Rosch on the Issuance of the section 2 Report by the Department of Justice 1 (8 Sept 2008).

74 Christine A Varney, assistant attorney general, Antitrust Division, US Department of Justice, Remarks for the United States Chamber of Commerce (12 May 2009).

75 Id at 6.

76 Id.

77 Id at 9.

78 342 US 143 (1951).

79 472 US 585 (1985).

80 253 F.3d 34 (DC Cir 2001) (en banc).

81 571 F.3d 930 (9th Cir 2009).

82 479 F.3d 726, 727 (9th Cir 2007).

83 In re Abbott Labs Norvir Antitrust Litigation, 562 F.Supp.2d 1080, 1086 (ND Cal 2008).

84 Id.

85 Abbott Labs, 571 F.3d at 933-935.

86 See In re Tamoxifen Citrate Antitrust Litigation, 466 F.3d 187 (2d Cir 2006), cert denied, 551 U.S. 1144 (2007); Schering-Plough Corp v Fed Trade Comm’n, 402 F.3d 1056 (11th Cir. 2005), cert denied, 548 US 919 (2006).

87 Abbott Labs, 571 F.3d at 934-935.

88 540 US 398 (2004).

89 Abbott Labs, 571 F.3d at 934 (citing Linkline, 129 SCt at 1119).

90 Id.

91 Id at 935.

92 Id.

93 Id.

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