The Interplay: Key Decisions at the Intersection of Antitrust & Life Sciences - January 2024

The Interplay: Key Decisions at the Intersection of Antitrust & Life Sciences - January 2024

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Illumina Agrees to Unwind Acquisition of Grail Following Fifth Circuit Decision.  On December 15, 2023, the Fifth Circuit vacated the FTC’s order that Illumina unwind its acquisition of Grail—a developer of a multi-cancer early detection (MCED) test. All MCED tests currently in development, including Grail’s MCED test, rely on Illumina’s next-generation sequencing (NGS) technology. After announcing the acquisition, Illumina offered a standardized supply contract (an “Open Offer”) to customers that, among other things, required Illumina post-merger to provide its NGS platforms at the same price and on the same conditions as Grail would receive. On review of an administrative law judge’s decision after trial, the Commission found that the merger was likely to substantially lessen competition in the market for research, development, and commercialization of MCED tests based on vertical anticompetitive effects. On appeal, the Fifth Circuit refused to disrupt the Commission’s determination that the merger might substantially lessen competition. The Fifth Circuit found, however, that the Commission legally erred in its treatment of Illumina’s Open Offer. According to the Fifth Circuit, the Commission should not have evaluated Illumina’s Open Offer as a remedy offered to address the antitrust concerns regarding the transaction, thereby evaluating whether the Open Offer “would restore the pre-merger level of competition.” Instead, the Fifth Circuit held, the Commission should have considered whether the Open Offer meant that the transaction did not have significant potential to “substantially lessen competition.” The Fifth Circuit panel therefore vacated the Commission’s order and remanded the case for reconsideration of the Open Offer under the proper standard. Illumina has since announced that it will unwind the transaction. The case is Illumina, Inc. et al., v. FTC, Case No. 23-60167 (5th Cir. Dec. 15, 2023).

FTC Takes Further Action on Orange Book Listings.  On the heels of its September 14 policy statement in which the FTC stated that improper listings in the FDA’s “Approved Drugs with Therapeutic Equivalence Evaluations” (the “Orange Book”) may impede competition from cheaper generic alternatives and keep branded drug prices artificially high, the FTC took two additional actions regarding Orange Book listings.

First, on November 7, the FTC sent notice letters to 10 companies challenging more than 100 patents held by branded manufacturers of asthma inhalers, epinephrine autoinjectors, and other drug products as improperly or inaccurately listed in the Orange Book. The notices trigger a process by which the FDA will send statements of dispute to the patent holder that filed the New Drug Application, which will then have 30 days to withdraw or amend its listings or certify that the listings comply with applicable statutory and regulatory requirements. Although the FTC elected to use the FDA regulatory dispute process in this instance, it emphasized that it can investigate allegedly improper Orange Book listings as unfair methods of competition under Section 5 of the FTC Act.

Second, on November 20, the Commission voted unanimously to file an amicus brief in Mylan Pharmaceuticals Inc. v. Sanofi-Aventis U.S. LLC. There, Mylan alleges that Sanofi employed multiple tactics, including bundled discounts, sham patent litigation, and improper Orange Book listings, to monopolize the market for injectable insulin. The FTC argues that making an improper Orange Book listing, and then bringing a patent infringement suit based on the listed patent, may violate Section 2 of the Sherman Act by “block[ing] competition for up to two-and-a-half years regardless of the scope or validity of the patent and regardless of whether it meets statutory listing criteria” and thereby “deterring potential competitors or distorting their decision-making.” 

Court Rejects Challenge to United Healthcare’s Reimbursement Practices.  On November 21, 2023, a court in the Eastern District of New York dismissed plaintiff’s antitrust challenge to United Healthcare’s (“United”) reimbursement model in New York. Plaintiff alleged that United violated Sections 1 and 2 of the Sherman Act by conspiring with another defendant, MultiPlan, to pressure anesthesiology providers to accept lower reimbursement rates, and that United used its monopsony power to push anesthesiology providers out of business to benefit its own subsidiary, Optum. The court dismissed all the claims for failing to allege an antitrust injury. Specifically, the court found that plaintiff had failed to allege that patients in the relevant market—rather than just plaintiff—had been harmed by the alleged anticompetitive conduct or that the lower reimbursement rates had actually impeded competition in the insurance market. The court also found that plaintiff had failed plausibly to allege a conspiracy to lower reimbursement rates. The case is Long Island Anesthesiologists PLLC v. United Healthcare Insurance Company of New York, Inc. et al., Case No. 22-cv-04040 (E.D.N.Y. Nov. 21, 2023).

Health Insurance Companies Successfully Defend Against Conspiracy Claims.  On November 27, 2023, a court in the Eastern District of Louisiana granted summary judgment dismissing a Sherman Act Section 1 claim alleging a conspiracy among health insurance companies to restrict competition in a market for allergy testing and allergen immunotherapy. Plaintiffs alleged defendants conspired to refuse to pay for testing and services conducted by primary care physicians that were contracting with plaintiff United Allergy Services (UAS). Plaintiffs argued that they had adduced direct evidence of a conspiracy, namely emails among the defendants’ employees regarding reduced payments for UAS’s services and individual defendants’ decision no longer to deal with UAS. The court found this evidence insufficient to create an issue of fact for trial, observing that none of the evidence “unambiguously and explicitly” referred to an understanding among defendants to take any action. The court also rejected plaintiffs’ argument that these communications constituted circumstantial evidence of a conspiracy, finding that the emails were consistent with each of the defendants having acted unilaterally rather than through a conspiracy. The case is Academy of Allergy & Asthma in Primary Care, et al. v. Louisiana Health Service and Indemnity Company, et al., Case No. 18-cv-00399 (E.D. La. Nov. 28, 2023).

Court Certifies Two Classes in Invisalign Antitrust Suits.  On November 29, 2023, a court in the Northern District of California certified two classes of purchasers of Invisalign products from Align Technology (Align). Plaintiffs allege that they paid artificially inflated prices because Align, which supplies Invisalign teeth aligners and iTero oral scanners, excluded competition by: (i) terminating an interoperability agreement under which Align accepted oral scans from 3Shape’s Trios scanners for placing Invisalign orders; and (ii) entering exclusive dealing arrangements with dental practices that allegedly excluded competing suppliers of aligners and scanners. Align argued that plaintiffs’ common impact and common damages models were flawed and were incapable of distinguishing between legal and illegal conduct because the models accounted for the impact of exclusive dealing agreements that the court had previously determined were not themselves unlawful. The court, however, ruled that for class certification purposes, allegations regarding those agreements could be part of a broader alleged anticompetitive scheme, even if they could not constitute a Section 2 violation standing alone. The court did, however, deny certification for a purported class of dentists who purchased mouth scanners that are used in the Invisalign process because none of the named plaintiffs alleged that he or she had purchased such scanners during the class period. The case is Simon and Simon PC, et al. v. Align Technology, Inc., Case No. 20-cv-03754 (N.D. Cal. Nov. 29, 2023).

Sanofi Terminates Acquisition of Maze’s Drug.  On December 11, 2023, the FTC brought an administrative challenge to Sanofi’s proposed acquisition of an exclusive license to Maze Therapeutic’s developmental drug to treat Pompe disease, a rare genetic disorder that causes muscle damage. The FTC alleged that the acquisition would maintain a monopoly by eliminating a nascent competitor to Sanofi’s drug for treating Pompe disease. The same day, Sanofi announced that it was abandoning the proposed transaction.


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