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

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

Client Alert


FTC Issues Second Round of Warning Letters on Orange Book Listings 

This week, the FTC continued its intense regulatory focus on pharmaceutical patents listed in the FDA’s Orange Book. As reported in earlier editions of The Interplay, the FTC issued a policy statement in September 2023, opining 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. Following that policy statement, the FTC then challenged more than 100 patents held by ten different manufacturers of brand-name asthma inhalers, epinephrine autoinjectors, and other drug products as improperly or inaccurately listed in the Orange Book, a month later. On April 30, the FTC took further action, sending a second round of warning letters to ten companies (four of which were not targets of the first round of letters) covering more than 300 Orange Book listed patents covering obesity and type-2 diabetes injectable drugs, asthma and COPD inhalers, and a nasal spray to treat severe hypoglycemia. Each letter expresses the FTC’s determination that the patents identified “have been improperly or inaccurately listed in the Orange Book,” and informs the listing company that the FTC has notified the FDA that the FTC is disputing the accuracy of the patent listings. The notices trigger a process by which the FDA will send statements of dispute to the patent holder that filed the New Drug Application. The patent holder will then have 30 days to withdraw or amend its listings or certify that the listings comply with applicable statutory and regulatory requirements.

Second Circuit Reverses Dismissal of Sherman Act Claims Regarding Alleged Monopolization of Market for Anti-VEGF Medications

On March 18, 2024, the Second Circuit held that a relevant antitrust pharmaceutical market could plausibly be limited to a single patented form of a drug, even excluding other products with the same active ingredients that are approved for treatment of the same conditions. The court reversed a decision from the Northern District of New York dismissing claims brought by Regeneron Pharmaceuticals arising from an alleged effort by Novartis and Vetter Pharma International to exclude Regeneron from a market for anti-vascular endothelial growth factor (“VEGF”) medications sold as prefilled syringes (“PFSs”). Among other things, Regeneron alleged that Novartis fraudulently obtained a patent claiming PFSs containing any anti-VEGF, and then asserted that patent to exclude Regeneron from the relevant market. The district court dismissed those antitrust claims for failure to allege a plausible relevant product market. Specifically, the district court held it implausible that the relevant antitrust market would not also include at least the anti-VEGF products with the same active ingredients but sold in vials. The Second Circuit held, however, that the district court erred by placing “improper weight on the functional, rather than economic, similarities between anti-VEGF PFSs and vials.” The court decided that Regeneron had sufficiently plead that the two categories of drugs (vials and PFSs) were not sufficiently close economic substitutes, specifically observing that Regeneron alleged that 80% of patients on anti-VEGF treatment courses transitioned from vials to PFSs due to their superiority and the industry recognized that differences in methods of administration methods, accuracy, and convenience differentiate anti-VEGF PFSs from vials. The Second Circuit also held that the district court was wrong in maintaining that an antitrust product market could not be “coextensive” with the scope of a patent. Instead, the Second Circuit explained that a patent may confer antitrust monopoly power in some instances, and the question turns on whether there are “effective substitutes for the product, which do not infringe the patent.” The Second Circuit concluded that “Regeneron’s allegations plausibly demonstrate that anti-VEGF PFS and vials are not reasonably interchangeable and are consequently not part of the same product market.” The case is Regeneron Pharmaceuticals, Inc. v. Novartis Pharma AG, et al., 96 F.4th 327 (2d. Cir. 2024).

Court Permits Reverse Payment Claims to Proceed Based On Alleged Exchange of Delayed Entry

On March 26, 2024, a court in the District of Kansas denied a motion to dismiss Sherman Act claims against Teva Pharmaceuticals arising from an alleged reverse payment scheme. Specifically, plaintiffs alleged that Teva entered a settlement agreement with Mylan under which Mylan agreed to delay market entry for its generic version of Teva’s Nuvigil product in exchange for a separate settlement agreement under which Teva committed to delay market entry for its generic version of Mylan’s EpiPen products. In denying defendants’ motion to dismiss on statute of limitations grounds, the court first held that either the four-year Sherman Act limitations period or equitable laches would ordinarily bar recovery for conduct that occurred more than four years before the complaint was filed. The court nevertheless held that plaintiffs had plausibly alleged that defendants actively concealed their wrongdoing by publicly announcing the two agreements separately, several days apart and permitted the claims to proceed. The court also rejected defendants’ argument that plaintiffs failed to state a Sherman Act claim, declining Defendants’ invitation to view each of the EpiPen patent settlement and the Nuvigil patent settlement as independent and lawful settlements. The court explained that, under Actavis, “[t]he question in a reverse payment settlement [case] is simple: Did the patent infringer receive a large, unjustified payment as compensation for getting out of the way so the patent holder’s supracompetitive prices would continue?” Viewed through this lens, the court held that plaintiffs alleged “large, unjustified payments” as part of both the Nuvigil and EpiPen settlements, observing “plaintiffs allege that the parties traded one monopoly for another.” Specifically, the court reasoned that, as alleged, Mylan agreed to refrain from competing against Nuvigil in return for the ability to continue to earn supracompetitive profits on EpiPen products, and that Teva agreed to refrain from competing against Mylan’s EpiPen products in return for the ability to continue to earn supracompetitive profits on Nuvigil. The court concluded these allegations satisfied the pleading requirements for a reverse payment claim. The case is Edgar, et al. v. Teva Pharmaceutical Industries, Ltd., et al., 22-cv-2501-DDC-TJJ in the District of Kansas.

District Court Denies Class Certification Based On Unreliable Damages Model

On March 29, the Northern District of Illinois denied class certification to proposed classes of purchasers of a seizure drug, Acthar. The plaintiffs alleged that a drug distributor and a drug manufacturer conspired to raise Achtar’s prices by entering an exclusive distribution agreement. One of the assumptions in the plaintiff’s expert’s model was that, absent the alleged misconduct, Acthar’s prices would have behaved similarly to the drug price levels across the entire pharmaceutical industry as reflected in the industry’s Producer Price Index. The defendants argued that the expert’s model did not consider factors that, absent the alleged conspiracy, could affect the drug’s price and fluctuations in shares in the relevant market. The court denied class certification, finding that the plaintiffs did not meet the predominance standard under Rule 23(b)(3) because the expert’s model was unreliable under Federal Rule of Evidence 702 and thus could not support damage claims “capable of measurement on a classwide basis.” The case is City of Rockford v. Mallinckrodt ARD, Inc., No. 3:17-cv-50107.


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