UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

UFCW LOCAL 1500 WELFARE FUND, on

behalf of itself and all those similarly situated,

Plaintiff,

vs.

JAZZ PHARMACEUTICALS IRELAND

LIMITED, JAZZ PHARMACEUTICALS, INC.,

ROXANE LABORATORIES, INC., HIKMA

PHARMACEUTICALS PLC, EUROHEALTH

(USA), INC., and WEST-WARD

PHARMACEUTICALS CORP.,

Defendants.

Case No. ____________________

Jury Trial Demanded

CLASS ACTION COMPLAINT

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TABLE OF CONTENTS

NATURE OF THE ACTION ......................................................................................................... 1

THE PARTIES................................................................................................................................ 5

A. Plaintiff ......................................................................................................................... 5

B. Defendants .................................................................................................................... 5

JURISDICTION AND VENUE ..................................................................................................... 7

REGULATORY FRAMEWORK .................................................................................................. 7

A. FDA New Drug Approval Process ............................................................................... 9

B. The Hatch-Waxman Act Encourages and Facilitates Generic Drug

Approvals.................................................................................................................... 11

C. Brand Manufacturers and First Filers Can Manipulate the Regulatory

Structure to Delay the Emergence of Generic Competition ....................................... 14

D. No-Authorized Generic Agreements .......................................................................... 18

E. REMS Abuse .............................................................................................................. 19

1. REMS Background ............................................................................................... 19

2. REMS Abuse ........................................................................................................ 20

FACTUAL BACKGROUND ON XYREM................................................................................. 21

DEFENDANTS’ UNLAWFUL CONDUCT ............................................................................... 24

A. Jazz’s Serial and Abusive Patent Prosecutions and Infringement

Litigation..................................................................................................................... 24

1. Roxane I................................................................................................................ 24

2. Roxane II............................................................................................................... 25

3. Roxane III ............................................................................................................. 26

4. Roxane IV ............................................................................................................. 26

5. Roxane V .............................................................................................................. 27

6. Roxane VI ............................................................................................................. 28

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7. Roxane VII............................................................................................................ 30

8. Roxane VIII .......................................................................................................... 31

9. Roxane IX ............................................................................................................. 31

10. Jazz sues other generic manufacturers seeking FDA approval to

sell generic Xyrem. ............................................................................................... 32

11. The PTO invalidates the Xyrem REMS Patents in inter partes

review.................................................................................................................... 33

B. Jazz Abused REMS Requirements Causing Delay in the Approval of

Roxane’s ANDA......................................................................................................... 34

1. Jazz delayed the development of Xyrem REMS through its

inconsistent positions before the FDA.................................................................. 34

2. Jazz stonewalled generic rivals and FDA in developing an SSS

REMS for Xyrem.................................................................................................. 37

C. The FDA Grants Final Approval of Roxane’s ANDA and Grants

Waiver on SSS for Xyrem REMS .............................................................................. 40

D. Jazz and Roxane Enter an Unlawful Pay for Delay Agreement ................................. 41

1. The value of the no-AG agreement to Jazz........................................................... 44

2. The value of the no-AG agreement to Roxane. .................................................... 45

3. Upon announcing its no-AG agreement with Roxane, Jazz’s stocks

soar........................................................................................................................ 47

MARKET POWER AND MARKET DEFINITION ................................................................... 50

DEFENDANTS’ ANTICOMPETITIVE CONDUCT INJURED PLAINTIFF

AND THE CLASSES............................................................................................................. 54

CLASS ACTION ALLEGATIONS ............................................................................................. 56

CLAIMS FOR RELIEF ................................................................................................................ 60

COUNT I (Contract, Combination or Conspiracy in Violation of the

Sherman Act, 15 U.S.C. § 1 on Behalf of the Nationwide Injunction Class)...................... 60

COUNT II (Monopolization in Violation of Sherman Act, 15 U.S.C. § 2

Against Jazz on Behalf of the Nationwide Injunction Class) .............................................. 62

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COUNT III (Anticompetitive Contracts, Combinations, and Arrangements

in Violation of State Antitrust Laws Against All Defendants on Behalf of

the Damages Class).............................................................................................................. 63

COUNT IV (Monopolization and Monopoly Maintenance in Violation of

State Antitrust Laws Against Jazz on Behalf of The Damages Class) ................................ 67

COUNT V (Unfair and Unconscionable Conduct in Violation of State

Consumer Protection Laws Against All Defendants on Behalf of the

Damages Class).................................................................................................................... 71

DEMAND FOR JUDGMENT...................................................................................................... 74

JURY DEMAND.......................................................................................................................... 75

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Plaintiff UFCW Local 1500 Welfare Fund brings this class action against Defendants

Jazz Pharmaceuticals Ireland Limited, Jazz Pharmaceuticals, Inc. (together, “Jazz”), Roxane

Laboratories, Inc., Hikma Pharmaceuticals PLC, Eurohealth (USA), Inc., and West-Ward

Pharmaceuticals Corp. (together, “Roxane”), for claims under the Sherman Act and various state

laws to recover damages and injunctive relief for the substantial injuries it and others similarly

situated have sustained arising from Defendants’ anticompetitive conduct. Plaintiff’s allegations

are based on personal knowledge as to Plaintiff, and Plaintiff’s own actions and upon

information and belief as to all other matters.

NATURE OF THE ACTION

1. This action arises from an unlawful scheme between Jazz and Roxane to delay the

entry of generic competition for Jazz’s blockbuster medication Xyrem®. Xyrem (sodium

oxybate oral solution) is indicated to treat two common symptoms associated with narcolepsy:

excessive daytime sleepiness and cataplexy.

2. Developed by Orphan Medical, the FDA approved Xyrem for the treatment of

cataplexy in 2002. In 2005, Jazz acquired Xyrem, when it purchased Orphan Medical. That year,

the FDA also approved Xyrem for use in treating excessive daytime sleepiness.

3. Xyrem is an “orphan drug,” treating fewer than 200,000 Americans per year.

However, despite the relatively small patient pool, Xyrem has become a commercial success,

generating billions of dollars in sales for Jazz since its acquisition. While Xyrem only cost $2.04

per 1-milliliter dose in 2007, by 2014, it cost $19.40 per 1-milliliter dose. By year-end 2019,

Xyrem sales have comprised over three-quarters of Jazz’s revenues.

4. With expiration of Jazz’s orphan drug exclusivity over Xyrem nearing, several

generic manufacturers, including Roxane, Amneal Pharmaceuticals, Lupin Pharmaceuticals, and

Par Pharmaceutical, filed Abbreviated New Drug Applications (“ANDAs”) seeking FDA

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approval of their competing generic versions of Xyrem. Competition from these generics likely

would have driven down the price of Xyrem by upwards of 90%, saving drug purchasers,

including Plaintiff and the Classes, billions of dollars.

5. In 2010, Roxane filed the first ANDA seeking approval of generic Xyrem.

Roxane’s ANDA contained certain certifications claiming that the patents purportedly covering

Xyrem—known as Paragraph IV certifications—were invalid, unenforceable, or not infringed by

Roxane’s proposed generic Xyrem. As the first generic competitor to file an ANDA for generic

Xyrem, Roxane was entitled to 180 days of generic marketing exclusivity—meaning that upon

FDA approval of its generic Xyrem ANDA, Roxane would be the only generic version of Xyrem

permitted on the market for 180 days (with the exception of an authorized generic (“AG”)

licensed by Jazz). Upon the expiration of the 180-day exclusivity period, any other approved

generic manufacturer could begin marketing its generic Xyrem, leading to increased price

competition.

6. However, to stymie the ability of Roxane—and other generics—to market less

expensive generic versions of Xyrem, Jazz embarked on a pattern of anticompetitive behavior to

slow down and ultimately eliminate the competitive threat they posed. First, to protect its cash

cow, Jazz filed serial and abusive patent infringement lawsuits—nine patent infringement

lawsuits against Roxane alone, covering over a dozen patents. Many of these patents were

improperly listed in the Orange Book or were obtained through inequitable conduct before the

Patent and Trademark Office (“PTO”). Several of these patents were later invalidated by the

Patent Trial and Appeal Board (“PTAB”) and Federal Circuit. The practical effect of Jazz’s

conduct was to delay resolution of patent litigation, causing the Roxane patent infringement

litigation, which began in 2010, to persist for nearly seven years.

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7. Second, Jazz abused regulatory processes concerning the development of a single

shared system (“SSS”) for a Risk Evaluation and Mitigation Strategy (“REMS”)—a drug safety

program the FDA requires drug manufacturers to develop when a particular drug has a potential

for misuse or abuse—covering Xyrem and its generic equivalents. Although Section 505-1 of the

Food, Drug, and Cosmetic Act (“FDCA”) requires that brand drugs and their generic equivalents

use an SSS for REMS, Jazz stonewalled, obfuscated, and took contradictory positions during its

REMS negotiations with the FDA and the would-be generic competitors. While transitioning

from a predecessor risk management program to a REMS for Xyrem, Jazz requested that the

FDA remove the requirement to distribute Xyrem through a single pharmacy company as part of

the risk management program. Jazz claimed that the removal of the single-pharmacy requirement

would “increase patient access without compromising patient safety” and that the requirement

“imposes numerous impediments to patient access to Xyrem, possibly depriving narcolepsy

patients of an important medication . . . and potentially affect[ing] their lives dramatically.”1 The

FDA agreed, stating that the final REMS “should not contain the single pharmacy limitation.”2

8. However, after generic competitors filed ANDAs for generic Xyrem and sought

to negotiate an SSS REMS with Jazz, Jazz abruptly changed its position. When the FDA

informed Jazz it was requiring a “modification to the REMS under the Agency’s statutory

authority, which . . . would remove the single pharmacy limitation” Jazz filed “a formal dispute

resolution request, appealing the Division of Neurology Product’s REMS modification

notification and claiming that the Agency’s ‘assertion that the closed-loop distribution system

for Xyrem is no longer necessary is not only unsupported, it puts patients and others at risk.’”3

1 Xyrem REMS Waiver Ltr. at 6.

2

Id. at 6 (emphasis in original).

3

Id. at 7 (emphasis added).

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Jazz’s change in position was not made for any legitimate reason—it was simply to frustrate and

prolong negotiations on the SSS and in turn, delay approval of any Xyrem ANDA. And it

worked.

9. Although the FDA ultimately granted Roxane and other generics a waiver from

the SSS requirement in January 2017, the waiver came after four years of unsuccessful

negotiations with Jazz. These prolonged negotiations also caused the FDA to delay the approval

of Roxane’s ANDA, which was approved the same day as the SSS waiver. Thus, in the words of

the FDA, the delay may have “impose[d] a substantial cost to the U.S. healthcare system, as

Xyrem remained, until now, shielded from generic competition.”4

10. Third, in January 2017, the FDA granted final approval of Roxane’s ANDA and

therefore was in a position to launch its generic Xyrem during the pendency of the patent

litigation. In April 2017, as the patent trial on the Xyrem patents approached—placing Jazz’s

monopoly at significant risk—Jazz settled its patent infringement claims against Roxane through

an unlawful reverse payment to Roxane. Under the patent settlement, Jazz provided Roxane with

a license to sell an authorized generic (“AG”) version of Xyrem beginning January 1, 2023, with

an option to extend the license for five years. Notably, though, the deal also contained a promise

by Jazz not to launch its own AG of Xyrem to compete against Roxane’s AG for as long as

Roxane continued to license the AG from Jazz (the “no-AG agreement”), providing Roxane with

a significant and valuable inducement in exchange for delaying its launch for nearly six years.

11. Because Jazz’s launch of an AG would have cut Roxane’s sales during 180-day

marketing exclusivity by between 40% and 50% over that 180-day period, Jazz’s “no-AG”

promise conferred significant monetary value—worth hundreds of millions of dollars—to

4

Id. at 16 n.49 (emphasis added).

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Roxane. This payment in exchange for Roxane’s agreement to delay its competitive entry well

exceeded any litigation costs saved by Jazz or Roxane through settlement and thus constitutes a

large reverse payment under FTC v. Actavis, Inc., 570 U.S. 136 (2013).

12. To remedy past and ongoing injury to Plaintiff and members of the Classes

(defined below), Plaintiff brings this action on behalf of itself and all others similarly situated to

restrain Defendants’ anticompetitive conduct and restore competition to the sodium oxybate

marketplace. Plaintiff also seeks damages under state law to compensate it and all others

similarly situated who have overpaid, and will continue to overpay, for Xyrem.

THE PARTIES

A. Plaintiff

13. Plaintiff UFCW Local 1500 Welfare Fund (“Local 1500”) is an employee welfare

benefits fund with its principal place of business at 425 Merrick Avenue, Westbury, New York

11590. Local 1500 provides nearly 23,000 plan participants with health and welfare benefits and,

with 15,000 members, is the largest grocery union in New York. During the Class Period (as

defined below), Local 1500 indirectly purchased, paid, or reimbursed for some or all of the

purchase price for Xyrem. Local 1500 made such payments and/or reimbursements for members

located in New York. Local 1500 paid and reimbursed more for these products than it would

have absent Defendants’ anticompetitive conduct and, accordingly, suffered injury to its business

and property.

B. Defendants

14. Jazz Pharmaceuticals Ireland Limited (“Jazz Ireland”) is a pharmaceutical

developer and manufacturer with its principal place of business at Waterloo Exchange, Waterloo

Road, Dublin, 4, Ireland. Jazz Ireland is a signatory to the patent settlement agreement with

Roxane (defined below) that Plaintiff challenges in this litigation.

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15. Jazz Pharmaceuticals, Inc. (“Jazz Pharmaceuticals”) is a pharmaceutical

manufacturer with its principal place of business at 3180 Porter Drive, Palo Alto, California

94304. Jazz Pharmaceuticals is a signatory to the patent settlement agreement with Roxane

(defined below) that Plaintiff challenges in this litigation.

16. Jazz Pharmaceuticals Ireland Limited and Jazz Pharmaceuticals, Inc. are

collectively referred to as “Jazz”. During the Class Period, Jazz marketed and sold Xyrem in the

United States.

17. Roxane Laboratories, Inc. (“Roxane Laboratories”) is a generic pharmaceutical

manufacturer with its principal place of business at 2001 Arlington Lane, Columbus, Ohio

43212. Roxane Laboratories is a signatory to the patent settlement agreement with Jazz Plaintiff

challenges in this litigation.

18. Hikma Pharmaceuticals PLC (“Hikma”) is a pharmaceutical manufacturer with its

principal place of business at 1 New Burlington Place, London, W1S 2HR, United Kingdom.

Hikma is a signatory to the patent settlement agreement with Jazz Plaintiff challenges in this

litigation.

19. Eurohealth (USA), Inc. (“Eurohealth”) is a pharmaceutical manufacturing

company with its principal place of business at 401 Industrial Way West, Eatontown, New Jersey

07724. Eurohealth is a signatory to the patent settlement agreement with Jazz Plaintiff challenges

in this litigation.

20. West-Ward Pharmaceuticals Corp. (“West-Ward”) is a generic pharmaceutical

manufacturer with its principal place of business at 401 Industrial Way West, Eatontown, New

Jersey 07724. West-Ward is a signatory to the patent settlement agreement with Jazz Plaintiff

challenges in this litigation.

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21. Roxane Laboratories, Inc., Hikma Pharmaceuticals PLC, Eurohealth (USA), Inc.,

and West-Ward Pharmaceuticals Corp. are collectively referred to as “Roxane.”

JURISDICTION AND VENUE

22. This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C.

§§ 1331 and 1337 and Section 16 of the Clayton Act, 15 U.S.C. § 26, because this action arises

under the federal antitrust laws. This Court also has subject matter jurisdiction under 28 U.S.C. §

1332(d) and 28 U.S.C. § 1367.

23. Venue is appropriate within this district under 15 U.S.C. § 15(a), 15 U.S.C. § 22

(nationwide venue for antitrust matters), and 28 U.S.C. § 1391(b) (general venue provision).

Defendants resided, transacted business, were found, or had agents within this District, and a

portion of the affected interstate trade and commerce discussed below was carried out in this

District. Defendants’ conduct, as described in this Complaint, was within the flow of, was

intended to, and did have a substantial effect on, the interstate commerce of the United States,

including in this District.

24. The Court has personal jurisdiction over each Defendant. Each Defendant has

transacted business, maintained substantial contacts, and/or committed overt acts in furtherance

of the illegal scheme and conspiracy throughout the United States, including in this District. The

scheme and conspiracy have been directed at, and have had the intended effect of, causing injury

to persons residing in, located in, or doing business throughout the United States, including in

this District.

REGULATORY FRAMEWORK

25. Generic competition allows purchasers at all levels of the pharmaceutical chain of

distribution to purchase generic drugs at prices lower than those drugs’ brand counterparts.

Generic competition to a single brand drug can provide potentially billions of dollars in savings

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to consumers, pharmacies, and other drug purchasers, as well as to private health insurers or state

Medicaid programs, both of which reimburse the cost of drug purchases by covered individuals.

26. The FDA sets the standards for the approval of generic drugs. Upon satisfaction

of FDA regulations governing, among other things, safety, efficacy, and labeling, the FDA

confers upon a generic drug a therapeutic equivalence rating from AA to BX. Typically an “A”

(i.e., AA, AB, AN, AO, AP, AT) rated generic is assigned, “those for which there are no known

or suspected bioequivalence problems or for which actual or potential bioequivalence problems

have been resolved with adequate in vivo and/or in vitro evidence supporting bioequivalence.”5

As defined in the regulations, bioequivalence is:

the absence of a significant difference in the rate and extent to

which the active ingredient or active moiety in pharmaceutical

equivalents or pharmaceutical alternatives becomes available at the

site of drug action when administered at the same molar dose

under similar conditions in an appropriately designed study.6

27. The A rating permits the generic drug to be substituted for the brand drug at a

pharmacy counter. All States permit—and indeed, some States require—pharmacists to

substitute an A-rated generic drug for the corresponding brand drug, unless the prescribing

healthcare provider has specifically stated that the brand drug is to be used.

28. Many health insurers and other third-party payors have adopted policies to

encourage the substitution of A-rated generic drugs for their brand name counterparts. For

example, many third-party payors implement a tiering system that places certain drugs on

different benefit tiers. A drug that is placed on one tier may receive only partial reimbursement,

while a drug placed on another tier may receive full reimbursement. Typically, branded drugs are

5 Orange Book Preface (38th ed.),

https://www.fda.gov/Drugs/DevelopmentApprovalProcess/ucm079068.htm.

6 21 C.F.R. § 320.1(e).

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placed on a different tier than their corresponding generic. Furthermore, branded drugs with a

generic equivalent are usually subject to smaller reimbursements or higher co-pays, while

generic drugs will be given total (or near total) reimbursement with a limited, or no, co-pay.

29. As a result of these policies, healthcare professionals are incentivized to prescribe

generics so that they can receive higher reimbursements. In addition, these policies also

incentivize end users to request generic drugs because of the cost savings they may receive with

respect to their co-pay.

30. Because both healthcare professionals and end-users are economically

incentivized to prefer generic drugs, A-rated generics are usually able to capture a substantial

portion of the market.

31. The first A-rated generic is typically priced at a discount to its brand counterpart.

As additional A-rated generics obtain FDA approval to enter the market, the resulting increase in

competition causes prices of both the first generic and the brand counterpart to drop

dramatically.

32. Empirical studies show that within a year of generic entry, generics will have

obtained about 90% of the market, i.e., pharmacists fill 90 of every 100 prescriptions for the

compound with an A-rated generic. Indeed, an FTC study found that in a “mature generic

market, generic prices are, on average, 85% lower than the pre-entry branded drug prices.”7

A. FDA New Drug Approval Process

33. The Federal Food, Drug and Cosmetic Act (the “FDCA”) and its accompanying

regulations set the standards for the approval of any new drug compound that is to be marketed,

7 FTC Staff Study, Pay-for-Delay: How Drug Company Pay-Offs Cost Consumers Billions, at 8 (Jan.

2010), available at http://emmanuelcombe.org/delay.pdf.

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sold, or distributed in the United States. Drug manufacturers seeking to gain FDA approval for a

new drug must file a New Drug Application (“NDA”). Applicants filing an NDA are required to

provide a host of information demonstrating the safety and efficacy of their drug, including, but

not limited to: (1) information and studies regarding the chemistry of the drug substance, which

includes information concerning how the drug is manufactured; (2) information and studies

regarding nonclinical pharmacology and toxicology for the new drug; (3) information and studies

regarding the human pharmacokinetics and bioavailability; and (4) information and data from

clinical studies on human subjects.8

34. Upon satisfying FDA regulations concerning efficacy, safety and labeling, the

FDA will approve the NDA, permitting the applicant to market, sell, and distribute the approved

drug to the U.S. public.

35. In addition, upon receiving FDA approval, the brand manufacturer will list any

patents it believes cover the approved drug in a publication called the “Approved Drug Products

with Therapeutic Equivalence Evaluations,” which is more commonly referred to as the “Orange

Book.”9

36. However, only drug substance patents (active ingredient), drug product patents

(formulation and composition), and method-of-use patents qualify for listing in the Orange

Book.10 Thus, for example, process patents covering a new drug are not eligible for listing

(although they may be asserted in a future patent litigation against any allegedly infringing

product).

8 See 21 C.F.R. § 314.50(c)-(d).

9 21 U.S.C. § 355(j)(7)(A)(iii).

10 21 C.F.R. § 314.53(b).

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37. In listing patents in the Orange Book, the FDA acts in a ministerial capacity. It

does not verify whether the patents listed in the Orange Book are properly listed but instead

relies on the accuracy and truthfulness of the NDA applicant.

38. In addition to the protection conferred by patents covering the brand

manufacturer’s drug, NDA applicants are afforded additional statutory protections for a drug

containing a new active ingredient. NDAs for drugs containing a new active ingredient are given

up to five years of marketing exclusivity before any generic drug manufacturer may file an

application for the approval of a generic formulation.11

B. The Hatch-Waxman Act Encourages and Facilitates Generic Drug

Approvals

39. In 1984, Congress amended the FDCA with the enactment of the Drug Price

Competition and Patent Term Restoration Act of 1984, Pub. L. No. 98-417, 98 Stat. 1585 (1984),

more commonly known as the “Hatch-Waxman Act.”

40. The Hatch-Waxman Act simplifies the regulatory hurdles that generic drug

manufacturers have to clear prior to marketing and selling generic drugs. Instead of filing a

lengthy and highly costly NDA, the Hatch-Waxman Act allows generic drug manufacturers to

obtain FDA approval in an expedited fashion through the filing of an ANDA.

41. If an ANDA applicant shows that the generic drug is bioequivalent to the brand

drug, then the ANDA applicant may rely on scientific and other data compiled in the brand drug

NDA it references concerning, among other things, safety and efficacy.12 The ability to rely on

the scientific data published in the referenced NDA obviates the need for duplicative and

expensive experimentation and clinical trials, which in some instances can result in out-of-pocket

11 21 U.S.C. § 355(j)(5)(F)(ii).

12 21 U.S.C. § 355(j)(2)(A).

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costs of upwards of $130 million. The FDA must approve an ANDA unless the information

submitted in the ANDA is insufficient to meet the requirements under the Hatch-Waxman Act.13

In sum, the streamlined approval process under the Hatch-Waxman Act makes it easier for

generic drug manufacturers to bring competing and cheaper generic products to market.

42. Although the Hatch-Waxman Act seeks to facilitate generic competition, the

brand manufacturer retains the right to enforce any patents associated with its brand drug. As

part of its ANDA, the applicant must certify that the generic drug will not infringe any of the

Orange Book patents because: (1) no patents exist on the brand drug; (2) the patents have

expired; (3) the patents will expire by the time the generic product comes to market; or (4) the

patents are invalid, unenforceable, or will not be infringed by the sale of the generic product.14

When a generic drug manufacturer certifies that the patents covering the referenced brand drug

are invalid, unenforceable, or will not be infringed, it known as a “Paragraph IV certification.”

43. When a generic drug manufacturer files a Paragraph IV certification asserting that

one or more patents listed in the Orange Book are invalid, unenforceable or will not be infringed,

it must serve notice of its certification to both the brand manufacturer and the owner(s) of the

patent.

44. The issuance of a Paragraph IV certification creates an “artificial act” of patent

infringement, permitting the patent owner to file a patent infringement suit against the ANDA

applicant making the Paragraph IV certification(s).15

13 21 U.S.C. § 355(j)(4).

14 21 U.S.C. § 335(j)(2)(A)(vii)(I)–(IV).

15 35 U.S.C. § 271(e)(2)(A).

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45. If the brand manufacturer files a patent infringement suit against the ANDA

applicant within 45 days of receiving the Paragraph IV certification, the FDA may not grant final

approval to the ANDA until the earlier of: (a) 30 months, running from the date the when the

Paragraph IV notice was served on the patentee; or (b) a court ruling that the patent is invalid,

unenforceable, or not infringed by the ANDA.16 During the 30-month stay, the FDA may grant

“tentative approval” of an ANDA if the FDA determines that the ANDA would otherwise

qualify for final approval but for the 30-month stay.

46. Despite the threat of a patent infringement suit and a 30-month stay, the HatchWaxman Act creates powerful incentives for generic drug manufacturers to file ANDAs.

Specifically, the Hatch-Waxman Act grants a 180-day period of market exclusivity to the first

applicant (the “first filer”) to file a substantially complete ANDA containing a Paragraph IV

certification.

47. During the 180-day period of market exclusivity, the first filer only competes

against the brand manufacturer and potentially any AG marketed under the brand manufacturer’s

NDA; all other generic ANDA applicants must wait until either the expiration of the 180-day

exclusivity period or a court order finding that each of the patents that are the subject of a

Paragraph IV certification are invalid, unenforceable, or not infringed.

48. Because all other ANDA generics are barred from the market during the first

filer’s 180-day exclusivity period, the first-filing ANDA applicant is able to price its generic

version at a price that is around 20%-30% below the brand drug’s price. This allows the first filer

to gain market share, while simultaneously taking advantage of the price umbrella created by the

16 21 U.S.C. § 355(j)(5)(B)(iii).

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brand manufacturer’s pricing. Indeed, during the first-filer’s 180-day exclusivity period, the firstfiler can capture over 80% of branded and generic unit and dollar sales.

49. However, once the first filer’s 180-day exclusivity period expires, all other FDAapproved ANDA filers can begin to market their generic equivalents, driving down prices

substantially and reducing the profitability of both the branded drug and the first filer’s generic.

C. Brand Manufacturers and First Filers Can Manipulate the Regulatory

Structure to Delay the Emergence of Generic Competition

50. Because the Hatch-Waxman Act automatically stays the approval of an ANDA

when a brand manufacturer files an infringement suit against an ANDA applicant, brand

manufacturers have an incentive to liberally (and sometimes wrongfully) list in the Orange Book

all patents potentially covering the brand drug. Upon a generic drug manufacturer’s filing of an

ANDA with a Paragraph IV certification, the brand manufacturer will then sue on one or more of

those Orange Book patents to trigger the stay.

51. Frequently, patent infringement suits arising from Paragraph IV certifications

result in settlements. In some of these settlements, the brand manufacturer will offer the generic

drug manufacturer some form of consideration (i.e., payment) in exchange for the generic drug

manufacturer agreeing to delay entry of its generic product. These settlements commonly are

referred to as “pay-for-delay agreements.”

52. These pay-for-delay agreements have the practical effect of permitting the

settling brand manufacturer to retain a significant portion of its monopoly profits while only

ceding a relatively small portion of those profits to the settling generic drug manufacturer in

exchange for the generic drug manufacturer’s agreement to delay market entry.

53. The incentive to create these types of agreements is particularly acute between a

brand manufacturer and the first-filing ANDA applicant. In these agreements, the brand

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manufacturer seeks to delay generic entry and preserve its monopoly for as long as possible.

Typically, a generic drug manufacturer will want as early an entry date as possible, if only for

the higher present value of earlier sales.

54. However, unlike other generic drug manufacturers, a first-filing ANDA applicant

has the potential benefit of 180 days of marketing exclusivity where it can reap substantial

revenues as potentially one of two products in the relevant drug market. A first-filing ANDA

applicant’s continued litigation against the brand manufacturer runs the risk that the court will

find the patent(s) at issue valid, enforceable, and/or infringed by the first filer’s ANDA. A

finding of validity, enforceability, and/or infringement by a court would negate the first filer’s

Paragraph IV certification and disqualify that generic drug manufacturer from receiving the

benefit of 180 days of marketing exclusivity. Thus, the first filer has an acute interest in settling

the patent infringement lawsuit as a means of guaranteeing its 180-day exclusivity period, and, in

turn, the economic bounty associated with it.

55. With the promise of substantial revenue during its generic exclusivity period

secure, the first filer cares little about date of ultimate launch sought by the brand

manufacturer—that is so long as the brand name manufacturer sufficiently compensates the first

filer for the delay in launching its generic.

56. Moreover, brand manufacturers are willing to pay substantial sums to the first

filer for any delay in generic launch in exchange for the promise that the first filer will not enter

before a certain date. This is because the value of monopoly profits is so great that the brand

manufacturer is willing to pay more to ensure the first filer’s acquiescence to the later launch

date. The generic drug manufacturer’s acquiescence to a later entry date, in turn, preserves a

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substantial portion of the brand manufacturer’s monopoly profits in the period prior to the first

filer’s agreed-to launch date.

57. In essence, by settling with the brand manufacturer, the first filer receives a

double bonus in the form of: (1) a substantial payment from the brand manufacturer to forgo

early entry; and (2) the guarantee of substantial revenues as the only generic on the market

(absent an authorized generic) during that first filer’s 180-day exclusivity period. Under such

circumstances, the first-filing ANDA applicant has limited incentive to continue the patent

litigation for purposes of securing a judgment of non-infringement, invalidity, or

unenforceability—and thus, a potentially earlier entry date—because it still retains the economic

bounty associated with its statutory 180-day exclusivity period.

58. Such pay-for-delay agreements also create powerful disincentives for subsequent

ANDA filers to continue defending their ANDAs in patent infringement litigations against the

brand manufacturer. Specifically, once it becomes apparent that the brand manufacturer and the

first filer have settled their patent litigation, subsequent ANDA filers usually will not pursue

litigation aggressively, and, often times, settle as well.

59. Subsequent ANDA filers are unlikely to continue litigating because obtaining a

judgment that the patents subject to Paragraph IV certifications are invalid, unenforceable, or not

infringed provides little pay-off to them. For example, prior to the enactment of the Medicare

Prescription Drug, Improvement, and Modernization Act of 2003 (the “MMA”), Pub. L. No.

108-173, 117 Stat. 2066, a judgment of patent invalidity or unenforceability would not cause the

first filer to lose its 180-day exclusivity period; rather, the subsequent filer’s success in litigation

would only accelerate the start of the first filer’s exclusivity period. The subsequent ANDA filer

must still wait until the first filer’s 180-day exclusivity period expires, and only at that point can

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other FDA-approved ANDA applicants enter the market as well. Thus, these pay-for-delay

agreements effectively “park” exclusivity and cause a bottleneck in the timing of full generic

entry.

60. More recent legislation has not alleviated the problems caused by pay-for-delay

agreements. MMA attempts to make the incentives underlying pay-for-delay agreements less

attractive by enumerating a series of forfeiture events that, if triggered, will deprive a first filer of

its 180-day exclusivity period.

61. One of the key forfeiture events under the MMA is if the first filer fails to obtain

tentative approval within 30 months of submitting its ANDA.17

62. While noble in purpose, scholars have found the MMA’s “use it or lose it”

provision to be woefully inadequate in deterring anticompetitive agreements to delay generic

competition for two reasons. First, market acceleration clauses, which are standard components

of pay-for-delay agreements, allows the first filer to accelerate its entry into the market ahead of

the later date agreed to with the brand manufacturer in its settlement should a subsequent generic

challenger prevail in the courts.

63. Second, brand manufacturers can avoid triggering a potential forfeiture event by

only suing on some, but not all, of the patents subject to the first filer’s Paragraph IV

certifications. Because a subsequent filer needs to obtain a judgment of invalidity or noninfringement with respect to all patents that are the subject of a first filer’s Paragraph IV

certification in order to trigger the forfeiture event, the brand manufacturer need only sue on a

few of the patents to avoid that scenario.

17 21 U.S.C. § 505(j)(5)(D)(i)(I).

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64. The lengthy and expensive nature of patent litigation makes it such that

subsequent filing generic drug manufacturers typically do not have the stomach to pursue

litigation to the end. Indeed, by the time a generic drug manufacturer secures the judgments

necessary, “the clock [will] simply run[] out on the subsequent generic filers fighting to open the

market earlier than the date agreed to by the first filer in its ‘parked’ exclusivity settlement.”18

D. No-Authorized Generic Agreements

65. Pay-for-delay agreements can be augmented by including terms in which the

brand manufacturer agrees not to launch an authorized generic to compete with the first filer

during its 180-day exclusivity period.

66. As a threshold matter, a first filer’s 180-day exclusivity period does not prevent a

brand manufacturer from marketing its own authorized generic during that period of generic

exclusivity. Authorized generics are chemically identical to the branded drug and are marketed

under the brand manufacturer’s NDA. An authorized generic can be marketed either through a

generic drug division of the brand manufacturer or through a third-party generic drug

manufacturer.

67. Competition from an authorized generic during the first filer’s 180-day

exclusivity period substantially reduces the first filer’s profit margins and increases price

competition that ultimately benefits consumers and other purchasers of the branded drug and the

first filer’s generic equivalent.

68. In a 2011 study titled, Authorized Generic Drugs: Short-term Effects and LongTerm Impact (the “FTC 2011 Report”), the FTC found that authorized generics capture a

18 Letter from Michael Carrier, Rutgers School of Law, to Sen. Tom Harkin, at 3 (Apr. 21, 2011),

available at http://www.hpm.com/pdf/blog/LIPITOR%20-%20Balto-Carrier%20Ltr.pdf.

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significant number of generic drug sales, reducing the first filer’s revenues by 40–52 percent on

average during the 180-day exclusivity period.

69. Although first filers make significantly less money when they are forced to

compete with an authorized generic during the first 180 days, consumers benefit from the lower

prices caused by competition between the authorized generic and the first filer.

70. In light of the substantial negative effects on a first filer’s bottom-line that can be

caused by the presence of an authorized generic, a promise by a brand manufacturer to not

launch, or license, an authorized generic confers significant monetary value to a first filer. The

value conferred to a first filer is tantamount to a payment for agreeing to delay generic entry and

competition.

E. REMS Abuse

1. REMS Background

71. For certain drugs, which pose potential risks of abuse or misuse, the FDA may

require drug manufacturers to submit for approval a Risk Evaluation Mitigation Strategy

(“REMS”). The Food & Drug Administration Amendments Act (“FDAAA”) added Section 505-

1 to the FDCA. It defines REMS as a “required risk management plans that use risk

minimization strategies beyond . . . professional labeling to ensure that the benefits of certain

prescription drugs outweigh their risks.”19 Examples of REMS include education addressing

possible risks associated with use of particular drugs, certification and training of prescribers and

pharmacists, developing protocols for tracking distribution and dispensing of particular drugs

down the distribution chain.

19 21 U.S.C. § 355-1.

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72. Certain REMS include protocols known as Elements to Assure Safe Use

(“ETASU”), which control distribution of a particular drug and may include prescriber

certification requirements, pharmacies or dispensaries certifications, restricted distribution to

specific settings (e.g., hospitals), patient monitoring, and enrollment of patients to registries.

73. When a generic manufacturer files an ANDA for a drug encumbered by a REMS,

the FDCA requires that the brand and generic manufacturers work together to develop a Single

Shared System (“SSS”) for REMS.20 The FDA may waive the requirement to develop an SSS

under two circumstances. The first circumstance is when the burden of creating an SSS

outweighs the benefits.21 The second is when an aspect of the ETASU is “claimed by a patent

that has not expired or is a method or process that, as a trade secret, is entitled to protection.”22

74. However, FDA waivers are by and large the exception. FDA officials have stated

that their “[e]xpectation is [the] successful formation of SSS.”23

2. REMS Abuse

75. Although REMS are intended to ensure patient safety, brand manufacturers have

used REMS as a pretext for refusing to provide samples to generic manufacturers seeking to use

those samples for purposes of establishing their product’s bioequivalence to the branded product.

76. In other instances, despite statutory commands requiring cooperation in

developing an SSS and FDA statements strongly encouraging the development of an SSS,

branded manufacturers have used the development of REMS as a mechanism for delaying

20 21 U.S.C. § 355-1(i)(1)(B).

21 21 U.S.C. § 355-1(i)(1)(B)(i).

22 21 U.S.C. § 355-1(i)(1)(B)(ii).

23 Elaine Lippmann, Risk Evaluation and Mitigation Strategies (REMS), at 33,

https://www.fda.gov/downloads/Drugs/DevelopmentApprovalProcess/SmallBusinessAssistance/UCM56

3789.pdf.

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generic entry. For example, brand manufacturers have stonewalled and frustrated generic

manufacturers in the development of an SSS by taking inconsistent positions or engaging in

other dilatory tactics during negotiations.

77. In still other instances, brand manufacturers encumber their ETASU with patents

of questionable validity and strength. Often these patents simply describe a process for

distributing and monitoring the sale and use of a drug. They do not describe a compound or

method of using a drug and thus cannot be listed in the Orange Book. Yet, in many instances,

these REMS patents are improperly listed in the Orange Book. Because generic manufacturers

are required to make certifications against all Orange Book patents—even those listed

improperly—improper listing of REMS patents provides the brand manufacturer the opportunity

to sue on these patents, along with any other patents covering the drug, or a method of using a

drug. As a result, generic manufacturers must incur increased litigation expense and delay in

resolving issues surrounding these patents.

78. According to one study published in 2014, the estimated cost of REMS abuse to

the U.S. healthcare system is $5.4 billion annually.

FACTUAL BACKGROUND ON XYREM

79. Orphan Medical Inc. (“Orphan Medical”) developed Xyrem and, on October 2,

2000, filed with the FDA NDA 21-196. On July 17, 2002, the FDA approved Xyrem for the

treatment of cataplexy associated with narcolepsy. Because Xyrem active ingredient sodium

oxybate is a controlled substance (Schedule C-III), in conjunction with the approval of the NDA,

the FDA also approved a Risk Management Program (“RiskMAP”) for Xyrem.

80. The Xyrem RiskMAP required:

(a) “Implementation of a restricted distribution program for Xyrem;”

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(b) “Implementation of a program to educate physicians and patients about the

risks and benefits of Xyrem;”

(c) “Filing of the initial prescription only after the prescriber and patient have

received and read the educational materials;” and

(d) “Maintenance of a registry of all patients and record of all prescribers.”24

81. As part of the risk management program, the FDA also required the distribution

of a Medication Guide for patients informing them of important safety information when taking

Xyrem.25

82. In April 2005, Jazz acquired Orphan Medical, including the rights to Xyrem, for

$122.6 million. Three years later, on November 18, 2005, the FDA approved a new indication

for Xyrem: treatment of excessive daytime sleepiness in patients with narcolepsy.

83. On August 29, 2008, Jazz submitted a REMS proposal.

84. The FDA ultimately approved Jazz’s proposed REMS for Xyrem on February 27,

2015. The Xyrem REMS includes the following requirements, among others: (1) healthcare

provider certification; (2) enrollment of Xyrem patients into “Patient Enrollment” plan; and (3)

pharmacy certification.

85. Jazz also obtained several patents concerning its proposed REMS for Xyrem.

Specifically, Jazz obtained the following seven patents covering the Xyrem REMS (the “Xyrem

REMS Patents”):

(a) U.S. Patent No. 7,668,730 (“the ’730 patent”);

(b) U.S. Patent No. 7,765,106 (“the ’106 patent”);

24 July 17, 2002 Xyrem FDA Approval Ltr. at 2.

25 Id.

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(c) U.S. Patent No. 7,765,107 (“the ’107 patent”);

(d) U.S. Patent No. 7,895,059 (“the ’059 patent”);

(e) U.S. Patent No. 8,457,988 (“the ’988 patent”);

(f) U.S. Patent No. 8,589,182 (“the ’182 patent”); and

(g) U.S. Patent No. 8,731,963 (“the ’963 patent”)

86. Each of these patents was listed in the Orange Book as seen below:

87. However, as explained below, the Xyrem REMS Patents were: (1) improperly

listed in the Orange Book because they did not claim the Xyrem drug compound or an approved

method of using Xyrem; and (2) invalid for reasons of obviousness in light of prior art.

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DEFENDANTS’ UNLAWFUL CONDUCT

88. Jazz undertook a prolonged campaign against would-be generic manufacturers of

Xyrem. As part of its campaign, Jazz: (1) engaged in a pattern of serial, abusive patent

prosecution and litigation and (2) abused the REMS regulatory process.

A. Jazz’s Serial and Abusive Patent Prosecutions and Infringement Litigation

89. Jazz’s pattern of abusive patent litigation against generic manufacturers delayed

the resolution of any legitimate patent dispute. Jazz sought to protect its monopoly over Xyrem

through a series of petitions to the PTO to obtain patents purportedly covering Xyrem, and then

listing those patents in the Orange Book, forcing Roxane and other generics to submit successive

Paragraph IV certifications on those newly listed patents, triggering successive 30-month stays

and delays on the FDA’s ability to approve pending ANDAs for generic Xyrem.

90. Some of Jazz’s more egregious patent-related behavior included (1) using

information obtained in pending patent litigation in proceedings before the PTO to obtain

additional patent coverage as a means of “trapping” generics into an infringement, (2) failing to

disclose material prior art references in the prosecution of certain patents, and (3) asserting the

Xyrem REMS Patents and other patents against generic rivals, despite their improper listing in

the Orange Book.

1. Roxane I

91. On or about October 14, 2010 Roxane notified Jazz that it had submitted ANDA

No. 202090, seeking to market a generic version of Xyrem, and that its ANDA included a

Paragraph IV certification as to the ’889, ’219, ’730, ’106, and ’107 patents, claiming that each

was invalid, unenforceable, or not infringed by Roxane’s ANDA product.

92. On November 22, 2010, Jazz sued Roxane in the District of New Jersey, Case No.

2:10-cv-06108. Jazz alleged that Roxane’s ANDA infringed the ’889, ’219, ’730, ’106, and ’107

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patents. Under the Hatch-Waxman Act, Jazz’s filing of the lawsuit—irrespective of its prospects

of success—triggered an automatic 30-month stay of the FDA’s ability to approve Roxane’s

ANDA.

93. Roxane pleaded numerous affirmative defenses and counterclaimed. Roxane

sought declaratory judgments that the ’889, ’219, ’730, ’106, and ’107 patents were invalid,

unenforceable, and/or not infringed by Roxane’s ANDA product. Roxane also sought orders

requiring removal of the ’730, ’106, and ’107 patents (each a Xyrem REMS Patent) from the

Orange Book because those patents were improperly listed in the Orange book due to the fact

that they neither covered the Xyrem drug compound nor a method of using Xyrem.

2. Roxane II

94. On or about January 10, 2011, Roxane notified Jazz that it had submitted a

Paragraph IV certification as to the ’506 patents, claiming it was invalid, unenforceable, or not

infringed by Roxane’s ANDA product.

95. On February 4, 2011, Jazz sued Roxane in the District of New Jersey, Case No.

2:11-cv-00660. Jazz alleged that Roxane’s ANDA infringed the ’431 and ’506 patents. Jazz’s

filing of the lawsuit—irrespective of its prospects of success—triggered an automatic 30-month

stay of the FDA’s ability to approve Roxane’s ANDA.

96. Roxane pleaded numerous affirmative defenses and counterclaimed. Roxane

sought declaratory judgments that the ’431 and ’506 patents were invalid, unenforceable, and/or

not infringed by Roxane’s ANDA product. Roxane also sought an order requiring removal of the

’506 patent from the Orange Book because the ’506 patent was improperly listed in the Orange

Book due to the fact that it did not claim an approved indication for Xyrem or a method of using

Xyrem.

97. On April 6, 2011, Roxane II was consolidated with Roxane I.

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3. Roxane III

98. On or about March 22, 2011, Roxane notified Jazz that it had submitted a

Paragraph IV certification as to the ’059 patent, claiming that it was invalid, unenforceable, or

not infringed by Roxane’s ANDA product.

99. On May 2, 2011, Jazz sued Roxane in the District of New Jersey, Case No. 2:11-

cv-02523. Jazz alleged that Roxane’s ANDA infringed the ’059 patent. Jazz’s filing of the

lawsuit—irrespective of its prospects of success—triggered an automatic 30-month stay of the

FDA’s ability to approve Roxane’s ANDA.

100. Roxane pleaded numerous affirmative defenses and counterclaimed. Roxane

sought a declaratory judgment that the ’059 patent was invalid, unenforceable, and/or not

infringed by Roxane’s ANDA product. Roxane also sought an order requiring removal of the

’059 patent from the FDA’s Orange Book because the patent was improperly listed in the Orange

book. The ’059 patent does not claim an approved indication or any method of using Xyrem.

101. On June 15, 2011, Roxane III was consolidated with Roxane I.

4. Roxane IV

102. On or about October 5, 2012 Roxane notified Jazz that it had submitted a

Paragraph IV certification as to the ’650 patent, claiming it was invalid, unenforceable, or not

infringed by Roxane’s ANDA product.

103. On October 26, 2012, Jazz sued Roxane in the District of New Jersey, Case No.

2:12-cv-06761. Jazz alleged that Roxane’s ANDA infringed the ’650 patent. Jazz’s filing of the

lawsuit—irrespective of its prospects of success—triggered an automatic 30-month stay of the

FDA’s ability to approve Roxane’s ANDA.

104. Roxane pleaded numerous affirmative defenses and counterclaimed. Roxane

sought a declaratory judgment that the ’650 patent was invalid, unenforceable, and/or not

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infringed. Among other things, Roxane alleged that the patents were unenforceable because Jazz

had engaged in inequitable conduct during the prosecution of the ’650 patent, including the

withholding of material prior art reference (Chem Abstract ES302338).

105. Roxane, in fact, had disclosed this prior art reference to Jazz as part of Roxane’s

Initial Invalidity Contentions regarding the ’431 patent family (of which the ’650 patent is a

member) in Civil Action No. 2:10-cv-6108. Yet, despite its duty to disclose material prior art

references to the PTO,26 Jazz did not disclose this prior art reference in connection with the

prosecution of the application that would later issue as the ’650 patent.27 Jazz, in fact, admitted

that it did not disclose Chem Abstract ES302338 in the prosecution of the ’650 patent.28

106. On April 12, 2013, Roxane IV was consolidated with Roxane I.

107. On December 30, 2013, the Court permitted Roxane to amend its answers and

counterclaims to include allegations in support of prosecution laches and unclean hands.29 The

Court held that Roxane had plausibly alleged facts to support to such claims.30

5. Roxane V

108. On December 4, 2012, PTO issued the ’275 patent to Jazz. The claims of the ’275

patent cover methods of use and administration of sodium oxybate.

109. The very next day, on December 5, 2012, Jazz sued Roxane in the District of New

Jersey, Case No. 2:12-cv-07459. Jazz alleged that Roxane’s ANDA infringed the ’275 patent.

Jazz’s filing of the lawsuit—irrespective of its prospects of success—triggered an automatic 30-

month stay of the FDA’s ability to approve Roxane’s ANDA.

26 See 37 C.F.R. § 1.56.

27 Case No. 2:12-cv-06761, ECF No. 5 ¶¶ 25–26.

28 Case No. 2:10-cv-6108, ECF No. 293, ¶ 22.

29 Case No. 2:10-cv-6108, ECF No. 283.

30 Case No. 2:10-cv-6108, ECF No. 282.

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110. Roxane answered and pleaded numerous affirmative defenses, including noninfringement and invalidity.

111. On April 12, 2013, Roxane V was consolidated with Roxane I.

6. Roxane VI

112. On or about January 15, 2015, Roxane notified Jazz that it had submitted a

Paragraph IV certification as to the ’306 and ’619 patents, claiming that they were invalid,

unenforceable, or not infringed by Roxane’s ANDA product.

113. On February 20, 2015, Jazz sued Roxane in the District of New Jersey, Case No.

2:15-cv-01360. Jazz alleged that Roxane’s ANDA infringed the ’203, ’306, and ’619 patents.

Jazz’s filing of the lawsuit—irrespective of its prospects of success—triggered an automatic 30-

month stay of the FDA’s ability to approve Roxane’s ANDA.

114. Roxane answered, pleaded numerous affirmative defenses, and counterclaimed.

Roxane sought a declaratory judgment that the ’203, ’306, and ’619 patents were invalid and/or

unenforceable and that Jazz’s claims of infringement were barred by both prosecution and

litigation laches and the unclean hands doctrine.

115. Specifically, Roxane claimed that Jazz “unreasonably and inexcusably delay[ed]

the presentation of claims” covered by the ’203 and ’619 patents.31 Both patents are part of the

’431 patent family and both issued from patent applications that were filed over a decade after

the patent application that issued as the ’431 patent.32

116. With respect to both Roxane alleged that

Jazz has embarked on an abusive course of conduct in which it

gleans information about Roxane’s non-infringement positions,

then runs to the Patent Office to obtain new, patent-counsel

31 Case No. 2:15-cv-01360, ECF No. 12, ¶¶ 3, 56.

32 Id. at ¶¶ 26, 77.

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invented patent claims by filing continuation applications of patent

applications filed ten plus years ago, and then files in seriatim law

suits against Roxane based on these unreasonably presented patent

claims, to delay resolution of patent infringement actions against

Roxane’s ANDA No. 202090.33

117. In the case of both the ’203 and ’619 patents, Roxane accused Jazz of filing patent

applications that would later issue as the ’203 and ’619 patents after obtaining information about

Roxane’s ANDA product and Roxane’s invalidity non-infringement contentions relating to the

patent-in-suit in the Roxane I litigation.34

118. Roxane alleged that Jazz delayed filing the patent applications that would later

issue as the ’203 and ’619 patents in order to

seek additional claims to cover Roxane’s sodium oxybate product

or to circumvent Roxane’s non-infringement defenses to the claims

of the original patents-in-suit and has improperly kept and

unreasonably delayed in keeping patent applications pending, not

to claim additional inventions the inventors believed they had

invented, but to glean information from Roxane to craft broader or

different claims in an attempt to read on Roxane’s sodium oxybate

product.35

119. Roxane also moved to dismiss Jazz’s infringement claims as to the ’306 patent,

arguing that the patent did not claim patent-eligible subject matter.36 The court administratively

terminated the motion and stayed discovery on the ’306 patent pending the outcome of a pending

inter partes review on the ’306 patent.37

33 Id. at ¶ 22.

34 Id. at ¶¶ 64, 66, 75

35 Id. at ¶ 27 (the ’203 patent). See also id. at ¶ 78 (the ’619 patent).

36 Case No. 2:15-cv-01360, ECF No. 10-1.

37 Case No. 2:15-cv-01360, ECF No. 34. The Patent Trial and Appeal Board ultimately declined to

institute an inter partes review for the ’306 patent. See Amneal Pharms. LLC v. Jazz Pharms. Ireland

Ltd., 2016 WL 5222883 (PTAB July 28, 2016).

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7. Roxane VII

120. On or about April 16, 2015, Roxane notified Jazz that it had submitted a

Paragraph IV certification as to the ’062 patent, claiming that it was invalid, unenforceable, or

not infringed by Roxane’s ANDA product.

121. On June 1, 2015, Jazz sued Roxane in the District of New Jersey, Case No. 2:15-

cv-03684. Jazz alleged that Roxane’s ANDA infringed the ’062 patent. Jazz’s filing of the

lawsuit—irrespective of its prospects of success—triggered an automatic 30-month stay on the

FDA’s ability to approve Roxane’s ANDA.

122. Roxane asserted affirmative defenses and counterclaims. Roxane sought a

declaratory judgment of non-infringement and invalidity.

123. In addition, Roxane pleaded that Jazz’s claims of infringement were barred by

laches. Roxane alleged that Jazz had a history of abusive conduct, using information gleaned

from the litigation positions Roxane took in ongoing patent litigation and then running to the

PTO “to obtain new, patent-counsel-invented patent claims by filing continuation applications of

patent applications filed ten plus years ago, and then fil[ing] in seriatim lawsuits against Roxane

based on these unreasonably presented patent claims in order to delay resolution of patent

infringement actions against Roxane’s ANDA . . . .”38

124. Roxane further alleged that

Jazz improperly delayed filing the ’437 Application [the application that

issued as the ’062 patent] to seek additional claims to cover Roxane’s

sodium oxybate product or to circumvent Roxane’s non-infringement

defenses to the claims of the original patents-in-suit and has improperly

kept and unreasonably delayed in keeping patent applications pending, not

to claim additional inventions the inventors believed they had invented,

but to glean information from Roxane to craft broader or different claims

in an attempt to read on Roxane’s sodium oxybate product.

38 2:15-cv-03684, ECF No. 7, ¶ 43.

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* * * *

Jazz has used newly-issued patents to try to serially consolidate new

patent lawsuits against Roxane with older patent lawsuits against Roxane

– all regarding Roxane’s ANDA No. 202090 – in order to delay resolution

of these patent infringement litigations relating to Roxane’s sodium

oxybate ANDA product.39

125. On November 23, 2015, Roxane VII was consolidated with Roxane VI.

8. Roxane VIII

126. On or about December 14, 2015, Roxane notified Jazz that it had submitted a

Paragraph IV certification as to the ’302 patent, claiming that it was invalid, unenforceable, or

not infringed by Roxane’s ANDA product.

127. On January 27, 2016, Jazz sued Roxane in the District of New Jersey, Case No.

2:16-cv-00469. Jazz alleged that Roxane’s ANDA infringed ’302 patent. Jazz’s filing of the

lawsuit—irrespective of its prospects of success—triggered an automatic 30-month stay on the

FDA’s ability to approve Roxane’s ANDA.

128. Roxane asserted affirmative defenses and counterclaims of non-infringement and

invalidity.

129. On March 24, 2016, Roxane VIII was consolidated with Roxane VI, Case No.

2:15-cv-01360 because the ’302 patent was related to and from the same patent family as the

’306 patent.

9. Roxane IX

130. On or about January 9, 2015, Roxane notified Jazz that it had filed a Paragraph IV

certification as to the ’963 patent, claiming that it was invalid, unenforceable, or not infringed by

Roxane’s ANDA product.

39 2:15-cv-03684, ECF No. 7, ¶¶ 47, 49.

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131. On August 12, 2016, Jazz sued Roxane in the District of New Jersey, No. 2:16-

cv-04971, for a ninth and final time. Jazz alleged that Roxane’s ANDA infringed ’963 patent.

Jazz’s filing of the lawsuit—irrespective of its prospects of success—triggered an automatic 30-

month stay of the FDA’s ability to approve Roxane’s ANDA.

132. Roxane moved to dismiss Jazz’s claim of infringement of the ’963 patent, arguing

that it encompassed an unpatentable abstract idea.40 The patent litigation was dismissed before

the court could rule on the motion.

* * * *

133. Trial in the consolidated Roxane I patent action was scheduled to begin May 1,

2017. On March 17, 2017, parties jointly submitted a list of issues to be tried.41

134. However, prior to the start of trial, on April 5, 2017, Jazz and Roxane settled their

outstanding patent litigations.

10. Jazz sues other generic manufacturers seeking FDA approval to sell

generic Xyrem.

135. Jazz also filed numerous patent infringement lawsuits against eight other wouldbe generic manufacturers of generic Xyrem. Among those sued were: (1) Amneal

Pharmaceuticals, LLC; (2) Par Pharmaceutical, Inc.; (3) Ranbaxy Laboratories Ltd. and Ranbaxy

Inc.; (4) Watson Laboratories, Inc.; (5) Wockhardt Bio AG, Wockhardt Limited, and Wockhardt

USA LLC; (6) Lupin Ltd. and Lupin Pharmaceuticals, Inc.; and (7) Mallinckrodt plc. See Jazz

Pharms., Inc. v. Amneal Pharms., LLC, No. 2:13-cv-00391 (D.N.J.) (consolidated); Jazz

Pharms., Inc. v. Par Pharm., Inc., No. 2:13-cv-07884 (D.N.J.); Jazz Pharms., Inc. v. Ranbaxy

Labs. Ltd., No. 2:14-cv-4467 (D.N.J.); Jazz Pharms., Inc. v. Watson Labs., Inc., No. 2:14-cv40 2:16-cv-04971, ECF No. 20.

41 2:10-cv-06108, ECF No. 506.

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7757 (D.N.J.); Jazz Pharms., Inc. v. Lupin Ltd., No. 2:15-cv-06548 (D.N.J.); Jazz Pharms., Inc.

v. Wockhardt Bio AG, No. 2:15-cv-05619 (D.N.J.); Jazz Pharms., Inc. v. Mallinckrodt plc, No.

2:18-cv-00029 (D.N.J.).

136. The filing of patent infringement lawsuits against each of these generic companies

triggered an automatic 30-month stay on the FDA’s ability to approve their ANDAs.

137. Each case settled in the middle of discovery, before any claims construction

hearing or trial was held.

11. The PTO invalidates the Xyrem REMS Patents in inter partes review.

138. While generic manufacturers were fighting Jazz’s multitude of patent

infringement lawsuits in federal court, some opened a second front against Jazz’s weak Xyrem

REMS Patents.

139. Par Pharmaceutical and Amneal Pharmaceuticals petitioned the Patent Trial and

Appeal Board (“PTAB”) for inter partes review (“IPRs”) on each of the Xyrem REMS Patents.

IPRs are initiated when “there is a reasonable likelihood that the petitioner would prevail with

respect to at least 1 of the claims challenged in the petition.”42

140. In each instance, the PTAB found that one or more claims of each Xyrem REMS

Patent were unpatentable for reasons of obviousness in light of prior art.43

42 35 U.S.C. § 314(a).

43 Par Pharm. Inc. v. Jazz Pharms. Inc., 2016 WL 7985457 (PTAB July 27, 2016) (finding claims 1-

16 of the ’059 patent were unpatentable); Par Pharm. Inc. v. Jazz Pharms. Inc., 2016 WL 7998375

(PTAB July 27, 2016) (finding claims 1-8 of the ’106 patent were unpatentable); Par Pharm. Inc. v. Jazz

Pharms. Inc., 2016 WL 7985458 (PTAB July 27, 2016) (finding claims 1-11 of the ’730 patent and

claims 1-15 of the ’988 patent were unpatentable); Par Pharm. Inc. v. Jazz Pharms. Inc., 2016 WL

79854759 (PTAB July 27, 2016) (finding claims 1-6 of the ’107 patent were unpatentable); Amneal

Pharms. LLC v. Jazz Pharms. Inc., 2016 WL 8115064 (PTAB July 27, 2016) (finding claims 1-26 of the

’182 patent were unpatentable); Amneal Pharms. LLC v. Jazz Pharms., Inc., 2017 WL 1096638 (PTAB

Mar. 22, 2017) (finding claims 24, 26, and 27 of the ’963 patent were unpatentable).

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141. On July 31, 2018, the Federal Circuit affirmed the PTAB’s rulings invalidating

each of the Xyrem REMS Patents.44

B. Jazz Abused REMS Requirements Causing Delay in the Approval of

Roxane’s ANDA.

142. In addition to filing abusive, serial infringement lawsuits against Roxane and

other would-be generic competitors, Jazz also used the REMS process as means to frustrate

generics obliged to negotiate a single shared system (“SSS”) under REMS and delay approval of

pending ANDAs for generic Xyrem.

1. Jazz delayed the development of Xyrem REMS through its

inconsistent positions before the FDA.

143. As noted above, when Xyrem was approved, it was subject to a RiskMAP. The

original RiskMAP called for limited distribution of Xyrem through a single pharmacy company.

144. After the passage of the FDAAA, Jazz was required to submit a REMS to replace

its then existing RiskMAP, which it did in August 2008.

145. In connection with its transition from a RiskMAP to a REMS, Jazz petitioned the

FDA to “remove the restriction to a single pharmacy and instead allow certification of multiple

pharmacies.”45 Jazz justified this change by arguing that it would “‘increase patient access

without compromising patient safety.’”46 Jazz also argued that “the single pharmacy program in

existence . . . ‘imposes numerous impediments to patient access to Xyrem, possibly depriving

narcolepsy patients of an important medication to control their [excessive daytime sleepiness]

and cataplexy and potentially affect their lives dramatically.’”47

44 Jazz Pharms., Inc. v. Amneal Pharms., LLC, 895 F.3d 1347 (Fed. Cir. 2018).

45 FDA Ltr. re Xyrem REMS SSS Waiver, at 6.

46 Id.

47 Id.

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146. Jazz continued to advocate for a multiple-pharmacy REMS program in other

filings with the FDA. For example, when Jazz submitted a new NDA (NDA No. 22-531) seeking

FDA approval for a new Xyrem indication for fibromyalgia, Jazz proposed a REMS with

multiple certified pharmacies. While the FDA declined to approve the NDA, it did so for reasons

unrelated to Jazz’s proposed multiple-pharmacy certification REMS program.

147. In early 2011, however, Jazz abruptly changed its position on whether multiple

certified pharmacies could and should be part of a Xyrem REMS. For the first time in nearly two

years, Jazz began advocating for a REMS protocol a single certified pharmacy.

148. What explains Jazz’s about-face? Emerging generic competition—specifically,

Roxane filed its ANDA in July 2010, and gave notice to Jazz of that filing shortly thereafter.

Under an open REMS permitting the certification of multiple pharmacies, a generic competitor

could choose its own pharmacy network through which to distribute generic Xyrem. By closing

the Xyrem REMS to a single distributor, generic competitors would be beholden to Jazz’s

pharmacy of choice.

149. In August 2012, the FDA provided interim comments on Jazz’s proposed REMS.

Consistent with Jazz’s earlier request, the FDA stated that “the final Xyrem REMS should not

contain a single pharmacy limitation.”48 The FDA further stated that “the restriction to a single

pharmacy was not necessary or appropriate to ensure the safe use of Xyrem, and that any

pharmacy that could meet the requirements for certification could safely dispense Xyrem.”49

Significantly, the FDA accepted Jazz’s prior rationale for permitting multiple pharmacy

48 Id. at 6.

49 Id.

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certifications under the Xyrem REMS: limiting distribution to a single pharmacy “could unduly

burden patient access and the health care delivery system.”50

150. Recognizing the threat that opening the Xyrem REMS program to multiple

pharmacies posed to Xyrem’s profits in the advent of generic competition, Jazz alerted investors

in a third quarter 2013 SEC filing that the FDA’s expected modification would limit the ability

of Jazz’s REMS patents to block “generic competition.”51

151. In December 2013, the FDA informed Jazz that it was removing the single

pharmacy limitation to the proposed Xyrem REMS.

152. Two months later, in February 28, 2014, Jazz filed a formal request for dispute

resolution, appealing the FDA’s decision to modify the Xyrem REMS. Jazz argued that the

FDA’s decision was “not only unsupported” but “also puts patients and others at risk.”52

153. Jazz had no legitimate basis to challenge the FDA’s decision because, as noted

above, Jazz had previously vigorously advocated for the same multiple-pharmacy certification

system it was now rejecting. By appealing the decision, Jazz sought to stall the FDA’s decision

on the REMS program.

154. Following the FDA’s denial of Jazz’s dispute resolution request in May 2014, the

next month Jazz further appealed the decision to the Director of the Office of New Drugs. In its

appeal, Jazz conceded that “it might be possible for a distribution system that involves two, and

perhaps more, specialty pharmacies to effectively prevent the abuse, misuse, and diversion of

sodium oxybate [i.e., Xyrem].”53

50 Id.

51 Id. at 7 (citing Form 10-Q, Sept. 30, 2013, at 54).

52 Id. at 7 (citing Jazz Formal Dispute Resolution Request, Feb. 28, 2014).

53 Id.

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155. Yet, Jazz’s litany of appeals and petitions eventually wore down the FDA. The

FDA noted that “[i]n light of the significant drain on [FDA] resources posed by the dispute, and

the fact that the outcome of Jazz’s challenge to the [FDA’s] legal authority to require a

modification to a ‘deemed REMS’ had the potential to affect only a small number of drug

products, the [FDA] decided to approve the REMS Jazz had proposed (i.e., with the single,

central pharmacy limitation), and deny the dispute as moot.”54

156. However, in denying the appeal as moot, Dr. Jenkins, the FDA’s Director of the

Office of New Drugs, stated:

Our action approving the REMS submitted by Jazz should not be

construed or understood as agreement with Jazz that limiting

dispensing to a single pharmacy is the only way to ensure that the

benefits of Xyrem outweigh the risks under 505-1 of the FD&C

Act. We continue to be concerned that limiting the distribution of

Xyrem to one pharmacy imposes burdens on patient access and

the healthcare delivery system.

55

157. Indeed, so unique was Jazz’s position on the single pharmacy REMS program that

the FDA noted that “No other currently approved REMS requires a sponsor to limit dispensing

to a single pharmacy.” 56

2. Jazz stonewalled generic rivals and FDA in developing an SSS REMS

for Xyrem.

158. Generic rivals, including Amneal Pharmaceuticals, Ohm Laboratories (part of Sun

Pharmaceuticals), and Roxane, seeking to work with Jazz on the development of an SSS—which

they were required to do by law—were similarly subjected to Jazz’s untenable negotiating

positions and delay.

54 Id. at 7–8.

55 Id. at 8 (emphasis added).

56 Id. (emphasis added).

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159. Roxane first contacted Jazz about the development of an SSS REMS on October

12, 2012. For months, Roxane negotiated with Jazz on the development of an SSS but to no

avail.

160. In an attempt to accelerate the progress of the SSS negotiations between Jazz and

Roxane, on January 23, 2014, the FDA hosted a meeting to facilitate the development of an SSS

REMS for Xyrem and Xyrem generics. Roxane provided a timetable for certain deliverables,

including the execution of a confidentiality and disclosure agreement (“CDA”) within 30 days of

the meeting. The FDA requested that the Jazz and Roxane submit bi-weekly updates on the

status of negotiations.

161. Four days after the FDA meeting, on January 28, 2014, Roxane provided a draft

of the CDA to Jazz. On February 14, 2014, Jazz returned a substantially revised CDA.

Negotiations over the CDA ensued for more than seven months. The CDA was not signed until

August 2014.

162. After learning of Jazz’s dispute resolution request, in March 2014, Roxane

expressed concern that “‘any dispute resolution process will be a protracted matter which will

further delay the implementation of a REMS.’”57 The FDA, in response, requested that the

parties continue their negotiations. However, because the FDA lacked any enforcement

mechanism to bring the parties to an agreement within a date certain, Jazz used this loophole to

do exactly what Roxane feared Jazz would do—delay and extend negotiations, which in turn,

would delay the approval of an SSS REMS for generic Xyrem. And because generic approval

was contingent on the development of such a REMS, any delay caused by Jazz’s stonewalling

would also delay FDA final approval for generic Xyrem ANDAs.

57 Id. at 9 (citing Email from Gregory Hicks to FDA, Mar. 12, 2014).

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163. The negotiations between Jazz and would-be generic competitors over the

development of an SSS REMS continued without success for over a year. By October 2015, the

parties were at impasse on several threshold issues that precluded the development of an SSS

REMS. Indeed, Roxane and Jazz had not even agreed on the process for negotiating the SSS.

Jazz contended that the generics were refusing to proceed with “legal and operational discussions

on parallel tracks, which would require integration of operational personnel into legal

discussions.”58 This position, however, was a red herring because the CDA precluded the

generics from using any information from the negotiations for an SSS REMS in the possible

future development of a separate REMS for the generics. As a result, if the generic companies’

operations staff was involved in the discussions regarding the legal agreement with Jazz, those

individuals would have to be walled-off from doing any work in developing a separate REMS.

Accordingly, Jazz was forcing its generic rivals into a no-win situation.

164. Frustrated by Jazz’s recalcitrance in negotiations, Roxane and other generic rivals

stated their intention to seek a waiver for the SSS REMS.

165. Realizing that a waiver, if granted, would clear a major roadblock to FDA final

approval, on December 4, 2015, Jazz opposed the waiver request. Jazz reiterated its position that

a single, central pharmacy was the only acceptable REMS protocol—a position that, as noted

above, contradicted Jazz’s previous position when transitioning from a RiskMAP to a REMS.59

166. Roxane formally submitted a request for the FDA to waive the SSS requirement

on December 28, 2016.

58 Id. at 10.

59 Id.

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C. The FDA Grants Final Approval of Roxane’s ANDA and Grants Waiver on

SSS for Xyrem REMS

167. Despite Jazz’s efforts to use the REMS process to arrest the approval of Roxane’s

and other generics’ pending ANDAs, on January 17, 2017, the FDA finally approved Roxane’s

ANDA. On the same date, it also issued granted Roxane and other generics a waiver from the

SSS requirement under the FDCA.

168. In the final approval letter, the FDA noted that although Roxane’s ANDA was not

tentatively approved within the 30-month period described, Roxane did not forfeit its 180-day

exclusivity by operation of the provisions in the Food and Drug Administration Safety and

Innovation Act.

169. The final approval letter also stated that Roxane’s REMS program, which

consisted of a Medication Guide, ETASU, and an implementation system, was also approved.

Concurrently with the final approval letter, Roxane also received a formal decision from the

FDA waiving the need for an SSS REMS for its generic Xyrem product. In its decision to waive

the SSS requirements, the FDA noted that the waiver came after four years of unsuccessful

negotiations with Jazz. Recognizing the lack of incentive Jazz had in cooperating to develop an

SSS REMS, the FDA also stated that “[t]here are obvious incentives for any innovator company,

including Jazz, to delay generic competition, including by failing to agree on SSS REMS

terms.”60

170. The FDA further stated that it “ha[d] been waiting to approve any sodium oxybate

ANDAs pending development of an SSS REMS.”61 Recognizing the effects of this delay, the

60 Id. at 17 (emphasis added).

61 Id. at 16.

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FDA stated that the delay may have “impose[d] a substantial cost to the U.S. healthcare system,

as Xyrem remained, until now, shielded from generic competition.”62

171. With final approval of its ANDA and REMS program in hand, Roxane was finally

able to launch its generic Xyrem product. However, as explained below, before it could launch

its product and bring the benefits of increased competition, Jazz and Roxane settled their

ongoing patent litigation through the use of an unlawful reverse payment.

D. Jazz and Roxane Enter an Unlawful Pay for Delay Agreement

172. As noted above, trial in the consolidated Jazz-Roxane Xyrem patent litigation was

scheduled to begin May 1, 2017. On April 5, 2017, though, Jazz and Roxane settled their sevenyear long patent litigation by executing three interrelated and contemporaneous agreements: the

Settlement Agreement, the License Agreement, and the AG Agreement (collectively, the “patent

settlement”).

173. Under the patent settlement, Jazz granted Roxane a license to sell an AG of

Xyrem beginning January 1, 2023 or earlier under certain circumstances. Although these other

circumstances have not been publicly disclosed, it is customary for the brand manufacturer in

Hatch-Waxman settlements to permit the settling generic to accelerate the timing of its launch if

the brand manufacturers’ patents are declared invalid or unenforceable prior to the generic’s

agreed upon entry date.

174. The initial term of Roxane’s AG license is six months—i.e., the duration of

Roxane’s 180-day generic exclusivity. Roxane, however, has the option to continue its sale of

the AG for a total of five years. During the initial six-month period, Roxane will pay Jazz a

royalty on Roxane’s net sales of the Xyrem AG. Roxane will also pay Jazz for the supply of the

62 Xyrem REMS Waiver Ltr. at 16 n.49 (emphasis added).

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AG and a portion of the cost associated with Jazz’s REMS program for Xyrem. In addition,

under the agreement, Jazz refrained from launching its own AG of Xyrem during Roxane’s sixmonths of AG sales.

175. Notably, only after the expiration of the initial six-month term of AG sales is

Roxane permitted to launch a generic version of Xyrem under its ANDA.63

176. These terms demonstrate that Jazz and Roxane’s patent settlement is an unlawful

pay-for-delay agreement. As explained in further detail below, Jazz’s agreement not to launch its

own AG will provide hundreds of millions of dollars to Roxane that it would not have obtained

but for its agreement with Jazz. Further, Jazz has continued to preserve the value of the no-AG

agreement to Roxane by refusing to permit other settling generics from obtaining similar terms.

For example, in Jazz’s Xyrem patent settlements with Ranbaxy and Wockhardt, it only permitted

these generics to enter the market on December 31, 2025.

177. Even when Jazz licensed a Xyrem AG to other would-be generic competitors, it

took care not to negotiate settlements that permitted those AG licenses to run concurrently with

Roxane’s. Jazz’s settlement with Par is instructive. Jazz granted Par a license to sell limited

quantities of a Xyrem AG, but in doing so, only permitted those generics’ license to commence

on July 1, 2023—the 181st day after Roxane was permitted to launch its Xyrem AG. The limited

nature of the Par license provides additional value to Roxane because in the event that Roxane

continues licensing the AG from Jazz after its 180-day exclusivity, it will face only limited

competition from other generics. Such agreements worked to the financial benefit of Jazz, too,

63 https://www.prnewswire.com/news-releases/jazz-pharmaceuticals-reaches-settlement-with-hikmapharmaceuticals-related-to-xyrem-patent-litigation-300435524.html.

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because it also will benefit from less robust competition after the expiry of Roxane’s 180-day

exclusivity.

178. Jazz entered into similar settlements with Lupin and Amneal permitting them to

launch “limited quantities” of a Xyrem AG after Hikma’s 180-day exclusivity period expires.

Without the benefit of discovery or the settlement agreements themselves, it is unclear at this

time whether these agreements have anticompetitive terms.

179. The fact that Roxane will owe a royalty to Jazz under its AG license and must pay

Jazz for the AG supply does not change the fact that Jazz’s no-AG agreement is a large payment

to Roxane exchange for Roxane’s agreement to delay market entry for nearly six years. The

royalty here simply acts as a tax on Roxane. In order for Roxane to maximize its profits during

its 180-day exclusivity period, it will keep the prices of its Xyrem AG to near parity with Xyrem.

Thus, the royalty serves to induce Roxane to keep its prices for the AG higher than it otherwise

would have, had it been allowed to market a generic under its own ANDA.

180. Jazz’s anticompetitive conduct has effectively prevented the entry of any true

(non-AG) generic until July 2023 at the earliest with multiple true generics only appearing at

year-end 2025. Accordingly, by the time Roxane is capable of launching the first true generic in

July 2023, as the following timeline demonstrates, Jazz will have maintained its domination over

the Xyrem market for nearly 20 years and made many billions of dollars over that time period for

a drug it obtained for little over $120 million.

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1. The value of the no-AG agreement to Jazz.

181. After generic entry in January 2023, Jazz would have lost at least 80% of its

branded sales during Roxane’s 180-day exclusivity period. But without generic entry, Jazz kept

all those sales—and continued to enjoy those branded sales until the end of 2016.

182. Because Roxane was the first ANDA filer, its agreement not to launch generic

Xyrem until January 2023 created a competition bottleneck where no other generic company

could market its own ANDA generic of Xyrem product until 180 days after Roxane launched a

generic Xyrem product. In establishing a bottleneck using Roxane, Jazz maximized the potential

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for it to maintain its monopoly on Xyrem for about six years longer than it otherwise would

have.

183. Sales of Xyrem in 2017 were $1.186 billion. Based on well-documented trends

relating to the sales and pricing of pharmaceuticals upon the emergence of generic competition,

Jazz’s AG and Roxane’s generic, combined, would have captured at least 80% of the amount of

branded sales in the first six months, with each of those companies splitting the generic sales

50/50 (therefore, 40% each of the brand share). The Jazz AG and Roxane’s generic would have

sold at around 40%-50% of the price of branded Xyrem. Using these assumptions and assuming

Xyrem sales did not grow after 2017—which they did, to about $1.64 billion annually (as of

2019)—a conservative estimate (because it assumes that Jazz foresaw no additional sales growth,

which is unlikely) of the value of Jazz’s AG in the first six months following generic entry is that

it would have been worth at least $119 million.64 Had Jazz predicted that sales would continue to

grow to its present levels (i.e., about $1.64 billion annually), a Jazz AG would be expected to be

worth at least $164 million to Jazz.65

184. The estimated value of the no-AG agreement far exceeds the litigation costs Jazz

saved by settling its patent litigation with Roxane. At the time of settlement, Defendants were

only a few weeks from trial, meaning that much of the expense of litigation had already been

incurred. Accordingly, the no-AG agreement is a large, unjustified Actavis-type reverse payment.

2. The value of the no-AG agreement to Roxane.

185. The value of the no-AG agreement from Roxane’s perspective is a matter of

estimating the additional sales it made during its six-month generic exclusivity period in 2016

64 $1.186 billion * 0.5 [for the first six months] * 0.4 [share of the generic sales] * 0.5 [generic

price].

65 $1.64 billion * 0.5 [for the first six months] * 0.4 [share of the generic sales] * 0.5 [generic price].

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compared to the sales it would have made in the first six months of generic competition starting

in January 2023 when, without the benefit of the no-AG agreement, it would have faced

competition from a Jazz Xyrem AG.

186. Under competitive conditions, the calculation of Roxane’s sales during the first

six months of generic competition starting in January 2023 is identical to the calculation for

Jazz’s Xyrem AG during this period, because the same assumptions apply to Roxane’s generic as

to Jazz’s. Thus, when facing competition from Jazz’s Xyrem AG, the expected value of

Roxane’s generic Xyrem would have been between approximately $119 million (if Xyrem sales

remained constant after 2017) to $150 million (if Roxane accurately predicted Xyrem sales to

grow as they did).

187. Under the anticompetitive conditions created by the no-AG agreement, however,

Roxane stood in a far better position financially. With the no-AG agreement, Roxane will (a)

receive 100% of the generic sales in the first six months of generic launch (because there was no

AG taking market share); and (b) be able to sell that generic during those months for about 90%

(and not 40%–50%) of the branded price because there was no AG driving down price.

188. Without competition from Jazz’s AG, Roxane’s Xyrem AG will stand alone and

therefore can expect to capture at least 80% of the sales of the branded product in 2023, and

likely would have priced its generic product at about 80%-90% of the brand’s price. As a result,

during its six-month exclusivity period in 2023, without competition from Jazz’s AG, Roxane’s

Xyrem AG will likely realize at least $524.8 million in generic sales.66

66 $1.64 billion * 0.5 [for the first 6 months] * 0.8 [generic penetration of Hikma’s Xyrem AG] * 0.8

[generic price].

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189. Thus, the no-AG agreement with Jazz delaying Roxane’s entry into the market

until January 2023 is worth at least $374.8 million in additional sales to Roxane, compared to

sales it would have made without the benefit of the no-AG agreement ($524.8 million less $150

million). The no-AG payment from Jazz to Roxane made delayed generic entry will be

incredibly lucrative for Roxane.

190. The value of the no-AG agreement far exceeds any litigation costs Roxane saved

by agreeing to settle its patent litigation with Jazz. As noted above, at the time of settlement,

Defendants were only a few weeks from trial, meaning that much of the expense of litigation had

already been incurred. Accordingly, the no-AG agreement is a large, unjustified Actavis-type

reverse payment.

3. Upon announcing its no-AG agreement with Roxane, Jazz’s stocks

soar.

191. Further corroboration that the Jazz-Roxane patent settlement contained an

unlawful reverse payment to Roxane can be shown in the way the stock market reacted to the

news of the Jazz-Roxane patent settlement.

192. Academic literature has demonstrated that increases in a brand pharmaceutical

company’s stock price, and stock trading volumes upon the announcement of a patent settlement

with a generic manufacturer, is a strong signal that the settlement contained a reverse payment.

Market participants have an expectation of when they expect generic competition to enter the

market—either through a settlement or litigation victory. That information is incorporated into

the trading price and trading volumes of a particular company’s stock.

193. When a brand manufacturer announces a patent settlement with a generic rival

that calls for a delayed generic entry beyond what market participants expected, that new

information causes the market to react. Thus when a settlement announcement precipitates

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significant increases in the brand company’s stock price and trading volumes, it creates a strong

inference that the settling parties received something of significant value: in the case of the

brand, an extended monopoly.

194. The figures below reflect Jazz’s historical stock prices and trading volume in the

week prior to, and the week following, the announcement of the Jazz-Roxane patent settlement

on April 5, 2017. The deal was announced at or after the end of trading on April 5, 2017,

meaning that the market did not fully react to the announcement until the market reopened on

April 6 (marked in yellow highlight and bold below).

FIGURE 1: JAZZ STOCK PRICE / TRADING VOLUME TABLE

Date Open High Low Close Volume

03/27/2017 141.59 148.14 141.14 146.98 670,400

03/28/2017 146.38 147.28 145.56 145.91 461,400

03/29/2017 145.51 146.82 145.13 146.05 464,900

03/30/2017 146.52 146.83 145.58 145.68 303,500

03/31/2017 145.74 146.97 144.95 145.13 509,500

04/03/2017 144.55 145.36 141.9 142.91 554,600

04/04/2017 142.63 144.26 142.17 143.21 319,100

04/05/2017 144.18 144.18 139.72 140.65 669,700

04/06/2017 150 154.99 149.63 153.88 2,733,900

04/07/2017 152.81 155.6 151.24 153.78 643,900

04/10/2017 152.24 153.54 151.7 152.88 447,500

04/11/2017 152.12 154.17 151.32 152.98 648,300

04/12/2017 153.57 153.57 151.15 152.21 419,000

04/13/2017 151.77 154.38 151.71 153.11 329,800

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FIGURE 2: JAZZ STOCK PRICE MOVEMENT GRAPH

FIGURE 3: JAZZ STOCK TRADING VOLUME

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195. As shown in Figures 1 and 2 above, on April 5, 2017, Jazz’s stock price closed at

$140.65/share. The announcement of the Jazz-Roxane settlement after the market closed caused

post-close trading prices of Jazz’s stock to increase substantially. On April 6, 2017, the market

open price for Jazz’s stock was $150/share—an increase of 6.4% over Jazz’s stock price at

market close the day prior. By market close of April 6, Jazz’s stock price had increased to

$153.88, an increase of over 9.4% over Jazz’s stock price at market close the day prior. By

comparison, the largest daily movement in Jazz’s stock price in the week leading up to April 6,

2017 was approximately 1.5%.

196. Trading volumes of Jazz’s stock also increased significantly upon the

announcement of the Jazz-Roxane patent settlement, as shown in Figures 1 and 3. At the end of

the trading day on April 5, 2017, trading volume of Jazz’s stock was 669,700. By the end of the

trading day on April 6, 2017, trading volume of Jazz’s stock soared to over 2.7 million—an

increase of 121% over the prior day’s trading volume. By comparison, the largest daily swing in

Jazz’s trading volume in the week leading up to April 6, 2017, was approximately 36.9%.

197. These movements in both stock price and volume traded when the Jazz-Roxane

patent settlement was announced are powerful evidence that the settlement between Jazz and

Roxane contained a large reverse payment.

MARKET POWER AND MARKET DEFINITION

198. To the extent that Plaintiff may be required to prove market power

circumstantially by first defining a relevant product market, Plaintiff alleges that the relevant

product market is the market for branded and generic versions of sodium oxybate solution.

199. At all relevant times, Jazz had, and continues to have, substantial market power

and/or monopoly power in the market for branded and generic versions of sodium oxybate oral

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solution (Xyrem). Jazz has maintained and continues to maintain 100% market share in the

market for branded and generic versions of sodium oxybate solution.

200. At all relevant times, Jazz has exercised, and continues to exercise, the power to

exclude and restrict competition in the market for branded and generic versions of Xyrem.

201. At all relevant times, there were, and continue to be, high barriers to entry with

respect to competition in the market for branded and generic versions of Xyrem in the form of

patent and other regulatory protections, as well as high startup costs.

202. At all relevant times, Jazz has sold Xyrem at prices well in excess of the

competitive price and has maintained gross margins on Xyrem sales in excess of 90%.

203. A small but significant, non-transitory price increase for Xyrem by Jazz would

not have caused a significant loss of sales to other narcolepsy treatments sufficient to make such

a price increase unprofitable.

204. Xyrem did not exhibit significant, positive cross-elasticity of demand with respect

to price, with any narcolepsy treatments currently on the market.

205. In fact, Jazz raised prices of Xyrem immediately after acquiring the drug from

Orphan Medical and continued to increase Xyrem prices through the present. The table below

shows Xyrem’s historic per unit (1 mg/mL) Wholesale Acquisition Cost (“WAC”) from

February 2015 to the present:

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FIGURE 4: HISTORIC XYREM WAC

Date Per Unit WAC

02/15/2015 18.8399

02/02/2016 20.6278

01/05/2017 21.9665

07/07/2017 22.4058

01/05/2018 23.9742

01/04/2019 25.6524

07/10/2019 26.1655

01/08/2020 28.3895

06/24/2020 28.3895

206. The consistent WAC increases demonstrates that Xyrem does not have any close

competitors and that Jazz can and does profitably increase prices without competitive restraints.

207. Xyrem is not reasonably interchangeable with any products other than A-rated

generic versions of Xyrem.

208. The existence of non-Xyrem narcolepsy treatments did not constrain Jazz’s ability

to raise or maintain Xyrem’s supracompetitive prices, and therefore those other drug products are

not in the same relevant antitrust market with Xyrem.

209. Therapeutic alternatives are not the same as economic alternatives. Functional

similarities between Xyrem and non-Xyrem narcolepsy treatments are insufficient to permit

inclusion of those other narcolepsy treatments in the relevant market with Xyrem. To be an

economic substitute for antitrust purposes, a functionally similar product must exert sufficient

pressure on the prices and sales of another product, so that the price of that other product cannot

be maintained at supracompetitive levels. No other narcolepsy treatments apart from generic

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versions of Xyrem could have taken away sufficient sales from Xyrem to prevent Jazz from

raising or maintaining the price of Xyrem at supracompetitive levels.

210. Xyrem is also not reasonably interchangeable with any products other than

generic versions of Xyrem because both Xyrem and its generic equivalents have different

attributes significantly differentiating them from other narcolepsy treatments and making them

unique. Xyrem and its generic equivalents are chemically and therapeutically distinct from other

narcolepsy treatments, including stimulants (modafinil and armodafinil), selective serotonin

reuptake inhibitors (fluoxetine and venlafaxine), and tricyclic antidepressants (protriptyline,

imipramine, and clomipramine). Indeed, Xyrem is highly effective for treating cataplexy

symptoms in patients with narcolepsy. Further, the FDA does not consider Xyrem and its generic

equivalents interchangeable with other narcolepsy treatments.

211. Price does not typically drive prescriptions for medications, including those for

narcolepsy treatments. The pharmaceutical marketplace is characterized by a “disconnect”

between the payment obligation and the product selection. State laws prohibit pharmacists from

dispensing many pharmaceutical products, including sodium oxybate oral solution, to patients

without a prescription written by a doctor. Patients and third-party payors have the obligation to

pay for the pharmaceutical product, but it is ultimately the patients’ doctors who choose which

product the patient will buy.

212. Studies show that doctors typically are not aware of the relative costs of brand

pharmaceuticals. Moreover, even when they are aware of the costs, they are insensitive to prices

because they do not pay for the products. The result is a marketplace in which price plays a

comparatively smaller role in product selection.

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213. Thus, unlike many consumer products for which consumers are provided with a

choice of functionally similar products at the point of sale and make purchasing decisions

primarily based on price, the initial purchasing decision for prescription drugs, such as

narcolepsy treatments, is generally made by the physician, not by consumers of those products.

Consequently, despite the existence of a number of different narcolepsy treatments a physician

could have started a patient on, or in theory could switch a patient to, once the physician and

patient find one that is effective and well tolerated, it is unlikely that the patient will switch to a

different narcolepsy treatments based on variations of price.

214. Doctors generally select narcolepsy treatments based on the clinical and

pharmacological attributes of the drug and the relevant characteristics of the patient, rather than

on the basis of price. For clinical reasons, among others, physicians and patients prefer Xyrem to

other narcolepsy treatments.

215. Accordingly, Jazz needs to control only Xyrem and its generic equivalents, and no

other products, in order to profitably maintain supracompetitive prices for Xyrem. Only the

market entry of competing, generic versions of Xyrem will render Jazz unable to profitably

maintain its supracompetitive prices of Xyrem.

216. The relevant geographic market is the United States and its territories.

DEFENDANTS’ ANTICOMPETITIVE CONDUCT INJURED PLAINTIFF AND THE

CLASSES

217. Defendants’ anticompetitive scheme had the purpose and effect of unreasonably

restraining and injuring competition by protecting Xyrem from generic competition. But for the

pay-for-delay agreement, Roxane would have entered the market earlier than January 2023.

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218. But for Defendants’ illegal conduct, generic competition would have forced

decreases in the prices of Xyrem, as price competition among the suppliers of branded and

generic versions of Xyrem would have been intense.

219. But for Defendants’ illegal conduct, Plaintiff and members of the Classes would

have paid less for branded and generic versions of Xyrem. Defendants’ conduct proximately

caused Plaintiff’s and the Classes’ injuries because they have paid and continue to pay hundreds

of millions of dollars in overcharges on purchases of Xyrem.

220. As a result of the delay in generic competition brought about by Defendants’

anticompetitive scheme, Plaintiff and members of the Classes paid more for Xyrem than they

would have paid absent Defendants’ illegal conduct.

221. Upon entering the market, generic equivalents of brand name drugs are priced

below the branded drug. When multiple generic products are on the market, prices for the brand

drug and its generic equivalents fall even further because of the increased competition.

222. If generic competition for Xyrem had not been unlawfully delayed, Plaintiff and

members of the Class would have paid less for both branded and generic versions Xyrem by: (a)

substituting their purchases of Xyrem with less-expensive generic versions of Xyrem; (b)

purchasing generic Xyrem at lower prices sooner; and (c) purchasing branded Xyrem at a

reduced price.

223. Defendants’ efforts to restrain competition in the market for branded and generic

versions of Xyrem have substantially affected interstate commerce.

224. At all material times, Jazz manufactured, promoted, distributed, and sold

substantial amounts of Xyrem in a continuous and uninterrupted flow of commerce across state

lines and throughout the United States.

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225. At all material times, Jazz transmitted funds and contracts, invoices, and other

forms of business communications and transactions in a continuous and uninterrupted flow of

commerce across state lines in connection with the sale of Xyrem.

226. Defendants’ pay-for-delay agreement has enabled Jazz to continue charging end

payors prices in excess of what they otherwise would have been able to charge absent the

Defendants’ unlawful actions.

227. These prices were inflated as a direct and foreseeable result of Defendants’

anticompetitive conduct.

CLASS ACTION ALLEGATIONS

228. Plaintiff brings this action on behalf of itself and all others similarly situated as a

class action under Rules 23(a), (b)(2), and (b)(3) of the Federal Rules of Civil Procedure, seeking

relief on behalf of the following classes (the “Classes”):

The Nationwide Injunction Class

All persons or entities in the United States and its territories that

purchased or reimbursed brand or generic Xyrem, beginning at

least as early as April 5, 2017 until the effects of Defendants’

conduct cease (the “Class Period”).

The Damages Class

All persons or entities that purchased or reimbursed brand or

generic Xyrem, beginning at least as early as April 5, 2017 until

the effects of Defendants’ conduct cease in any of the following

states or territories: Arizona, California, Connecticut, Florida,

Hawaii, Illinois, Iowa, Kansas, Maine, Maryland, Massachusetts,

Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada,

New Hampshire, New Mexico, New York, North Carolina, North

Dakota, Oregon, Rhode Island, South Dakota, Tennessee, Utah,

Vermont, West Virginia, or Wisconsin.

229. The following persons and entities are excluded from each of the above-described

proposed Classes:

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(a) Defendants and their counsel, officers, directors, management, employees,

subsidiaries, or affiliates;

(b) All governmental entities (including state and federal Medicaid programs),

except for government-funded employee benefit plans;

(c) All persons or entities who purchased Xyrem for purposes of resale or

directly from Defendants or their affiliates;

(d) Fully-insured health plans (plans that purchased insurance from another

third-party payor covering 100 percent of the plan’s reimbursement obligations to its members);

(e) Flat co-payers (consumers who paid the same co-payment amount for

brand and generic drugs);

(f) Pharmacy Benefit Managers;

(g) All Counsel of Record; and

(h) The Court, Court personnel and any member of their immediate families.

230. Members of the Classes are so numerous and geographically dispersed that

joinder of all members of the Class is impracticable. Plaintiff believes that there are thousands of

members of the Classes widely dispersed throughout the United States. Moreover, given the

costs of complex antitrust litigation, it would be uneconomic for many plaintiffs to bring

individual claims and join them together. The Classes are readily identifiable from industry data

and information and record maintained by pharmacy benefit managers, retail and mail-order

pharmacies, and other sources.

231. Plaintiff’s claims are typical of the claims of members of the Classes. Plaintiff and

members of the Classes were harmed by the same wrongful conduct by Defendants in that they

paid artificially inflated prices for Xyrem and were deprived of the benefits of earlier and more

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robust competition from cheaper generic equivalents of Xyrem as a result of Defendants’

wrongful conduct.

232. Plaintiff will fairly and adequately protect and represent the interests of the

members of the Classes. Plaintiff’s interests are coincident with, and not antagonistic to, those of

the members of the Classes.

233. Plaintiff is represented by counsel with experience in the prosecution of class

action antitrust litigation and with experience in class action antitrust litigation involving

pharmaceutical products.

234. Questions of law and fact common to the members of the Classes predominate

over questions that may affect only individual members of the Classes because Defendants have

acted on grounds generally applicable to the Classes, making overcharge damages with respect to

the Classes as a whole appropriate. Such generally applicable conduct is inherent in Defendants’

wrongful conduct.

235. Questions of law and fact common to the Classes include:

(a) Whether Defendants unlawfully maintained monopoly power through all

or part of their overall anticompetitive generic suppression scheme;

(b) To the extent such justifications exist, whether there were less restrictive

means of achieving them;

(c) Whether direct proof of Defendants’ monopoly power is available and, if

so, whether it is sufficient to prove Defendants’ monopoly power without the need to define the

relevant market;

(d) Whether Defendants’ scheme, in whole or in part, has substantially

affected interstate commerce;

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(e) Whether Defendants’ unlawful agreement, in whole or in part, caused

antitrust injury through overcharges to the business or property of Plaintiff and the members of

the Classes;

(f) Whether Jazz and Roxane conspired to delay generic competition for

Xyrem;

(g) Whether, pursuant to the pay-for-delay agreement, Jazz’s promise not to

compete against Roxane’s generic product constituted a payment;

(h) Whether Jazz’s agreement with Roxane was necessary to yield some

cognizable, non-pretextual procompetitive benefit;

(i) Whether Jazz’s compensation to Roxane was large and unexplained;

(j) Whether the pay-for-delay agreement a bottleneck to further delay generic

competition for Roxane;

(k) Whether the pay-for-delay agreement harmed competition;

(l) Whether Jazz possessed the ability to control prices and/or exclude

competition for Xyrem;

(m) Whether Defendants’ unlawful monopolistic conduct was a substantial

contributing factor in causing some amount of delay of the entry of generic Xyrem;

(n) Determination of a reasonable estimate of the amount of delay

Defendants’ unlawful monopolistic conduct caused;

(o) The quantum of overcharges paid by the Damages Class in the aggregate;

and

(p) The scope and nature of the equitable relief for the Nationwide Injunction

Class.

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236. Class action treatment is a superior method for the fair and efficient adjudication

of the controversy. Such treatment will permit a large number of similarly situated persons to

prosecute their common claims in a single forum simultaneously, efficiently, and without the

unnecessary duplication of evidence, effort, or expense that numerous individual actions would

engender. The benefits of proceeding through the class mechanism, including providing injured

persons or entities a method for obtaining redress on claims that could not practicably be pursued

individually, substantially outweighs potential difficulties in management of this class action.

237. Plaintiff knows of no special difficulty to be encountered in litigating this action

that would preclude its maintenance as a class action.

CONTINUING VIOLATION

238. This Complaint alleges an ongoing restraint of competition in the market for

sodium oxybate solution, and Plaintiff and members of the Damages Class (defined below) are

entitled to recover damages suffered within the applicable limitations periods.

239. A claim for damages accrued each time a Plaintiff purchased brand or generic

sodium oxybate solution at a supra-competitive price as a result of Defendants’ anticompetitive

conduct. And each sale of brand or generic sodium oxybate solution at a supra-competitive price

constituted another overt act in furtherance of Defendants’ continuing anticompetitive scheme.

Accordingly, Plaintiffs are entitled to recover all damages suffered by Plaintiff and members of

the Damages Class within the applicable limitation period for the statutory claims pleaded below.

CLAIMS FOR RELIEF

COUNT I

(Contract, Combination or Conspiracy in Violation of the Sherman Act, 15 U.S.C. § 1 on

Behalf of the Nationwide Injunction Class)

240. Plaintiff incorporates the preceding paragraphs by reference.

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241. On April 5, 2017, Jazz and Roxane entered into a pay-for-delay agreement, a

continuing illegal contract, combination, and restraint of trade, under which Jazz paid Roxane

substantial consideration in exchange for Roxane’s agreement to delay bringing its generic

version of Xyrem to the market, the purpose and effect of which was to:

(a) Delay generic entry of Xyrem in order to lengthen the period in which

Jazz’s brand Xyrem could monopolize the market and make supra-competitive profits;

(b) Keep an authorized generic off the market during Roxane’s 180-day

generic exclusivity period, thereby allowing Roxane to monopolize the generic market for

Xyrem during that period and allowing Roxane to make supra-competitive profits;

(c) Allocate 100% of U.S. generic Xyrem sales to Roxane during the first 180

days of generic sales; and

(d) Raise and maintain the prices that Plaintiff and the members of Classes

would pay for Xyrem at supra-competitive levels until at least July 2023.

242. Jazz and Roxane are liable for this pay-for-delay agreement under a “rule of

reason” standard under the antitrust laws because there is no legitimate, non-pretextual, procompetitive business justification for this pay-for-delay agreement that outweighs its harmful

effect on direct purchasers and competition. Even if there were some conceivable and cognizable

justification, the payment was not necessary to achieve such a purpose.

243. As a result of Defendants’ conduct, Plaintiff and the Nationwide Injunction Class

Members have been harmed by having to pay higher prices for Xyrem and its AA-rated generic

equivalents than they would have paid in the absence Defendants’ anticompetitive conduct.

244. Plaintiff and Nationwide Injunction Class Members are entitled to equitable and

injunctive relief, including disgorgement of profits, pursuant to Section 16 of the Clayton Act, 15

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U.S.C. § 26, and other applicable law, to correct for the anticompetitive market effects caused by

Defendants’ unlawful conduct, and other relief to ensure that the same or similar anticompetitive

conduct does not reoccur in the future.

COUNT II

(Monopolization in Violation of Sherman Act, 15 U.S.C. § 2

Against Jazz on Behalf of the Nationwide Injunction Class)

245. Plaintiff incorporates the preceding paragraphs by reference.

246. Jazz has knowingly engaged in an anticompetitive scheme designed to delay and

block entry of generic equivalents of Xyrem. The intended and accomplished goal of the scheme

was to use exclusionary conduct to delay the ability of generic manufacturers to launch

competing, generic versions of Xyrem. Jazz’s exclusionary conduct included:

(a) improperly listing of Xyrem REMS Patents in the Orange Book, despite

none claiming the Xyrem drug product or a method of using Xyrem;

(b) the filing of serial and abusive patent litigation against would-be generic

competitors on improperly listed Orange Book patents and patents obtained through inequitable

conduct before the PTO;

(c) abusive and dilatory conduct in the negotiation and development of a

Xyrem REMS; and

(d) entering into an unlawful pay-for-delay agreement with Roxane that

preserved Jazz’s monopoly over brand and generic Xyrem for an additional six years.

247. Jazz’s exclusionary conduct maintained Jazz’s monopoly over branded and

generic Xyrem until at least January 2023.

248. Plaintiff and the Nationwide Injunction Class Members have suffered harm as a

result of paying higher prices for Xyrem and its generic equivalents than they would have absent

Jazz’s anticompetitive conduct and continuing anticompetitive conduct.

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249. Plaintiff and the Nationwide Injunction Class Members have been injured in their

business or property by Jazz’s antitrust violation. Their injuries consist of (1) being denied the

opportunity to purchase lower-priced generic versions of Xyrem, and (2) paying higher prices for

these products than they would have paid in the absence of Jazz’s wrongful conduct. These

injuries are of the type the above antitrust laws were designed to prevent, and flow from that

which makes Jazz’s conduct unlawful.

250. Plaintiff and the Nationwide Injunction Class Members are entitled equitable and

injunctive relief, including disgorgement of profits, pursuant to Section 16 of the Clayton Act, 15

U.S.C. § 26, and other applicable law, to correct for the anticompetitive market effects caused by

Jazz’s unlawful conduct, and other relief to ensure that the same or similar anticompetitive

conduct does not reoccur in the future.

COUNT III

(Anticompetitive Contracts, Combinations, and Arrangements in Violation of State

Antitrust Laws Against All Defendants on Behalf of the Damages Class)

251. Plaintiff incorporates the preceding paragraphs by reference.

252. On April 5, 2017, Jazz and Roxane entered into a pay-for-delay agreement, a

continuing illegal contract, combination, and restraint of trade, under which Jazz paid Roxane

substantial consideration in exchange for Roxane’s agreement to delay bringing its generic

version of Xyrem to the market, the purpose and effect of which was to:

(a) Delay generic entry of Xyrem in order to lengthen the period in which

Jazz’s brand Xyrem could monopolize the market and make supra-competitive profits;

(b) Keep an authorized generic off the market during Roxane’s 180-day

generic exclusivity period, thereby allowing Roxane to monopolize the generic market for

Xyrem during that period and allowing Roxane to make supra-competitive profits;

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(c) Allocate 100% of U.S. generic Xyrem sales to Roxane during the first 180

days of generic sales; and

(d) Raise and maintain the prices that Plaintiff and the members of the

Damages Class would pay for Xyrem at supra-competitive levels until at least July 2023.

253. Jazz and Roxane are liable for this pay-for-delay agreement under a “rule of

reason” standard under the antitrust laws because there is no legitimate, non-pretextual, procompetitive business justification for this pay-for-delay agreement that outweighs its harmful

effect on direct purchasers and competition. Even if there were some conceivable and cognizable

justification, the payment was not necessary to achieve such a purpose.

254. Defendants’ conduct violated the following state antitrust laws:

(a) Ariz. Rev. Stat. §§ 44-1401, et seq., with respect to purchases in Arizona

by the Damages Class Members;

(b) Cal. Bus. Code §§ 16700, et seq., and Cal. Bus. Code §§ 17200, et seq.,

with respect to purchases in California by the Damages Class Members;

(c) Conn. Gen. Stat. § 35-24, et seq., with respect to purchases in Connecticut

by the Damages Class Members;

(d) D.C. Code Ann. §§ 28-4501, et seq., with respect to purchases in the

District of Columbia by the Damages Class Members;

(e) Hawaii Code § 480, et seq., with respect to purchases in Hawaii by the

Damages Class Members;

(f) 740 Ill. Comp. Stat. Ann. 10 / 3, et seq., with respect to purchases in

Illinois by the Damages Class Members;

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(g) Iowa Code §§ 553, et seq., with respect to purchases in Iowa by the

Damages Class Members;

(h) Kan. Stat. Ann. §§ 50-101, et seq., with respect to purchases in Kansas by

Damages Class Members;

(i) Md. Code, Com. Law § 11-201, et seq., with respect to purchases in

Maryland by the Damages Class Members;

(j) Me. Rev. Stat. Ann. 10, §§ 1101, et seq., with respect to purchases in

Maine by the Damages Class Members;

(k) Mich. Comp. Laws Ann. §§ 445.772, et seq., with respect to purchases in

Michigan by the Damages Class Members;

(l) Minn. Stat. §§ 325D.49, et seq., with respect to purchases in Minnesota by

the Damages Class Members;

(m) Miss. Code Ann. §§ 75-21-1, et seq., with respect to purchases in

Mississippi by members of the Damages Class Members;

(n) Neb. Code Ann. §§ 59-801, et seq., with respect to purchases in Nebraska

by the Damages Class Members;

(o) Nev. Rev. Stat. Ann. §§ 598A, et seq., with respect to purchases in Nevada

by the Damages Class Members, in that sales of Xyrem took place in Nevada, purchased by

Nevada end payers at supracompetitive prices caused by Defendants’ conduct;

(p) N.H. Rev. Stat. Ann. §§ 356:1, et seq., with respect to purchases in New

Hampshire by the Damages Class Members;

(q) N.M. Stat. Ann. §§ 57-1-1, et seq., with respect to purchases in New

Mexico by the Damages Class Members;

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(r) N.Y. Gen. Bus. L. §§ 340, et seq., with respect to purchases in New York

by the Damages Class Members;

(s) N.C. Gen. Stat. §§ 75-1, et seq., with respect to purchases in North

Carolina by the Damages Class Members;

(t) N.D. Cent. Code §§ 51-08.1-01, et seq., with respect to purchases in North

Dakota by the Damages Class Members;

(u) Or. Rev. Stat. §§ 6.46.705, et seq., with respect to purchases in Oregon by

the Damages Class Members;

(v) R.I. Gen. Laws §§ 6-36-4, et seq., with respect to purchases in Rhode

Island by the Damages Class Members;

(w) S.D. Codified Laws Ann. §§ 37-1, et seq., with respect to purchases in

South Dakota by the Damages Class Members;

(x) Tenn. Code Ann. §§ 47-25-101, et seq., with respect to purchases in

Tennessee by the Damages Class Members, with end payers in Tennessee paying substantially

higher prices for Xyrem in Tennessee;

(y) Utah Code Ann. §§ 76-10-3101, et seq., with respect to purchases in Utah

by Damages Class Members who are either citizens or residents of Utah;

(z) Vt. Stat. Ann. 9, §§ 2453, et seq., with respect to purchases in Vermont by

the Damages Class Members;

(aa) W.Va. Code §§ 47-18-3, et seq., with respect to purchases in West

Virginia by the Damages Class Members; and

(bb) Wis. Stat. §§ 133.03, et seq., with respect to purchases in Wisconsin by

the Damages Class Members, in that the actions alleged herein substantially affected the people

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of Wisconsin, with thousands of end payers in Wisconsin paying substantially higher prices for

Xyrem in Wisconsin.

255. Plaintiff and the Damages Class Members seek damages and multiple damages as

permitted by law for the injuries they suffered as a result of Defendants’ anticompetitive

conduct.

256. Defendants are jointly and severally liable for all damages suffered by Plaintiff

and the Damages Class Members.

COUNT IV

(Monopolization and Monopoly Maintenance in Violation of State Antitrust Laws Against

Jazz on Behalf of The Damages Class)

257. Plaintiff incorporates the preceding paragraphs by reference.

258. Jazz has knowingly engaged in an anticompetitive scheme designed to delay and

block entry of generic equivalents of Xyrem. The intended and accomplished goal of the scheme

was to use exclusionary conduct to delay the ability of generic manufacturers to launch

competing, generic versions of Xyrem. Jazz’s exclusionary conduct included:

(a) improperly listing of Xyrem REMS Patents in the Orange Book, despite

none claiming the Xyrem drug product or a method of using Xyrem;

(b) the filing of serial and abusive patent litigation against would-be generic

competitors on improperly listed Orange Book patents and patents obtained through inequitable

conduct before the PTO;

(c) abusive and dilatory conduct in the negotiation and development of a

Xyrem REMS; and

259. entering into an unlawful pay-for-delay agreement with Roxane that preserved

Jazz’s monopoly over brand and generic Xyrem for an addition six years.

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260. Jazz’s exclusionary conduct maintained Jazz’s monopoly over branded and

generic Xyrem until at least January 2023.

261. Plaintiff and the Damages Class Members have suffered harm as a result of

paying higher prices for Xyrem and its generic equivalents than they would have absent Jazz’s

anticompetitive conduct and continuing anticompetitive conduct.

262. Plaintiff and the Damages Class Members have been injured in their business or

property by Jazz’s antitrust violation. Their injuries consist of (1) being denied the opportunity to

purchase lower-priced generic versions of Xyrem and (2) paying higher prices for these products

than they would have paid in the absence of Jazz’s wrongful conduct. These injuries are of the

type the above antitrust laws were designed to prevent and flow from that which makes Jazz’s

conduct unlawful.

263. Jazz’s anticompetitive conduct violates the following state antitrust laws:

(a) Ariz. Rev. Stat. §§ 44-1401, et seq., with respect to purchases in Arizona

by the Damages Class Members;

(b) Cal. Bus. Code §§ 16700, et seq., and Cal. Bus. Code §§ 17200, et seq.,

with respect to purchases in California by the Damages Class Members;

(c) Conn. Gen. Stat. § 35-24, et seq., with respect to purchases in Connecticut

by the Damages Class Members;

(d) D.C. Code Ann. §§ 28-4501, et seq., with respect to purchases in the

District of Columbia by the Damages Class Members;

(e) Hawaii Code § 480, et seq., with respect to purchases in Hawaii by the

Damages Class Members;

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(f) 740 Ill. Comp. Stat. Ann. 10 / 3, et seq., with respect to purchases in

Illinois by the Damages Class Members;

(g) Iowa Code §§ 553, et seq., with respect to purchases in Iowa by the

Damages Class Members;

(h) Kan. Stat. Ann. §§ 50-101, et seq., with respect to purchases in Kansas by

Damages Class Members;

(i) Md. Code, Com. Law § 11-201, et seq., with respect to purchases in

Maryland by the Damages Class Members;

(j) Me. Rev. Stat. Ann. 10, §§ 1101, et seq., with respect to purchases in

Maine by the Damages Class Members;

(k) Mich. Comp. Laws Ann. §§ 445.772, et seq., with respect to purchases in

Michigan by the Damages Class Members;

(l) Minn. Stat. §§ 325D.49, et seq., with respect to purchases in Minnesota by

the Damages Class Members;

(m) Miss. Code Ann. §§ 75-21-1, et seq., with respect to purchases in

Mississippi by members of the Damages Class Members;

(n) Neb. Code Ann. §§ 59-801, et seq., with respect to purchases in Nebraska

by the Damages Class Members;

(o) Nev. Rev. Stat. Ann. §§ 598A, et seq., with respect to purchases in Nevada

by the Damages Class Members, in that sales of Xyrem took place in Nevada, purchased by

Nevada end payers at supracompetitive prices caused by Defendants’ conduct;

(p) N.H. Rev. Stat. Ann. §§ 356:1, et seq., with respect to purchases in New

Hampshire by the Damages Class Members;

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(q) N.M. Stat. Ann. §§ 57-1-1, et seq., with respect to purchases in New

Mexico by the Damages Class Members;

(r) N.Y. Gen. Bus. L. §§ 340, et seq., with respect to purchases in New York

by the Damages Class Members;

(s) N.C. Gen. Stat. §§ 75-1, et seq., with respect to purchases in North

Carolina by the Damages Class Members;

(t) N.D. Cent. Code §§ 51-08.1-01, et seq., with respect to purchases in North

Dakota by the Damages Class Members;

(u) R.I. Gen. Laws §§ 6-36-4, et seq., with respect to purchases in Rhode

Island by the Damages Class Members;

(v) Or. Rev. Stat. §§ 6.46.705, et seq., with respect to purchases in Oregon by

the Damages Class Members;

(w) S.D. Codified Laws Ann. §§ 37-1, et seq., with respect to purchases in

South Dakota by the Damages Class Members;

(x) Tenn. Code Ann. §§ 47-25-101, et seq., with respect to purchases in

Tennessee by the Damages Class Members, with end payers in Tennessee paying substantially

higher prices for Xyrem in Tennessee;

(y) Utah Code Ann. §§ 76-10-3101, et seq., with respect to purchases in Utah

by Damages Class Members who are either citizens or residents of Utah;

(z) Vt. Stat. Ann. 9, §§ 2453, et seq., with respect to purchases in Vermont by

the Damages Class Members;

(aa) W.Va. Code §§ 47-18-3, et seq., with respect to purchases in West

Virginia by the Damages Class Members; and

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(bb) Wis. Stat. §§ 133.03, et seq., with respect to purchases in Wisconsin by

the Damages Class Members, in that the actions alleged herein substantially affected the people

of Wisconsin, with thousands of end payers in Wisconsin paying substantially higher prices for

Xyrem in Wisconsin.

264. Plaintiff and the Damages Class Members seek damages and multiple damages as

permitted by law for the injuries they suffered as a result of Jazz’s anticompetitive conduct.

COUNT V

(Unfair and Unconscionable Conduct in Violation of State Consumer Protection Laws

Against All Defendants on Behalf of the Damages Class)

265. Plaintiff incorporates the preceding paragraphs by reference.

266. On April 5, 2017, Jazz and Roxane entered into a pay-for-delay agreement, a

continuing illegal contract, combination, and restraint of trade under which Jazz paid Roxane

substantial consideration in exchange for Roxane’s agreement to delay bringing its generic

version of Xyrem to the market, the purpose and effect of which was to:

(a) Delay generic entry of Xyrem in order to lengthen the period in which

Jazz’s brand Xyrem could monopolize the market and make supra-competitive profits;

(b) Keep an authorized generic off the market during Roxane’s 180-day

generic exclusivity period, thereby allowing Roxane to monopolize the generic market for

Xyrem during that period and allowing Roxane to make supra-competitive profits;

(c) Allocate 100% of U.S. generic Xyrem sales to Roxane during the first 180

days of generic sales; and

(d) Raise and maintain the prices that Plaintiff and the members of Damages

Class would pay for Xyrem at supra-competitive levels until at least July 2023.

267. Further, Jazz engaged in deceptive conduct by: (1) improperly listing the Xyrem

REMS Patents in the Orange Book despite the fact that none claimed a drug product or method

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of using a drug as required by regulation; (2) withholding material prior art from the PTO in the

prosecution of certain patents purportedly covering Xyrem, causing the PTO to improperly issue

those patents; and (3) asserting those improperly obtained patents against would-be generic rivals

in multiple patent infringement suits.

268. Defendants’ pay-for-delay agreement and other unlawful conduct therefore

constitute unfair, unconscionable, and/or deceptive conduct in violation of the following state

consumer protection statutes:

Florida Deceptive & Unfair Trade Practices Act (“FDUTPA”)

Florida Stat. §§ 501.201, et seq.

269. The primary policy of the FDUTPA is “[t]o protect the consuming public and

legitimate business enterprises from those who engage in unfair methods of competition, or

unconscionable, deceptive, or unfair acts or practices in the conduct of any trade or commerce.”

Florida Stat. §§ 501.202(2).

270. A claim for damages under the FDUTPA has three elements: (1) a prohibited

practice; (2) causation; and (3) actual damages.

271. Under Florida law, indirect purchasers have standing to maintain an action under

the FDUTPA based on the facts alleged in this Complaint.

272. As a result of Defendants’ illegal agreements, Plaintiff and the Damages Class

paid more than they would have paid for Xyrem, absent the illegal conduct.

273. Defendants sold Xyrem in Florida, and their conduct had a direct and substantial

impact on trade and commerce in Florida. Accordingly, such conduct falls within the

prohibitions in Florida Stat. §§ 501.202(2).

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Massachusetts Consumer Protection Act (“MCPA”)

Mass. Gen. L. Ch. 93A, et seq.

274. The MCPA regulates trade and commerce “directly or indirectly affecting the

people of this commonwealth.” Mass. Gen. L. Ch. 93A § 9(1).

275. Under the MCPA, “[a]ny person, who has been injured by another person’s use or

employment of any method, act or practice” that constitutes “[u]unfair methods of competition

and unfair or deceptive acts or practices in the conduct of any trade or commerce.” Mass. Gen. L.

Ch. 93A §§ 2, 9(1). MCPA § 2(b) provides that these terms are interpreted consistent with

Section 5 of the FTC Act (15 U.S.C. § 45(a)), which also prohibits “[u]nfair methods of

competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting

commerce.” Mass. Gen. L. Ch. 93A § 2(b); 15 U.S. § 45(a)(1).

276. As a result of Defendants’ illegal agreements, Plaintiff and the Damages Class

paid more than they would have paid for Xyrem absent the illegal conduct.

277. Defendants sold Xyrem in Massachusetts, and their conduct had a direct and

substantial impact on trade and commerce in Massachusetts. Accordingly, such conduct falls

within the prohibitions in Ch. 93A § 2.

Missouri Merchandising Practices Act (“MMPA”)

Mo. Rev. Stat. 407.020

278. Under Section 407.020, the MMPA prohibits “[t]he act, use or employment by

any person of any deception, fraud, false pretense, false promise, misrepresentation, unfair

practice or the concealment, suppression, or omission of any material fact in connection with the

sale or advertisement of any merchandise in trade or commerce.” Mo. Rev. Stat. 407.020.

279. The Missouri Attorney General has defined an “unfair practice” as:

any practice which . . . [o]ffends any public policy as it has been

established by the Constitution, statutes or common law of this

state, or by the Federal Trade Commission, or its interpretive

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decisions; or . . . [i]s unethical, oppressive, or unscrupulous; and

. . . [p]resents a risk of, or causes, substantial injury to consumers.

Mo. Att’y Gen. Reg., 15 CSR 60-8.02.

280. As a result of Defendants’ illegal agreement and other unlawful conduct, Plaintiff

and the Damages Class paid more than they would have paid for Xyrem, absent the illegal

conduct.

281. Defendants sold Xyrem in Missouri, and Defendants’ conduct had a direct and

substantial impact on trade and commerce in Missouri. Upon information and belief, Defendants

also directed advertising and marketing efforts for Xyrem in Missouri. Accordingly, Defendants’

conduct falls within the prohibitions in the MMPA.

DEMAND FOR JUDGMENT

WHEREFORE, Plaintiff, on behalf of itself and the proposed Classes, respectfully

demands that this Court:

(a) Determines that this action may be maintained as a class action pursuant to

Rules 23(a), (b)(2), and (b)(3) of the Federal Rules of Civil Procedure, and directs that

reasonable notice of this action, as provided by Rule 23(c)(2), be given to the Classes, and

declares Plaintiff as a representative of the Classes;

(b) Enters joint and several judgments against the Defendants and in favor of

Plaintiff and the Classes;

(c) Grants Plaintiff and the Nationwide Injunction Class equitable relief in the

nature of an injunction, disgorgement, restitution, and the creation of a constructive trust to

remedy Defendants’ unjust enrichment;

(d) Awards the Damages Class damages, trebled, in an amount to be

determined at trial;

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(e) Awards Plaintiff and the Classes their costs of suit, including reasonable

attorneys’ fees as provided by law; and

(f) Awards such further and additional relief as the case may require and the

Court may deem just and proper under the circumstances.

JURY DEMAND

Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Plaintiff, on behalf of itself

and the proposed Classes, demands a trial by jury on all issues so triable.

DATED: June 30, 2020

/s/ Michael J. Freed

Michael J. Freed

Robert J. Wozniak

Brian Hogan

FREED KANNER LONDON & MILLEN

LLC

2201 Waukegan Rd, Suite 130

Bannockburn, IL 60015

Tel: (224) 632-4500

Fax: (224) 632-4521

mfreed@fklmlaw.com

rwozniak@fklmlaw.com

bhogan@fklmlaw.com

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Gregory S. Asciolla

Karin E. Garvey

Robin A. van der Meulen

Domenico Minerva

Matthew J. Perez

Veronica Bosco

LABATON SUCHAROW LLP

140 Broadway

New York, NY 10005

Tel: (212) 907-0700

Fax: (212) 818-0477

gasciolla@labaton.com

kgarvey@labaton.com

rvandermeulen@labaton.com

dminerva@labaton.com

mperez@labaton.com

vbosco@labaton.com

Roberta D. Liebenberg

Paul Costa

Mary L. Russell

FINE, KAPLAN AND BLACK, R.P.C.

One South Broad Street, 23rd Floor

Philadelphia, PA 19107

Tel: (215) 567-6565

Fax: (215) 568-5872

rliebenberg@finekaplan.com

pcosta@finekaplan.com

mrussell@finekaplan.com

Attorneys for Plaintiff and the Proposed

Classes

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