Source: https://www.orangebookblog.com/2006/05/index.html
Timestamp: 2019-04-20 07:06:51+00:00

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Antitrust Case Against Abbott Moves Forward: Were TriCor Formulation Changes Illegal?
In an opinion released last Friday, Judge Kent A. Jordan of the U.S. District Court for the District of Delaware denied Abbott's motion to dismiss numerous antitrust claims in Abbott Labs et al. v. Teva Pharms. et al., No. 02-1512.
The antitrust claims were originally brought by Teva and Impax as counterclaims in patent infringement litigation concerning Abbott's TriCor (fenofibrate) drug product, a treatment for high cholesterol and triglycerides. Later, various pharmacies and third-party payors filed related antitrust claims against Abbott, and those cases were consolidated with the patent infringement cases. The antitrust plaintiffs are seeking treble damages from Abbott.
Teva and the other antitrust plaintiffs allege that Abbott responded to the threat of generic entry by changing the formulation of TriCor, not to improve the product but simply to prevent generic formulations from becoming AB-rated for substitution with TriCor. Pharmacists may substitute a generic equivalent for a branded drug only if the generic drug has been AB-rated by the FDA, which means not only that the generic drug is bioequivalent to the branded drug, but also that the generic has the same form, dosage, and strength.
May 2005: D. Del. grants partial summary judgment of non-infringement to Teva in the tablets litigation; FDA then grants final approval to Teva's ANDA for 54 mg and 160 mg TriCor tablets; Abbott voluntarily dismisses remaining patent infringement claims.
Teva is pursuing ten separate antitrust claims against Abbott, including Sherman Action monopolization and sham litigation violations, Walker Process violations, and state law tortious interference with valid business expectations. In opposition to Teva's motion to dismiss, Abbott unsuccessfully argued that changing its TriCor formulation did not violate federal antitrust law; that any actions taken in its patent infringement litigation are immune under the Noerr-Pennington doctrine because Teva did not adequately plead the litigation was a sham; and that the state law allegations failed to state a claim.
While acknowledging that "[o]ne of the benefits of competition is the introduction of new, improved products," the court relied on the Microsoft case, 253 F.3d 34 (D.C. Cir. 2001) and the "nature of the pharmaceutical drug market," to determine that Teva's antitrust counterclaims should proceed and be analyzed under the "rule of reason." According to Judge Jordan's opinion, "The per se standard proposed by Defendants presupposes an open market where the merits of any new product can be tested by unfettered consumer choice. But here, consumers were not presented with a choice between fenofibrate formulations. Instead, [Abbott] allegedly prevented such a choice by removing the old formulations from the market while introducing new formulations.
As the antitrust case moves forward, "Plaintiffs [will] not [be] required to prove that the new formulations were absolutely no better than the prior version or that the only purpose of the innovation was to eliminate the complementary product of a rival. Rather, as in Microsoft, if Plaintiffs show anticompetitive harm from the formulation changes, that harm will be weighed against any benefits presented by Defendants."
Vermont Senator Patrick Leahy, co-chairman of the Intellectual Property Subcommittee of the Senate Judiciary Committee, introduced a bill last week entitled "Life-Saving Medicines Export Act of 2006." If enacted, the bill would provide for compulsory licensing of patented medicines (including vaccines and diagnostic tests) in the United States. According to a statement from Sen. Leahy's office, the bill "allows U.S. companies to make low-cost generic versions of patented medicines for export to impoverished nations that face public health crises but cannot produce those life-saving medicines for themselves."
the generic company must pay a royalty to the patent holder, not to exceed 4% of the commercial value of the exported medicine; the royalty rate will be determined by the Director of the USPTO.
The summary posted on Sen. Leahy’s web site provides no information about reporting requirements to be imposed on the generic drug companies that obtain compulsory licenses.
The FDA has appealed the decision in Ranbaxy v. Leavitt to the D.C. Circuit Court of Appeals. On May 1st, the district court in the case found that by denying Ranbaxy's and Teva's citizen petitions, the FDA improperly stripped the companies of their 180-day marketing exclusivity rights for generic Zocor. The citizen petitions had asked the FDA to relist Merck's patents on Zocor in the Orange Book. The FDA denied the petitions, and so Ranbaxy and Teva sued the FDA in federal court. The parties have agreed to an expedited appeal schedule.
In addition, Teva announced that it has received tentative approval from the FDA for its generic Zocor products. Merck's final patent on Zocor is set to expire on June 23, 2006, and analysts expect Teva and Ranbaxy to launch generic Zocor on or shortly after that date. Teva would have generic exclusivity on four dosage strengths, while Ranbaxy would have exclusivity on a fifth dosage strength. Zocor is the world's second-biggest selling drug (behind Pfizer's Lipitor), with $4.6 billion in annual sales.
"Reverse Payment" Settlements: Should Congress Weigh In?
The Solicitor General's recent recommendation to deny certiorari in FTC v. Schering seems to raise the likelihood that the Supreme Court will decline to hear the case. If the Supreme Court denies cert, perhaps Congress should consider the policy issues at play.
In FTC v. Schering, the FTC is appealing an Eleventh Circuit decision vacating the FTC's ruling that a settlement of Hatch-Waxman litigation including substantial "reverse payments" from Schering-Plough to two generic challengers violated the unfair competition laws. The Solicitor General's brief is one of several amicus briefs filed with the Court in the case.
so long as the exclusionary effects of a settlement agreement do not extend beyond the patent expiration date, the agreement comports with the antitrust laws.
The FTC and consumer advocate groups tend to hold the first view, while the courts have generally adopted the second. These competing views highlight the tension between the patent laws (which reward innovation by granting an exclusionary right for a fixed term), the antitrust laws (which prohibit parties with market power from allocating markets among their competitors), and the Hatch-Waxman Amendments (which seek to promote generic drug market entry while rewarding innovation by branded drug makers).
For those groups holding the first view, the public policy goal of bringing generic drugs to consumers at the earliest possible date trumps the other competing issues. While these groups see reverse payments as particularly egregious, their real issue is that any settlement in which generic entry is potentially delayed is harmful to consumers and should be considered a violation of the antitrust laws. One problem with this view is that it conflicts with the policy of encouraging settlements of lawsuits; another is that the courts haven’t bought into it.
A branded drug maker is currently entitled, under Hatch-Waxman, to a 30 month stay upon timely filing suit against an ANDA applicant who files a paragraph IV certification. Accordingly, the FTC and consumer advocate groups would seem most concerned by settlement agreements that extend a branded drug maker's exclusivity beyond the 30 month stay.
One way to reduce incentives for settlements that delay generic market entry beyond the 30 month stay is to require the first ANDA applicant who files a paragraph IV certification ("first filer") to forego all or part of its 180-day exclusivity rights if it enters into such a settlement agreement. Moreover, all or part of the exclusivity rights would transfer from the first filer to the second ANDA filer. Assuming the second ANDA has been approved by the FDA, the second filer could begin marketing its generic drug. If the branded drug maker settles with the second filer, the exclusivity would then pass to the third filer--and so on.
The purpose of the 180-day exclusivity for first filers is, after all, to encourage generic drug companies to challenge weak patents on brand name drugs. If the generic drug company drops its patent challenge in a settlement agreement, it should lose the exclusivity. Transferring the 180-day exclusivity to subsequent filers encourages multiple ANDA filings and multiple patent challenges for drugs protected by patents perceived to be weak, which should ultimately bring generic drugs to market sooner.
Comments on the proposal described above are welcome--and encouraged.
Teva announced Monday that the FDA has granted final approval of generic Lexapro to Teva's IVAX unit. Lexapro, manufactured by Forest Laboratories, is a selective serotonin reuptake inhibitor (SSRI) antidepressant, with annual sales of over $2 billion in the United States. Lexapro sales account for 60% of Forest's revenue.
Forest Labs' patent infringement case against IVAX concerning IVAX's ANDA for generic Lexapro is still pending before Judge Farnan in the U.S. District Court for the District of Delaware. See Forest Labs. v. IVAX Pharms., No. 03-891. A bench trial was held in March, and post-trial briefing was completed last week. Teva has not announced whether it intends to launch generic Lexapro at risk.
In its post-trial brief, IVAX argues that the '712 patent is invalid for anticipation and obviousness, invalid for broadening reissue, and unenforceable for inequitable conduct. In its lead argument, IVAX argues that a prior art reference, Smith, describes (+) and (-) citalopram as individual enantiomers in a form separated from each other. Forest counters in its post-trial brief that Smith does not anticipate the '712 patent because it does not enable one of skill in the art to make substantially pure (+)-citalopram without undue experimentation.
Based on prior experience with Judge Farnan, a decision in the case may not be announced for six months to a year.
Responding to the Supreme Court's invitation, the Solicitor General has filed an amicus brief in SmithKline Beecham v. Apotex. The Solicitor General recommends that the Supreme Court deny SKB's petition for certiorari.
Previously, SKB lost its patent infringement suit against Apotex both in the district court and at the Federal Circuit. In the suit, SKB alleges that Apotex's ANDA for a generic version of Paxil infringes SKB's patent on the hemihydrate form of paroxetine hydrochloride (PHC), the active ingredient in Paxil. Paxil is a leading anti-depressant drug, with annual sales of over $3 billion.
This case has a long, somewhat convoluted history, which has been closely tracked by Patently-O. In 2003, Judge Posner, sitting by designation, found SKB's patent not infringed. In 2004, a Federal Circuit panel affirmed the decision, but on different grounds: the patent was invalid because the invention had been in public use during clinical trials. In 2005, the full Federal Circuit vacated the panel decision and simultaneously the original panel issued a new opinion, holding that SKB's patent was invalid as inherently anticipated.
The Federal Circuit held that a prior art patent inherently anticipated PHC hemihydrate because "the manufacture of PHC anhydrate according to the [prior art] patent necessarily results in the production of PHC hemihydrate." Further, according to the Federal Circuit, although no one recognized the creation of PHC hemihydrate in the prior art, "inherent anticipation does not require a person of ordinary skill in the art to recognize the inherent disclosure in the art at the time the prior art is created."
Whether the Federal Circuit erred in holding, in conflict with this Court's decision in Tilghman v. Proctor, 102 U.S. 707 (1881), and its progeny, that the "unwitting" and "unappreciated" prior creation of a product renders a subsequent patent of that product invalid as "inherently anticipated," and thus not novel under Section 102 of the Patent Act.
The Solicitor General's brief argues that the Supreme Court has "squarely rejected" the contention that inherent anticipation occurs only if persons skilled in the art recognize the inherent matter at the time the prior art was created; to the contrary, the Court has held that "a characteristic of a pre-existing product is not patentable even if no one had previously recognized that characteristic." The Solicitor General argues that PHC hemihydrate is a characteristic of PHC because producing PHC inevitably results in PHC hemihydrate.
Moreover, according to the Solicitor General, the cases cited by SKB "are distinguishable for three reasons: they did not involve attempts to patent pre-existing products; they did not involve patents that would prevent the public from practicing the prior art; and it was not clear in those cases that the prior art had in fact inevitably produced the allegedly inherent result."
Thanks to an alert reader for bringing the Solicitor General's brief to my attention!
In this antitrust case, In re Wellbutrin SR Antitrust Litigation, Nos. 04-5525, 04-5898, 05-396 (E.D. Pa.), three classes of plaintiffs, representing direct and indirect purchasers of Wellbutrin SR, as well as Medical Mutual of Ohio, a "third-party payor for Wellbutrin SR," sued GlaxoSmithKline (GSK) for violating various state and federal antitrust laws. The plaintiffs allege that GSK pursued frivolous patent infringement litigation against several generic drug makers who filed ANDA's for Wellbutrin SR. In March of this year, the district judge presiding in the case denied GSK's motion to dismiss, finding that for the purposes of the motion, GSK's patent litigation was "sham litigation," and therefore not entitled to Noerr-Pennington immunity from the antitrust laws.
GSK developed Wellbutrin SR, a sustained release version of its popular Wellbutrin antidepressant, shortly after the last of its Wellbutrin patents expired in 1991. Wellbutrin SR contains bupropion, the active ingredient, and an excipient known as hydroxypropyl methylcellulose ("HPMC"). In 1993, GSK filed a patent application broadly covering any sustained release formulation of bupropion. However, the broad claims were rejected, and GSK thereafter narrowed the claims to cover only formulations containing HPMC. The Patent Office granted GSK a patent on the narrow claims.
Beginning in 1999, several generic drug makers, including Andrx Pharms., Eon Labs, Impax Labs, Excel Pharms., and Watson Labs filed ANDA's to market generic versions of Wellbutrin SR containing sustained release excipients other than HPMC. Accordingly, the generic drug makers filed paragraph IV certifications, alleging that they did not infringe GSK's formulation patent. GSK sued each company for patent infringement, thereby earning an automatic 30-month stay of generic approval. However, in separate decisions, the courts held that GSK's patent was not infringed. Subsequently, GSK was sued for antitrust violations based on GSK's unsuccessful Wellbutrin SR patent litigation.
GSK moved to dismiss the antitrust case on grounds that its patent infringement suits qualify for Noerr-Pennington immunity, which generally shields from antitrust liability those parties who petition the government for redress. The antitrust plaintiffs acknowledged that lawsuits are ordinarily protected activity under Noerr-Pennington, but argued that GSK's infringement actions are subject to the "sham litigation" exception because they were "objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits" and they concealed "an attempt to interfere directly with the business relationships of a competitor, through the use of the governmental process."
The district court agreed with the plaintiffs. In particular, the court found that "any reasonable litigant confronting the facts Plaintiffs alleged at the time the infringement suits were filed would have concluded that GSK would be estopped from claiming infringement by equivalence. Without a viable argument for infringement by equivalence, GSK could not reasonably have expected success on the merits." The court therefore found GSK's infringement suits "objectively baseless," and entered an Order denying GSK's motion to dismiss.
Last week, the district court denied GSK's motion to certify the Order for interlocutory appeal to the Federal Circuit, meaning the case now moves forward in the district court. Stay tuned . . . .
As Patently-O reported early this morning, the Solicitor General has filed an amicus brief in FTC v. Schering. The Supreme Court, while considering whether to grant certiorari in the case, had asked for the views of the Solicitor General last fall. The Solicitor General's brief advises the Court not to grant the FTC's cert petition.
If the Court denies certiorari, that would leave standing the 11th Circuit's decision that a settlement of a patent infringement lawsuit between Schering-Plough and Upsher-Smith did not violate the antitrust laws. The patent infringement suit concerned Upsher's generic version of Schering's K-Dur 20 drug product, a treatment for high blood pressure and heart disease. The settlement agreement between Schering and Upsher included a cash payment from Schering to Upsher in exchange for Upsher's promise not to launch its generic version of K-Dur 20 for six more years—close to the end of Schering's patent term.
Whether the antitrust laws prohibit a brand name drug patent holder and a prospective generic competitor from settling patent infringement litigation by agreeing that the generic manufacturer will not enter the market before a future date within the term of the patent and that the patent holder will make a substantial payment to the generic manufacturer.
Whether the court of appeals erred in concluding that "substantial evidence" did not support the Federal Trade Commission's factual finding that a payment from a patent holder to an allegedly infringing generic manufacturer was consideration for the generic manufacturer's delayed entry into the market rather than a separate royalty for a license concerning a different product.
Thanks to Dennis Crouch for sending me copies of the briefs!
In a recent decision, Ranbaxy v. Leavitt, the federal district court for the District of Columbia held that the FDA improperly denied Ivax's (a division of Teva) and Ranbaxy's citizen petitions to relist two Merck patents on Zocor. According to the court, by denying the citizen petitions, the FDA effectively nullified Ivax's and Ranbaxy's rights to 180-day exclusivity periods, contrary to the clear intent of Congress.
In 2000 and 2001, Ivax and Ranbaxy filed ANDA's for generic versions of Zocor, a blockbuster statin drug, certifying under paragraph iv that two of Merck's Orange Book listed patents were invalid, unenforceable, or not infringed. However, Merck chose not to sue the generic drug companies for patent infringement. In 2003, Merck sent a letter to the FDA requesting that the two patents be removed from the Orange Book. The next year, the FDA delisted the two patents.
In 2005, Ivax and Ranbaxy submitted citizen petitions asking the FDA to relist the patents, and for confirmation that, as the first ANDA filers, they were still entitled to 180 days of marketing exclusivity for generic Zocor. In October, 2005, the FDA denied the petitions, stating that it would not relist the patents and that no generic applicant would be entitled to a 180-day exclusivity period. In denying the citizen petitions, the FDA asserted that the statute was ambiguous, and therefore it was free to choose how to handle delisting requests.
If Merck had sued plaintiffs because of their paragraph IV certifications, plaintiffs would have been in danger of losing their right to a 180-day exclusivity period upon final FDA approval only if the patents were found to be enforceable or infringed. In this case, however, the FDA delisted the patents from the Orange Book, disregarding the plaintiffs' success in avoiding suit. That disparate treatment here contravened the plain and undisputed intent of Congress. The delisting practice as applied here effectively eliminated Congress's "first commercial marketing" trigger, in violation of the clear command of Congress.
The FDA has not yet indicated whether it will appeal the decision to the D.C. Circuit.
Generic drug companies may finally hear from the Supreme Court on whether merely listing a patent in the Orange Book creates a sufficient basis for a declaratory judgment action. Last October, the Supreme Court denied cert in Teva v. Pfizer, in which the Federal Circuit held that listing a patent in the Orange Book does not create a justiciable controversy. On Monday, in a move that may foreshawdow a grant of certiorari, the Supreme Court asked the Solicitor General for his views on a similar case, Apotex v. Pfizer. Both cases concern generic challenges to Pfizer's patent on Zoloft.
In its cert petition, Apotex framed the question for review as follows: whether, in cases where a generic drug maker seeks a declaratory judgment of noninfringement, a justiciable controversy is presented when "the failure to secure a court judgment prohibits the federal government from approving the generic equivalent and the prospect of massive patent liability deters the generic manufacturer from entering the marketplace." Apotex argued in its petition that Teva v. Pfizer was wrongly decided because the Federal Circuit improperly elevated its "reasonable apprehension" test for declaratory judgment jurisdiction to a "constitutional requirement"--in direct conflict with Supreme Court precedents. Apotex further argued that cert should be granted because the Federal Circuit's decision to deny declaratory judgment jursidiction "effectively nullifies an entire statutory scheme," the Hatch-Waxman Amendments.
In its opposition brief, Pfizer argued that the petition should be denied because: (a) the case is so fact-intensive that it doesn't raise a recurring issue; (b) the reasonable apprehension test is consistent with Supreme Court precedents and creates no split among the circuits; and (c) the lower court decision is correct on the merits. Apotex answered each of these arguments in its reply brief.
The Generic Pharmaceutical Association filed an amicus brief in support of Apotex.

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