Source: https://www.lit-antitrust.shearman.com/Northern-District-Of-Illinois-Dismisses-Antitrust-Claims-Relating-To-Worlds-Most-Profitable-Drug
Timestamp: 2020-08-03 09:40:14
Document Index: 461069040

Matched Legal Cases: ['§ 4', '§ 7', '§ 12', '§ 1', '§ 2', '§ 1', '§ 2', '§ 1', '§ 2', '§ 1', '§ 4', '§ 1', '§ 2']

Northern District Of Illinois Dismisses Antitrust Claims Relating To World’s Most Profitable Drug—Humira (Adalimumab)
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On June 8, 2020, Judge Manish Shah of the United States District Court for the Northern District of Illinois (Eastern Division) granted AbbVie’s motion to dismiss plaintiff’s Sherman Act claims because the allegations fell “short of alleging the kind of competitive harm remedied by antitrust law.” In re Humira (Adalimumab) Antitrust Litigation, No. 1:19-cv-01873 (N.D. Il. 2020). Plaintiffs are two separate classes of indirect purchasers in a consolidated class action alleging that pharmaceutical manufacturer AbbVie, in concert with competing biosimilar manufacturers (Amgen, Samsung Bioepis, and Sandoz), violated §§ 1 and 2 of the Sherman Act by improperly exercising monopoly power over the market for the drug Adalimumab.
Defendant AbbVie holds a vast portfolio of U.S. patents for the world’s best-selling drug Humira and similar drugs with the active ingredient Adalimumab, commonly used to treat arthritis and other inflammatory conditions. Plaintiffs raised two novel antitrust theories of harm: (1) that AbbVie used a litigious “patent thicket” strategy to maintain its monopoly over the U.S. market (in violation of Sherman Act § 2) and (2) that AbbVie illegally restrained trade by entering into settlement agreements with competing biosimilar manufacturers to allocate geographic markets through licenses that allowed the sale of biosimilars in Europe in 2018 while prohibiting sales in the U.S. until 2023 (in violation of Sherman Act § 1).
First, the Court considered plaintiffs’ § 2 monopolization claim that AbbVie acted to delay or foreclose competitors from entering the market by “aggressively” obtaining and asserting its patents via several regulatory channels, including the United States Patent and Trademark Office, the Food and Drug Administration, and Federal District Court. At 19. Ultimately, the Court dismissed these claims, finding that “the vast majority of the alleged scheme [was] immunized from antitrust scrutiny” under the Noerr-Pennington doctrine. That doctrine recognizes a First Amendment protection against antitrust liability for good-faith petitioning of government entities—including the pursuit and assertion of patents.
Drawing on case law, the Court determined that the use of patent petitions to the government was only unlawful where the petitions were “objectively baseless.” This standard required that “no reasonable litigant could realistically expect success on the merits.” According to the Court, the fact that over half of AbbVie’s patent applications were successful warranted a presumption of reasonable conduct that plaintiffs failed to rebut. As for the patents that were not approved, the Court found that there was no antitrust injury because plaintiffs failed to show that competing manufacturers would have entered the market any sooner than the dates that AbbVie had set in the settlement agreements it entered into with those competitors. Once this was established, all that remained was AbbVie’s throwing “a few sharp elbows” at “sophisticated competitors,” which, viewed in light of the presumption of a valid patent process, failed to prop up plaintiffs’ theory of antitrust liability.
Second, the Court considered plaintiffs’ § 1 claims that AbbVie’s settlement agreements with competing manufacturers were (1) a type of “pay-for-delay” scheme to prolong its monopoly and was (2) an improper geographic market allocation via licenses that routed competitors to the European market while enabling AbbVie to keep its U.S. monopoly. The Court ultimately rejected plaintiffs’ claims, deciding that there was no basis to challenge them in the first place because the agreements did not contain reverse payments of the kind that could be challenged under the Supreme Court’s decision FTC v. Actavis, Inc., 570 U.S. 136 (2013). According to that case, settlements that allow early entry without the patentee paying a competitor to stay out of the market do not give rise to antitrust concerns. In this case, because the agreements did not contain reverse payments (instead allowing entry in Europe in exchange for delaying entry into the U.S.), there was no basis for challenging them at all. “The transfer of value, as large as it was, did not have the hallmarks of an unjustified and otherwise inexplicable payment because the package either increased competition or preserved an anticompetitive status quo.” Because AbbVie allowed these competitors to enter the European market earlier than they might have otherwise, the Court found AbbVie’s settlement agreements to be the permissible type that posed no antitrust risk under the Supreme Court’s analysis in FTC. v. Actavis, Inc.
The Court did state, however, that pay-for-delay arrangements would be assessed under the rule of reason rather than on a quick-look or per se basis. Although it did not need to conduct the analysis in this case, the Court found that the rerouting of AbbVie’s competitors to Europe was not the kind of disadvantageous geographic restriction that was obviously and on-balance anticompetitive. Instead, there were procompetitive benefits to negotiating settlements that transferred value from the patent-holder to the alleged patent-infringer, including that the agreements provided certainty to both parties and avoided further litigation costs. Further, there was no evidence that AbbVie refused to settle with the “wave of challengers.”
Finally, the Court also addressed the question of antitrust injury to consumers. It found that plaintiffs had failed to show that competitors could have entered the market and lowered Adalimumab drug prices for consumers any sooner than the dates set in the settlement agreements and therefore the antitrust injury in this case was too speculative.
The Court therefore dismissed claims against AbbVie because its patent petitions, litigation, and settlement were not objectively baseless and offered procompetitive benefits. The Court further held that AbbVie’s conduct caused no antitrust injury to consumers. This case highlights the interplay between antitrust and patent law regimes. It additionally clarifies the application of the Noerr-Pennington doctrine over novel theories of antitrust liability. Parties should be reminded that the factual details of their case—such as a patent application success rate—can affect courts’ review of antitrust claims in both the type of analysis that is applied and the determination of what constitutes permissible conduct.
CATEGORIES: Antitrust Immunity, Antitrust Injury, Clayton Act, § 4, Monopolization, Rule of Reason, Sherman Act § 1, Sherman Act § 2