In re Niaspan Antitrust Litigation

42 F. Supp. 3d 735, 2014 WL 4403848
CourtDistrict Court, E.D. Pennsylvania
DecidedSeptember 5, 2014
DocketMDL No. 2460; Master File No. 13-MD-2460
StatusPublished
Cited by61 cases

This text of 42 F. Supp. 3d 735 (In re Niaspan Antitrust Litigation) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Niaspan Antitrust Litigation, 42 F. Supp. 3d 735, 2014 WL 4403848 (E.D. Pa. 2014).

Opinion

MEMORANDUM

DuBOIS, J.

I. INTRODUCTION

This multidistrict litigation concerns what has come to be known as a “pay-for-delay,” or “reverse payment,” settlement— [740]*740a practice in which a brand-name drug manufacturer brings a patent-infringement action against a generic-drug manufacturer and then compensates the generic-drug manufacturer for its agreement to refrain from entering the market with a competing generic version of the brand-name drug until a specified date. The term “reverse payment” derives from the fact that the payment flows in the direction opposite to what one would normally expect in patent-infringement litigation; in other words, the patentee pays the alleged infringer to settle the lawsuit, rather than the other way around.

In this case, plaintiffs aver that the brand-name manufacturer Kos Pharmaceuticals, Inc. (“Kos”) entered into anti-competitive settlement agreements in March of 2005 with the generic manufacturer Barr Pharmaceuticals, Inc. (“Barr”) in order to terminate patent-infringement litigation brought by Kos against Barr in the U.S. District Court for the Southern District of New York. Presently before the Court is defendants’ Joint Motion to Dismiss the Direch-Purchaser Plaintiffs and End-Payor Plaintiffs’ Consolidated Amended Complaints (“Motion to Dismiss”) and defendants’ Joint Motion for Judicial Notice in Support of Joint Motion to Dismiss the Consolidated Amended Complaints (“Motion for Judicial Notice”), on which the Court heard oral argument on June 24, 2014. For the reasons set forth below, defendants’ Motion to Dismiss is granted in part and denied in part, and defendants’ Motion for Judicial Notice is denied.

II. BACKGROUND

A. Regulatory Background

Prior to marketing or selling a new drug (i.e., a “pioneer drug” or “brand-name drug”) in the United States, a potential drug manufacturer must obtain a grant of approval from the Food & Drug Administration (“FDA”). To do so, an applicant must file a New Drug Application (“NDA”), which contains, inter alia, information about safety and efficacy of the drug, the components of the drug, and any patents issued on the composition of the drug or methods for its use. 21 U.S.C. § 355(b)(1). Upon approval of an NDA, the FDA publishes the drug and patent information in its directory of Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the “Orange Book.” Apotex Inc. v. UCB, Inc., 763 F.3d 1354, 1356-57, 2014 WL 3973498, at *2 (Fed.Cir.2014).

In an effort to speed up the approval process for generic versions of already FDA-approved brand-name drugs, Congress passed the Hatch-Waxman Act (“Hatch-Waxman”) in 1984. See Pub.L. No. 98-417, 98 Stat. 1585 (1984). Under Hatch-Waxman, a potential generic manufacturer only needs to file an Abbreviated New Drug Application (“ANDA”) if it can establish that its generic is the bioequivalent of an FDA-approved brand-name drug. See 21 U.S.C. § 355(j)(2)(A). The process for filing an ANDA is considerably more streamlined than that for an NDA because it allows the applicant to “piggyback” on the safety and efficacy findings made by the FDA in the course of approving the brand-name drug, rather forcing the applicant to conduct the time-consuming and costly trials anew. Teva Pharm., USA, Inc. v. Leavitt, 548 F.3d 103, 104 (D.C.Cir.2008).

An ANDA applicant must, inter alia, make one of four “paragraph certifications”: (1) no patent information for the brand-name drug has been filed with the FDA (paragraph I); (2) the patent has expired (paragraph II); (3) the patent will expire on a specifically identified date (paragraph III); or (4) the “patent is inval[741]*741id or will not be infringed by the manufacture, use, or sale of the new drug for which the application is submitted” (paragraph IV). 21 U.S.C. § 355(j)(2)(A)(vii).1 Pay-for-delay cases, such as the one before this Court, invariably involve the last of these four certifications, the so-called “paragraph IV certification.”

An applicant that makes a paragraph IV certification must send prompt notice to the patent holder of its position that the patent is invalid or will not be infringed by the applicant’s ' generic drug. Id. § 355(j)(2)(B). This notification triggers a forty-five day period during which the patent holder may file an infringement lawsuit against the ANDA applicant to prevent the FDA from proceeding with the ANDA application process. Id. § 355(j)(5)(B)(iii). The ANDA thus gives the brand-name manufacturer a jurisdictional basis on which it may bring an infringement suit without the generic having yet come to market. Teva Pharm. USA, Inc. v. Sebelius, 595 F.3d 1303, 1305 (D.C.Cir.2010). If the patentee files an infringement suit, the FDA stays the ANDA approval process either for thirty months or until the generic manufacturer has obtained a final judgment of non-infringement or invalidity, whichever occurs first. Id. § 355(j)(5)(B)(iiii). During this stay, however, the FDA can grant tentative approval provided that the applicant meets the scientific, labeling, and other approval criteria. Id. § 355(j)(5)(B)(iv)(II)(dd).

Consumers benefit if generic manufacturers routinely make paragraph IV certifications — more invalid patents are challenged, non-infringing generics are marketed, and competition is increased. Thus, to encourage generic entry and to compensate ANDA filers for the expense and risk of a potential infringement lawsuit, federal law grants the first generic manufacturer to file a paragraph IV ANDA application (i.e., the “first-filer”) a 180-day period of exclusive marketing rights. Sebelius, 595 F.3d at 1305; see also 21 U.S.C. § 355(j)(5)(B)(iv). The start of this period, during which the FDA may approve no other ANDA with respect to that brand-name drug, begins to toll upon either: (1) the commercial marketing of the generic by the first-filer, or (2) a final court decision of invalidity or non-infringement. 21 U.S.C. § 355(j)(5)(B)(iv).

While termed an ‘-‘exclusivity period,” the 180-day period is “exclusive” only with respect to other ANDA applicants. In other words, the statutory scheme, as interpreted by the courts, does “not prohibit the holder of an approved NDA from marketing ... its own ‘brand-generic’ version of its drug.” Teva Pharm. Indus. Ltd. v. Crawford, 410 F.3d 51, 55 (D.C.Cir.2005). This type of generic — one that is marketed by the holder of an approved NDA — is called an “authorized generic” or “AG.” Launch of an AG allows the brand-name drug manufacturer to recover some of the sales and profits it would otherwise lose when an ANDA applicant begins to market and sell a generic version of that manufacturer’s brand-name drug.

B. Factual Background2

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42 F. Supp. 3d 735, 2014 WL 4403848, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-niaspan-antitrust-litigation-paed-2014.