THE COURT GRANTED DEFENDANT’S MOTION TO ENFORCE ITS SETTLEMENT AGREEMENT, FINDING THAT THE AGREEMENT WAS NOT ANTICOMPETITIVE AND IN VIOLATION OF ANTITRUST LAW.

Case Name: Somaxon Pharma, Inc. v. Actavis Elizabeth LLC, No. 10-1100, 2020 WL 1903171 (D. Del. April 9, 2020) (Fallon, J.)

Drug Product and Patent(s)-in-Suit: Silenor® (doxepin hydrochloride); U.S. Patents Nos. 6,211,229 (“the ’229 patent”) and 7,915,307 (“the ’307 patent”)

Nature of the Case and Issue(s) Presented: Somaxon marketed Silenor, which was used to treat insomnia characterized by difficulties with sleep maintenance. In 2012, the parties executed an agreement that awarded Mylan the semi-exclusive right to sell an authorized generic of Silenor for 180 days beginning on January 1, 2020. Mylan obtained a “semi-exclusive” right insofar as Somaxon retained the right to grant one additional license during Mylan’s 180-day period, provided that such product was not an authorized generic. Actavis was granted that right and began selling an AB-rated generic version of Silenor on January 1, 2020.

After the agreement between Somaxon and Mylan had been executed, the Supreme Court issued its decision in FTC v. Actavis, finding unenforceable reverse-payment settlements in the Hatch-Waxman context. Relying on Actavis, the Third Circuit subsequently held that a brand-name manufacturers’ promise not to produce an authorized generic amounted to an impermissible non-monetary reverse payment. In response, in October 2019, Currax (Somaxon’s successor-in-interest) informed Mylan of its plan to launch its own AG product. Mylan moved to enforce its agreement against Currax, which the court granted.

Why Mylan Prevailed: Currax argued that the agreement was unenforceable because it contained a “no-authorized generic” term that was anticompetitive and unlawful under the antitrust laws. The court disagreed, explaining that the agreement did not contain a no-AG provision because it allowed Mylan to launch an authorized generic, while a third party (Actavis) was permitted to market an AB-rated generic. In other words, because the agreement “authorize[d] Mylan to manufacture and sell an authorized generic to compete with Actavis’ AB-rated generic product during the 180-day exclusivity period, the provision lack[ed] the key features of a no-AG clause.”

Currax also contended that the provision was unenforceable under the California law that prohibits no-AG restraints in reverse payment settlements. The court explained, however, that there was no indication that the statute applied retroactively. Further, even assuming retroactive application, the California law contained a four-year statute of limitations, which had lapsed given the 2012 execution date of the Agreement. Additionally, any penalty “shall accrue only to the State of California” and could not be enforced in a civil action in Delaware.