ANDA Update - October 2015

by McDermott Will & Emery
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IN THIS ISSUE

Federal Circuit Interprets Statutory Requirements for Biosimilar Regulatory Pathway

A No-AG Settlement Agreement Is Subject To Actavis’ Rule of Reason Analysis

AstraZeneca and Ranbaxy Avoid Heartburn of a New Antitrust Trial

‘Sham Litigation’ Sufficiently Plead When Generic Provides Detailed Statement and Access to ANDA

Split Decisions Regarding Class Certification in Provigil Antitrust Lawsuits

Not Everyone Is Subject to Jurisdiction in Delaware

Allegations of Antitrust and Patent Misuse — Surviving a Motion to Dismiss

District Court Upholds Exclusivity Rights on Antibiotic Astragraf XL

Federal Pharmaceutical Regulations Pre-empt State-Tort Laws

Federal Circuit Interprets Statutory Requirements for Biosimilar Regulatory Pathway
Amgen Inc., v. Sandoz Inc., (Fed. Cir. July 21, 2015)
By Zachary D. Miller

In a case of first impression, the U.S. Court of Appeals for the Federal Circuit has ruled that the Biologics Price Competition and Innovation Act of 2009 (BPCIA) did not require a follow-on biologics or biosimilar applicant to disclose its application and manufacturing information to the reference product sponsor (RPS), but did require the applicant to provide a 180-day notice of marketing after its product was licensed by the U.S. Food and Drug Administration (FDA). Amgen Inc., v. Sandoz Inc., 2015 WL 4430108, Case No. 2015-1499 (Fed. Cir. July 21, 2015), (Lourie, J.) (Newman, J., concurring in part and dissenting in part) (Chen, J., dissenting in part).

BPCIA Statutory Landscape

The BPCIA, enacted in 2010, provides an abbreviated pathway for regulatory approval of biosimilar products that are “highly similar” to a previously approved “reference product” by allowing the follow-on product to rely in part on the approved license of the reference product. To balance innovation and price competition, a biosimilar application may not be submitted until four years after the reference product was first licensed, and may not be approved until 12 years after the reference product was licensed.

Additionally, the BPCIA established a patent-dispute-resolution regime related to biosimilars. This statutory regime includes (1) the biosimilar applicant granting the RPS access to its application and manufacturing information within 20 days of the FDA acceptance of the application; (2) an identification of patents and negotiation between the biosimilar applicant and RPS to formulate a list of patents (listed patents) subject to an immediate infringement action; and (3) at least 180 days’ notice prior to the first marketing of the biosimilar, to allow the RPS to seek a preliminary injunction based on identified, but non-listed, patents. The BPCIA also provides that neither the applicant nor the RPS can bring an declaratory judgment suit on non-listed patents prior to receiving the notice of first marketing—but permits the RPS to seek declaratory relief if the applicant fails to abide by certain provisions of the patent-dispute-resolution regime.

Biosimilar Applicants Are Not Required to Produce Their Applications to the Reference Product Sponsor

In 2014, Sandoz filed a biosimilar application for filgrastim, identifying Amgen’s Neupogen® product as the reference product. In July 2014, after the application was accepted by the FDA, but prior to approval, Sandoz notified Amgen that it planned to market its biosimilar product in early 2015, and that it was opting not to provide Amgen with access to its application or manufacturing information. Sandoz later provided additional notice of its intention to market the biosimilar product after the product was approved.

In October 2014, Amgen sued Sandoz for un-fair competition and conversion relating to alleged violations of the BPCIA. Specifically, Amgen alleged that Sandoz was required by the BPCIA to provide its application and manufacturing information within 20 days of the FDA’s acceptance of its application and that Sandoz first marketing notice to Amgen was in-effective because it occurred prior to the FDA’s approval of Sandoz’s application. The U.S. District Court for the Northern District of California evaluated these allegations on the pleadings and found that Sandoz had not violated any terms of the BPCIA.

The Federal Circuit reviewed the district court’s decision de novo and found that Sandoz had not violated the BPCIA. Accordingly, it upheld the district court’s dismissal of Amgen’s un-fair competition and conversion claims.

First, the Federal Circuit found that a biosimilar applicant is not required to provide its application and manufacturing information to the RPS under the BPCIA. Even though the statute states that an “applicant shall provide . . . the application submitted,” when viewed in the context of the entire statutory regime, such language did not indicate that providing the application was mandatory. Importantly, the court noted that if providing the application and manufacturing information was mandatory, the statutory provision allowing the RPS to bring suit on any patent immediately in the event the applicant did not provide the application would be rendered meaningless.

Second, the court found that the 180-day notice is mandatory, and must be given after FDA approval to license the biosimilar is granted. Sandoz argued that this would impermissibly extend the statutory monopoly period of 12 years by a further 180 days. However, the Federal Circuit ruled that the statutory language clearly referred to notice of marketing of a “biological product licensed [by the FDA],” which required the product to be approved before notice could be given. Yet, because Sandoz had provided additional notice after its biosimilar was approved, the court held that Sandoz had met the BPCIA requirements and could market its product 180 days after this later notice.

Neither aspect of the Federal Circuit’s decision was unanimous. Judge Pauline Newman wrote a dissenting opinion arguing that the language “shall provide” clearly indicated that the biosimilar applicant was required by the statute to provide the application and manufacturing information to the RPS if it wanted to take advantage of the abbreviated regulatory pathway. On the other hand, Judge Raymond T. Chen argued that the 180-day notice period was not mandatory. Instead, he opined that the 180-day notice period only makes sense in the larger BPCIA patent-dispute-resolution framework—and that if an applicant, like Sandoz, chose not to take part in that framework, they were not required to comply with the 180-day notice provision.

A No-AG Settlement Agreement Is Subject To Actavis’ Rule of Reason Analysis
King Drug Company of Florence, Inc. v. SmithKline Beecham Corp., et al. (3d Cir. June 26, 2015)
By Jeffrey R. Gargano

Plaintiffs, direct purchasers of the brand-name drug Lamictal® (lamotrigine), sued Lamictal’s producer, SmithKline Beecham Corporation (SmithKline Beecham) doing business as GlaxoSmithKline (GSK) and Teva Pharmaceuticals Industries Ltd. (Teva), a manufacturer of generic Lamictal, for violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 & 2. The U.S. District Court for the District of New Jersey granted Defendants’ Rule 12(b)(6) motion to dismiss for failure to state a rule of reason claim under Sections 1 and 2 of the Sherman Act.  On appeal, the U.S. Court of Appeals for the Third Circuit was asked to determine whether FTC v. Actavis,—U.S.—, 133 S. Ct. 2223 (2013) covers, in addition to reverse cash payments, a settlement that includes a no-authorized generic agreement (no-AG agreement.). The Third Circuit held that a no-AG agreement falls under Actavis because it may represent an unusual, un-explained reverse transfer of considerable value from the patentee to the alleged infringer and may therefore give rise to the inference that it is a payment to eliminate the risk of competition.  Accordingly, these kinds of settlements are subject to the rule of reason. King Drug Company of Florence, Inc. v. SmithKline Beecham Corp., et al., 791 F.3d 388 (3d Cir. 2015)

Background

In earlier Paragraph IV litigation, Teva had challenged the validity and enforceability of GSK’s patent on lamotrigine, Lamictal’s active ingredient. GSK’s lamotrigine patent expired on July 22, 2008. Teva was the first generic to file an application with the U.S. Food and Drug Administration (FDA) alleging patent invalidity or un-enforceability and seeking approval to market generic lamotrigine tablets and chewable tablets for markets alleged to be annually worth $2 billion and $50 million, respectively. 

In February 2005, after the court ruled that GSK’s main patent claim was invalid, GSK and Teva settled. They agreed that that in exchange for Teva dropping its challenge to GSK’s patent, GSK would: (1) allow Teva to enter the $50 million annual chewable lamotrigine tablet market no later than June 1, 2005 (37 months before patent expiration); (2) allow Teva to enter the $2 billion annual lamotrigine tablet market on March 1, 2008 (or July 21, 2008, if GSK received a pediatric exclusivity extension); and (3) GSK would not produce its own “authorized generic” version of lamotrigine tablets until after Teva’s 180-day market exclusivity expired.      

Direct Purchasers of Lamotrigine File Class Action Complaint

Direct purchasers of lamotrigine from GSK sued GSK and Teva in February 2012. They alleged that, by their no-AG agreement, Defendants—in effect, a “reverse payment” from GSK to Teva—violated Section 1 of the Sherman Act by conspiring to delay generic competition for Lamictal tablets and Section 2 by conspiring to monopolize the lamotrigine tablet market. GSK and Teva moved to dismiss, claiming that under In re K-Dur Antitrust Litigation, 686 F.3d 197 (3rd Cir. 2012), only cash payments constitute actionable “reverse payments.” In K-Dur, the court held that rule-of-reason scrutiny is proper for reverse payment settlements.

The district court granted the defendants motion to dismiss and noted that, while Teva surely received consideration or otherwise would have no incentive to settle, it viewed the parties settlement as “based on negotiated entry dates” rather than money. The court found that “from a policy perspective, this settlement did introduce generic products onto the market sooner than what would have occurred had GSK’s patent not been challenged.” Accordingly, the court concluded that the settlement was not subject to antitrust scrutiny under K-Dur

Plaintiffs appealed and the Third Circuit stayed proceedings pending the Supreme Court of the United States’ decision in Actavis. After Actavis, the circuit court remanded the case back to the district court for further consideration in view of the Supreme Court’s decision. The district court interpreted Actavis (as it had K-Dur before), as requiring antitrust scrutiny only of reverse-payment settlements that involve an exchange of money rather than some other type of valuable consideration. In the alternative, the district court found that the settlement “would survive Actavis scrutiny and is reasonable.” In January 2014, the district court affirmed its order of dismissal.     

Third Circuit Holds that No-AG Settlement Agreement Should Be Analyzed Under Antitrust “Rule of Reason”

The Third Circuit found that Actavis is not limited to reverse payments of cash. Specifically, the Third Circuit found that a no-AG agreement, when it represents an un-explained large transfer of value from the patent holder to the alleged infringer, may be subject to antitrust scrutiny under the rule of reason. Accordingly, the court found that Plaintiffs’ allegations were sufficient to state a claim under the Sherman Act.

In its decision, the Third Circuit analyzed the “five sets of considerations” that the Actavis court found weighed in favor of permitting antitrust scrutiny in reverse payment settlements: (1) potential for genuine adverse effects on competition; (2) whether any anticompetitive consequences are justified; (3) does the patentee possess power to bring about anticompetitive harm; (4) the size of the un-explained reverse payment; and (5) other ways to settle without the patentee paying the challenger to stay out of the market. 

But un-like in Actavis, no instance of reverse payment of cash existed in this case. Public records did show, however, that generic sales of Lamictal in 2008 were approximately $671 million. Plaintiffs also pointed to the drug Paxil® (paroxetine) as a measuring stick, suggesting that GSK’s no-AG agreement would have been worth hundreds of millions of dollars to Teva. The court noted that a brand’s commitment not to produce an authorized generic means that it must give up the valuable right to capture profits in the new two-tiered market: “The no-AG agreement transfers the profits the patentee would have made from its authorized generic to the settling generic plus potentially more, in the form of higher prices, because there will now be a generic monopoly instead of a generic duopoly.” Relying on Actavis, the court commented that a no-AG agreement may provide strong evidence that the patentee seeks to induce the generic challenger to abandon its claim with a share of its monopoly profits that would otherwise be lost in a competitive market.  

The Third Circuit also found that the anticompetitive consequences of a no-AG agreement may be as harmful as those resulting from reverse payments of cash. For example, as with a reverse payment of cash, a brand agreeing not to produce an authorized generic may have avoided the risk of patent invalidation or a finding of non-infringement. In addition, when the parties settlement includes a no-AG agreement, the generic also presumably agrees to a market entry date that is later than it would have otherwise accepted. During this time, the brand’s monopoly remains in force. And once the generic enters, it does not face other generic competition (at least for the 180-day exclusivity period). 

Defendants argued that GSK’s concession not to produce an authorized generic during Teva’s 180-day exclusivity period is in essence an “exclusive license,” exempt from antitrust scrutiny. The court rejected this argument finding that although a patent holder generally has the right to grant licenses, it does not mean it has the right to give a challenger a license along with a promise not to compete (i.e., no-AG agreement) in order to induce the challenger to abandon its invalidity or non-infringement claim. The court noted that in Actavis’ view, the question is not one of patent law, but of antitrust law, the latter of which prohibits “the improper use of [a patent] monopoly.” 

The defendants also tried to re-characterize any gain to Teva as resulting from its early entry alone. Again, the Third Circuit rejected this argument. GSK gave Teva a 180-day monopoly over the generic market. The court reasoned that Teva, as the first-to-file generic could not capture this value by early market entry alone. The court also noted that in Actavis, generic entry was allowed 65 months before patent expiration. Notwithstanding such early entry, the potential antitrust problem was that entry might have been earlier and/or the risk of competition not eliminated had the reverse payment not been tendered. 

Finally, the Third Circuit found the district court’s finding that the settlement was reasonable and would survive Actavis scrutiny to be erroneous. The court found that the plaintiffs had sufficiently pleaded violation of antitrust laws so as to overcome defendants’ motion to dismiss.  Moreover, the court found the rule-of-reason analysis to be for the finder of fact, not the court as a matter of law.

AstraZeneca and Ranbaxy Avoid Heartburn of a New Antitrust Trial
In re Nexium (Esomeprazole) Antitrust Litigation, (D. Mass., August 7, 2015)
By Krista Vink Venegas, Ph.D.

On August 7, 2015, Judge William G. Young, of the U.S. District Court for the District of Massachusetts, denied Plaintiffs’ post-trial motions seeking a new trial and entry of a permanent injunction in this complex, multi-district pharmaceutical antitrust litigation. These motions followed an October 2014 jury trial based on alleged antitrust violations stemming from reverse payment settlements between AstraZeneca (the manufacturer of heartburn medication, Nexium®) and generic manufacturers (Ranbaxy, Teva and Dr. Reddy’s Laboratories). Specifically, each settlement agreement AstraZeneca entered with generic manufacturers to end the Hatch-Waxman patent suit included a “no authorized generic clause.” The antitrust case was instituted by classes of plaintiffs (including wholesale drug distributors, end-payers and pharmaceutical retail outlets) claiming that the settlements between AstraZeneca and the generic manufacturers caused Plaintiffs to overpay for Nexium because generic entry was delayed. Following trial, the jury entered a judgment for the remaining defendants (AstraZeneca and Ranbaxy), and answered special questions relating to the claims tried. In re Nexium (Esomeprazole) Antitrust Litigation, Case No. 12-md-02409-WGY, ---F.R.D.--- (2015), 2015 WL 4720033 (D. Mass., August 7, 2015) (Young, D.J.).

Through the lens of Plaintiffs’ post-trial motions, the court reflected on the cost and value of the nearly month-long jury trial, given the defendants ultimately prevailed for reasons consistent with the court’s rulings on Defendants’ motions for summary judgments rendered one year earlier. The court provided an extensive procedural description of the case and trial, which set the stage for the court’s analysis of the post-trial motions. The court found it “most important” that, although the Federal Trade Commission (FTC) has not barred them, the jury found the no-authorized-generic (no-AG) clauses were un-justified reverse payments. *35. 

Summary of Case Background

In order to succeed, the plaintiffs had to prove the no-AG clauses caused “an ‘antitrust injury’—a real-world impact on the relevant market from the alleged monopolistic practice or practices.” *3 (citations omitted). Prior to trial, Defendants filed motions for summary judgment arguing that Plaintiffs lacked facts to establish causation. Because each of the AstraZeneca settlement agreements included a no-AG clause, the court concluded that “Plaintiffs would be able to make out their general civil conspiracy case.” *6. However, evidence of causation was lacking because first-filer Ranbaxy’s exclusivity and tentative approval were withdrawn by the U.S. Food and Drug Administration (FDA), and “there was simply no way . . . Ranbaxy was going to get to market with a generic version of Nexium prior to the expiry date in the AstraZeneca-Ranbaxy Settlement Agreement.” Therefore the AstraZeneca-Ranbaxy agreement “could not be the source of antitrust damages.” *7. Further, although defendant Teva was capable of bringing the product to market, due to the court’s erroneous belief about the method of calculating the reverse payment between AstraZeneca and Teva, the court determined that market injury could not be demonstrated. *7. Therefore, the court granted Defendants’ summary judgment motions.

Plaintiffs filed motions for re-consideration, and the court granted Plaintiffs’ motion for re-consideration on summary judgment “regarding the absence of reverse payment to Teva,” and while the court “thought that [p]laintiffs’ case was hanging by a thread,” set the pre-trial conference for September 2014 and trial for October 2014. *8. Because of the court’s “continuing unease with as to whether any reasonable jury could draw the Actavis inference from the AstraZeneca-Teva interactions, [the court] directed all evidence supportive of that inference to be introduced first.” *8.

A six-week trial ensued, and Plaintiffs pursued Sherman Act “Section 1 claims and their state law equivalents against all defendants, except Dr. Reddy’s Laboratories who settled before trial.” *10. As instructed, Plaintiffs led with expert testimony focused on the determining the value of the “fair settlement,” of the AstraZeneca settlements, which the expert commented was “not very germane . . . in the Hatch Waxman context.” *10. However, the turning point at trial was Plaintiffs’ presentation of an expert economist who explained the high value placed on no-AG provisions in the pharmaceutical industry. Specifically, Plaintiffs argued that “AstraZeneca paid first filer Ranbaxy to delay entry by agreeing to a no-AG provision.” *11. The economist testified that in the settlement negotiation, Ranbaxy wanted to maintain their first-filer 180-day exclusivity against other generic entrants, but also exclusivity against an authorized generic. The economist testified that Ranbaxy was willing to take a later entry date in exchange for sole exclusivity. This testimony re-aligned the courts understanding of the case, and the jury was refocused on plaintiffs’ theory that “AstraZeneca and Ranbaxy had conspired via the AstraZeneca-Ranbaxy Settlement Agreement to use Ranbaxy’s blocking position under the Hatch-Waxman regulatory scheme to artificially maintain the higher branded Nexium price.” *11. To prove antitrust damages, Plaintiffs had to show based on circumstantial evidence that but-for “the AstraZeneca-Ranbaxy Settlement Agreement, Ranbaxy would have teamed with Teva to launch a generic version of Nexium.” *12. After Defendants presented their case, Teva settled. 

Following the close of evidence, the court declined to issue a directed verdict in favor of the defendants based on Plaintiffs’ failure to prove causation. The case went to the jury on the theory that “but for the AstraZeneca-Ranbaxy Settlement Agreement, Ranbaxy would have agreed to an earlier launch date, which would have allowed Teva, the more launch-prepared generic, to work out an agreement with Ranbaxy to take over the generic launch as they had done on previous occasions.” **12–13. The question of “whether this scenario could have come to fruition” was posed to the jury in the form of a special question. The jury concluded that the AstraZeneca–Ranbaxy Settlement Agreement was un-reasonably anticompetitive under a rule of reason standard. However, the jury could not conclude that the agreement caused Plaintiffs’ damages, because Ranbaxy would have negotiated an earlier launch date but for the no-AG provision. Judgment was entered for AstraZeneca and Ranbaxy.

Motion for a New Trial

A new trial is to be granted “only when an error occurred in the conduct of the trial that was so grievous as to have rendered the trial unfair.” *15 (citations omitted). In view of this standard, the court concluded, “I did not try this case very well. I did try it fairly.” *1. The court analyzed each of the plaintiffs’ bases for seeking a new trial in turn. 

First, Plaintiffs’ main argument was that the court improperly limited Plaintiffs to presenting only one causation theory at trial—that Ranbaxy would have partnered with Teva to accelerate its generic launch but for the no-AG settlement provision). However, the court considered and rejected three other causation theories during the summary judgment phase. Post-trial, Plaintiffs advanced a new, reverse theory for causation that Ranbaxy would have forfeited its exclusivity sooner, and Teva would have pushed to enter the market sooner, but for the no-AG settlement provision. But, the court determined: (1) it never procedurally precluded Plaintiffs from making this causation argument at trial, at least because the relevant forfeiture facts did not arise until after summary judgment when the FDA revoked Ranbaxy’s first-filer exclusivity; and (2) on the merits, circumstantial evidence showed that Teva did not delay in developing and obtaining approval for its generic product. Therefore, this theory was un-likely to change the outcome of the trial. 

Defendants argued that Plaintiffs should be judicially estopped from using facts that occurred after May 27, 2014, to establish causation, because during trial plaintiffs moved in limine to preclude Defendants from offering information that arose after that date. Because the court denied Plaintiffs’ motion and, instead, ruled on the relevance of evidence as it arose at trial. Therefore, the court concluded that “Plaintiffs are not judicially estopped from arguing that this post-May 27, 2014, evidence is relevant and necessitates as new trial.” *17. 

Second, Plaintiffs argued that a new trial was warranted because the trial testimony by Ranbaxy’s corporate witnesses that Ranbaxy would not intentionally relinquish its first-to-file exclusivity was purportedly contradictory to an affidavit presented in the lawsuit with the FDA related to Ranbaxy’s exclusivity forfeiture and revocation of tentative approval. After evaluating the trial testimony and affidavit, the court concluded that the later affidavit was not contradictory. The affidavit indicated that partnership agreements were possible, but, for this product, Ranbaxy did not pursue a partnership due to the high value of first-to-file status, and Ranbaxy believed it would receive final FDA approval. Therefore, the court determined allowing the Ranbaxy corporate testimony to stand did not rise to a “miscarriage of justice” to warrant a new trial.

Third, Plaintiffs argued that newly discovered evidence that arose after the jury trial (FDA revocation of Ranbaxy’s tentative approval, Teva’s FDA approval and subsequent product launch) provided a basis for a new trial. However, the court found this information was not newly discovered information, because it was not “based on facts that were in existence at the time of trial,” even though the facts stemmed from the ongoing FDA review of Ranbaxy and Teva’s abbreviated new drug application (ANDA). *20. However, the court did find that pleadings and affidavits submitted in the Ranbaxy-FDA litigation were newly discovered facts because they were in existence prior to trial, described events preceding trial, and the court found Plaintiffs were excusably ignorant of the facts despite their diligence. The key inquiry then became whether the information “would probably change the result if a new trial [was] granted.” *20 (citations omitted). The court found insurmountable difficulties with proceeding to a new trial, even with this new evidence. Specifically, Plaintiffs’ new theory would require the stringing together of too many speculative interferences about Ranbaxy’s, the FDA’s, and Teva’s behavior, that are not supported by the trial record. For example, the court commented that inferences about the timeline to generic launch proceeding faster, if Ranbaxy had not been lulled into a slower development and regulatory timeline as a result of the AstraZeneca-Ranbaxy settlement, are not feasible in view of the complexity of the consent decree Ranbaxy entered with the FDA that was contingent upon meeting a variety of milestones and a lack of evidence that Teva could have actually brought the generic product to market faster than it did, in part because the FDA had not granted tentative approval. *22.

Finally, at the close of trial, select plaintiffs (end-payers, retailers and a direct purchaser via permissive joinder) moved for a permanent injunction under Section 16 of the Clayton Act to prevent AstraZeneca from using no-AG clauses for 10 years. Plaintiffs argued an injunction was appropriate because the jury found that the AstraZeneca-Ranbaxy settlement had an anticompetitive effect, and AstraZeneca and Ranbaxy are “serial antitrust violators.” *25. However, the court denied the motion because: (1) causation, and therefore, liability were not demonstrated; and (2) the no-AG provision against Ranbaxy became moot when the FDA revoked Ranbaxy’s first-filer exclusivity in January 2015.

In dicta, the court raised the U.S. Court of Appeals for the First Circuit’s affirmance of the certification of class members, and commented on a criticism found in the dissenting opinion relating to the difficulty and method for parsing class members with no antitrust injury (estimated at 24,000 customers). To “aid a likely appeal,” the court “articulate[s] the method [he] devised for culling the uninjured from the injured class members if ever we had gotten to the damages phase of the litigation.” *24 (emphasis added).    

The court concluded that the jury trial was valuable because “[w]hat emerged was a richly detailed picture of how these questioned settlement agreements came into being against real world economic incentives and realities. It is a picture with focus and precision that the pallid affidavits submitted in aid of summary judgement motions could not approach, much less equal.” *33-34.

‘Sham Litigation’ Sufficiently Plead When Generic Provides Detailed Statement and Access to ANDA
Otsuka Pharm. Co., Ltd. v. Torrent Pharms. Ltd., Inc., (D.N.J. June 22, 2015)
By Kevin P. Shortsle

Explaining the differences between the pleading standards for antitrust and patent misuse defenses, the U.S. District Court for the District of New Jersey denied Otsuka’s motion to dismiss Torrent’s antitrust counterclaim but granted Otsuka’s motion dismissing a counter claim for patent misuse. Otsuka Pharm. Co., Ltd. v. Torrent Pharms. Ltd., Inc., No. 2014-1078, __ F.Supp.3d ___, 2015 WL 3869677 (D.N.J. June 22, 2015) (Simandle, C.J.).

Otsuka brought over 25 patent infringement actions seeking to block generic versions of Otsuka’s antipsychotic drug Abilify® (aripiprazole) from the market. Torrent brought antitrust and patent misuse counterclaims alleging Otsuka monopolized the aripiprazole market by bringing objectively baseless and sham litigation in order to delay and eliminate competition and improperly maintain its exclusive monopoly over the aripiprazole market. Otsuka moved to dismiss Torrent’s antitrust and patent misuse counterclaims under Rule 12(b)(6) arguing Torrent: (1) failed to allege an anticompetitive injury required for antitrust standing; (2) failed to overcome the presumption of Noerr-Pennington immunity; and (3) failed as a matter of law to state a claim for patent misuse.

Otsuka challenged only the “antitrust injury” factor of the multi-factor test used by the U.S. Court of Appeals for the Third Circuit to determine antitrust standing. Otsuka argued that its infringement lawsuit has not caused Torrent to suffer any anticompetitive injury, because Torrent voluntarily chose to delay seeking regulatory approval until after the main compound patent for aripiprazole expired and Torrent’s allegations of delayed market entry lacked the immediacy required for antitrust standing. In rejecting these arguments, Chief Judge Jerome B. Simandle found a real and immediate injury because expiration of the compound patent did not create a present barrier for Torrent to enter the market, and the U.S. Food and Drug Administration (FDA) had already approved Torrent’s generic application for Abilify. The only barrier to market entry for Torrent was the lawsuit brought by Otsuka.

The court then found that Torrent pleaded sufficient facts to confer antitrust standing. The court focused on the “hallmark” for evaluating an allegation of antitrust injury—whether the actions alleged to be anticompetitive affect the overall market, rather than only an individual competitor. The court determined that pursuit of litigation that prevents generic competition constitutes anticompetitive behavior. It also found that Torrent’s counterclaim sufficiently alleged injury because Otsuka’s “pursuit of ‘objectively baseless and sham judicial proceedings’ has adversely affected competition in the overall aripiprazole market by encumbering the path of generic entry and effectively extending Otsuka’s long-held monopoly.” The district court stated that the pendency of the instant lawsuit against Torrent—and the 24 other lawsuits against other generic defendants—constituted the only encumbrance to Torrent’s and other generic manufacturers’ free ability to enter the market, making the injuries to these generic companies both real and immediate.

Next, the district court analyzed Otsuka’s argument that it was immune—under the Noerr-Pennington doctrine. Under that doctrine, Supreme Court precedent holds that a patent owner is presumptively immune from an antitrust violation when it initiates patent infringement litigation. Parties filing sham litigations, however, do not receive the benefit of the immunity. Judge Simandle determined that Torrent alleged specific facts that the lawsuit was objectively baseless and that the lawsuit was an attempt to interfere with the business of a competitor. Torrent specifically alleged that it provided a detailed statement setting forth why Torrent’s generic product would not infringe Otsuka’s Orange Book-listed patents. It further alleged that it provided its abbreviated new drug application (ANDA) to Otsuka, yet Otsuka still brought the lawsuit after viewing the detailed statement and Torrent’s ANDA. The court, accepting the allegations as true for purposes of Otsuka’s Rule 12(b)(6) motion, found these fact sufficient to overcome the Noerr-Pennington doctrine. The court noted that the ultimate question of whether Otsuka undertook reasonable investigation in advance of filing the lawsuit, whether it bought the lawsuit for an anticompetitive purpose and whether a reasonable litigant could have expected success on the merits were all questions of fact that could not be resolved prior to discovery and on a motion to dismiss under Rule 12(b)(6).

Judge Simandle granted each party’s request to bifurcate the antitrust portion of the case until after the patent infringement claims were tried, since if Otsuka prevailed on the patent infringement claims, their counterclaim for antitrust violations would be rendered moot. The court also stayed discovery of the antitrust counterclaim pending resolution of the infringement claims.

Finally, the court granted Otsuka’s motion to dismiss Torrent’s counterclaim for patent misuse. Making short work of the patent misuse defense, the court concluded that Torrent failed to plead a key element of the defense—that the patentee attempted to impermissibly broaden the physical or temporal scope of the patent by extending the term of the monopoly beyond that granted by law. Accordingly, the court dismissed the patent misuse claim without prejudice and allowed Torrent 14 days to submit an amended counterclaim.

Split Decisions Regarding Class Certification in Provigil Antitrust Lawsuits
Vista HealthPlan, Inc. v. Cephalon, Inc., (E.D. Pa. June 10, 2015);  In re Modafinil Litigation, (E.D. Pa. July 27, 2015)
By Rita J. Yoon

In two antitrust class actions in the U.S. District Court for the Eastern District of Pennsylvania, the court denied class certification as to plaintiff consumers and third-party payors (such as health insurance plans), but granted class certification as to direct purchasers (such as drug wholesalers).  Vista HealthPlan, Inc. v. Cephalon, Inc., No. 2:06-cv-1833 (E.D. Pa. June 10, 2015) (Goldberg, D.J.) (denying class certification of plaintiff consumers and third-party payors); King Drug Co. of Florence, Inc. v. Cephalon, Inc., No. 06-cv-1797 (In re Modafinil Litigation) (E.D. Pa. July 27, 2015) (Goldberg, D.J.) (granting class certification of plaintiff direct purchasers).

In April 1997, the U.S. Patent and Trademark Office (USPTO) issued U.S. Patent No. 5,618,845 to Cephalon, Inc. for the modafinil formulation in Provigil®. In 2002, Cephalon was granted a re-issue patent on Provigil, U.S. Patent No. RE 37,516 (RE‘516 patent), which was scheduled to expire October 6, 2014. Cephalon received an additional six months of pediatric exclusivity on Provigil through April 6, 2015.

On December 24, 2002, four generic manufacturers were first filers of abbreviated new drug applications (ANDAs) for generic Provigil, all of which included Paragraph IV certifications that Cephalon’s patent was either invalid or not infringed. These first filers were Teva Pharmaceutical Industries, Ltd. and Teva Pharmaceuticals USA, Inc. (Teva); Ranbaxy Laboratories, Ltd. and Ranbaxy Pharmaceuticals, Inc. (Ranbaxy); Mylan Pharmaceuticals, Inc. and Mylan Laboratories, Inc. (Mylan), and Barr Laboratories, Inc. (Barr). Cephalon sued these generic defendants for patent infringement on March 28, 2003.

From 2005 to 2006, Cephalon entered into four reverse-payment settlements with the four generic defendants. The settlements allowed the generic defendants to launch their generic Provigil product on April 6, 2012, prior to the expiration of the RE‘516 patent. Cephalon agreed to pay the generic defendants a total of approximately $300 million.

Plaintiffs filed antitrust class actions against Cephalon and the generic defendants beginning 2006, which were consolidated as In re Modafinil Litigation. Plaintiffs alleged that these settlement agreements were anticompetitive reverse-payment settlement agreements that violate the antitrust laws. Plaintiffs also alleged that Cephalon violated the antitrust laws by procuring its Provigil patent by fraud on the PTO, and then enforcing said patent to keep competitors off of the market.

Plaintiffs sought class certification under Federal Rule of Civil Procedure 23(b)(3), which requires proof of, among other things, (1) questions of law or fact common to class members that predominate over any questions affecting only individual members; and (2) a class action that is superior to other available methods for fairly and efficiently adjudicating  the controversy.  These requirements are known as predominance and superiority.

In seeking class certification, Plaintiffs argued that but for the settlement agreements, the generic defendants would have launched their generic Provigil products at risk in June 2006, which would have lowered the cost of Provigil through generic competition and brought significant savings to plaintiffs. 

The court held that predominance was not established as to the consumers and third-party payors, but established as to the direct purchasers. The court held that the consumers and third-party payors failed to identify a means of distinguishing between injured and un-injured class members. Specifically, the consumers and third-party purchasers failed to offer a reliable methodology for identifying those persons who purchased Provigil or its generic equivalent from those persons who would be excluded from this class, such as brand loyalists and persons with flat co-pays. 

By contrast, the court held that the direct purchasers established predominance because all of these class members purchased Provigil directly from Cephalon or one of the generic defendants. “The alleged overcharge, or antitrust injury, occurred when Plaintiffs purchased Provigil from Cephalon at an artificially inflated price.”

The court also held that superiority was not established as to the consumers and third-party payors, but established as to the direct purchasers. As to the consumers and third-party payors, the court held that the variations in the 26 state un-just enrichment laws rendered the class litigation un-manageable. As to the direct purchasers, however, the court held that the putative class of direct purchasers established superiority because these 22 class members have identical claims, and, therefore, “a class action would achieve economies of time, effort, and expense without bringing about undesirable results.”

Not Everyone Is Subject to Jurisdiction in Delaware
Purdue Pharma, L.P., et al. v. Collegium Pharmaceutical, Inc. (D. Del. Aug. 6, 2015)
By Melissa Nott Davis

Addressing the parameters of general and specific jurisdiction and the proper venue for a Hatch-Waxman case, the U.S. District Court for the District of Delaware held that it did not have general or specific jurisdiction over the defendant and the case should instead be heard in the U.S. District Court for the District of Massachusetts where Plaintiff had filed a protective lawsuit. Purdue Pharma, L.P., et al. v. Collegium Pharmaceutical, Inc., Civ. No. 15-260-SLR (D. Del. Aug. 6, 2015) (Robinson, D.J.).

Background

Defendant, Collegium, is a Virginia corporation with its principal place of business in Massachusetts. In 2002, Collegium incorporated in Delaware; however it re-incorporated in Virginia in 2014, before it filed the new drug application (NDA) at issue.

Purdue sued Teva Pharmaceuticals in the U.S. District Court for the Southern District of New York for infringement of three of the Orange Book-listed patents also asserted against Collegium (the New York litigation). In 2014 the court found the asserted patents invalid as obviousness. At the time of the decision in this case, Purdue’s appeal was pending.

In 2014, Collegium filed an NDA to market and sell an abuse-deterrent, extended-release formulation of oxycodone, branded as Xtampza ER™. Purdue claimed it held data exclusivity for Oxycontin®’s abuse-deterrent clinical trials until April 2016.

On February 12, 2015, Purdue received Collegium’s Paragraph IV notice letter. Purdue sued Collegium in the District of Delaware on March 25, 2015. Purdue then filed a protective suit in Massachusetts on March 26, 2015. Purdue indicated that it sought to stay litigation on the listed patents pending a final decision on its appeal in the New York litigation. Notably, one of the patents asserted against Collegium is not at issue in the New York litigation.

Collegium moved to dismiss the case for lack of personal jurisdiction, or in the alternative, a transfer to the Southern District of New York. Purdue argued that if transfer were required, the Massachusetts district court should hear the case.

Delaware Lacked Personal Jurisdiction

To support a general jurisdiction claim, Purdue pointed to the fact that Collegium was a Delaware corporation from 2002 to 2014. The district court rejected this argument, finding that Collegium changed its incorporation to Virginia before it filed its NDA, it was not registered to do business in Delaware and that its business activities were limited to Massachusetts and New York. The court noted that in Daimler AG v. Bauman, 134 S.Ct. 746, 749 (2014) the Supreme Court of the United States rejected the notion that “continuous and systematic contacts alone could confer general jurisdiction …” Collegium’s prior contacts with Delaware were insufficient to make it subject to general jurisdiction there.

Purdue next argued that Collegium’s contacts with Delaware were sufficient for specific jurisdiction in this instance. The district court noted that specific jurisdiction in Hatch-Waxman litigation “has evoked multiple analyses.” Courts have found the following contacts sufficient to establish specific jurisdiction: (1) sending a Paragraph IV notice letter into the state; (2) registration to do business in the state; (3) preparation of the U.S. Food and Drug Administration (FDA) application [NDA or abbreviated new drug application (ANDA)] in the state; and (4) design and development of the infringing product occurred in the state. The court concluded that Collegium’s contacts with Delaware did not meet any of the established standards, finding that the fact that Collegium worked with a Delaware corporation to conduct its clinical trials and purchased the application program interface (API) for Xtampza ER from a Delaware manufacturer insufficient to confer jurisdiction. The court noted that even if Collegium’s contacts satisfied Delaware’s long-arm statute, “it would not pass constitutional muster” and Collegium’s contacts with Delaware were not sufficient for Collegium to reasonably expect to be haled into a Delaware court.

The court dismissed the action for lack of personal jurisdiction over Collegium.

Massachusetts Was the Proper Venue

Collegium urged the court to transfer the case to the Southern District of New York, while Purdue argued that the case should be transferred to Massachusetts. The court agreed with Purdue and found that there was “no doubt” jurisdiction could be exercised over Collegium in Massachusetts, and the fact that the Southern District of New York had adjudicated the patents at issue was not compelling as the decision was on appeal and did not cover one of the patents Purdue asserted against Collegium.

The court noted the “unusual circumstances of this case” and dismissed the case to allow Purdue to pursue its protective lawsuit in Massachusetts, holding “that a straightforward venue like Massachusetts is the most reasonable solution to the parties’ dispute in this regard.”

Allegations of Antitrust and Patent Misuse — Surviving a Motion to Dismiss
Otsuka Pharmaceutical Co. v. Apotex Corp. et al. (D.N.J. August 11, 2015)
By Avani C. Macaluso

The U.S. District Court for the District of New Jersey was tasked with determining whether allegations in Defendants’ antitrust and patent misuse counterclaims set forth a plausible right to relief in order to survive a motion to dismiss under Rule 12(b)(6). Nearly a month prior to this decision, the court addressed Otsuka’s similar motion to dismiss in Otsuka Pharmaceutical Co. v. Torrent Pharmaceuticals Limited, Inc. where the counterclaims were substantially identical. Plaintiff’s motion to dismiss for the antitrust counterclaims was denied, and its motion to dismiss for the patent misuse counterclaims was granted with leave to amend. Otsuka Pharmaceutical Co. v. Apotex Corp. et al., Case No. 14-8074, 2015 WL 4756636 (D.N.J. August 11, 2015) (Simandle, D.J.).

This case involves Orange Book-listed patents 8,017,615, 8,580,796 8,642,760 and 8,759,350 covering Plaintiff’s aripiprazole product, which is marketed as Ability® for the treatment of depression. The present patent infringement case is one of 26 related actions under the Hatch-Waxman Act, whereby Plaintiff alleges Defendants’ proposed generic aripiprazole drug product will, if approved and marketed, infringe the Orange Book-listed patents. Defendants countered by alleging Otsuka has engaged in un-lawful monopolization by initiating objectively baseless and sham judicial proceedings causing Otsuka to enhance its monopolistic position in the aripiprazole market. Defendants also allege patent misuse by Otsuka for filing the present action with no basis. Plaintiff argued Defendants’ counterclaims fail to allege facts pertaining to the “anticompetitive injury” required for antitrust standing and fail to overcome Otsuka’s Noerr-Pennington immunity. Plaintiff also argued Defendants’ patent misuse allegation fails as a matter of law for not stating a cognizable claim for patent misuse.   

The court recognized a party suing under federal antitrust laws must meet the prudential requirement of “antitrust standing” which is determined by five factors, set forth in Ethypharm S.A. France.  Of those factors, Otsuka only challenged Defendants’ allegation of antitrust injury, which requires a showing (1) that it suffered an injury of the type the antitrust laws seek to prevent (e.g., anticompetitive behavior), and (2) that the injury resulted from the adversary’s unlawful or anticompetitive acts. The pleaded facts must show the challenged action has had actual adverse effect on the competition as a whole in the relevant market, and not just an adverse effect on a specific competitor. The court held Defendants’ allegations meet this requirement. Defendants allege Plaintiff initiated baseless patent infringement actions for the very purpose of excluding competitors from entering into the aripirazole market and to maintain its exclusivity in the market. As a result, Plaintiff has been able to maintain their monopoly over the aripirazole market. The court rejected Otsuka’s position that Defendants lack antitrust standing, because it lacks approval from the U.S. Food and Drug Administration (FDA) holding that such a finding would create an “anomalous” result since generics have little incentive to pursue final FDA approval during the pendency of an infringement action.

Otsuka also argues Defendants have not pled sufficient facts to demonstrate the Noerr-Pennington immunity does not apply. Under the Noerr-Pennington doctrine, a patent owner is granted immunity from antitrust attacks when initiating patent infringement proceedings, unless it is shown that the filing was a “sham litigation.” To prove sham litigation, a party must demonstrate (1) that the lawsuit is objectively baseless, and (2) that the baseless lawsuit was an attempt to interfere directly with the business relationships of a competitor. Here, the court determined Defendants’ counterclaim contained sufficient facts showing that it provided Otsuka with a detailed statement of its non-infringement position and over 13,000 pages of supporting documentation, as well as raw materials and product samples associated with its abbreviated new drug application (ANDA) product. Despite the complete lack of evidence,

Otsuka initiated litigation. Defendants allege Otsuka filed the present action in bad faith for the purpose of frustrating their entry into the aripirazole market. The court held Defendants pled sufficient facts to overcome the antitrust immunity.

Finally Otsuka argues Defendants’ patent misuse counterclaim fails to allege it impermissibly broadened the physical or temporal scope of the patent grant with an anticompetitive effect. Here, the court held Defendants sufficiently alleged that “Otsuka has wielded the Patents-in-Suite beyond their permissible ‘physical or temporal scope’ in order to gain market advantage.” 

Otsuka requested the court bifurcate and stay the antitrust and patent misuse counterclaims, pending resolution of the infringement issues. Following the practice of separating trial issues and antitrust issues, the Court separated the patent misuse and antitrust issues for trial.

District Court Upholds Exclusivity Rights on Antibiotic Astragraf XL
Veloxis Pharms. Inc. v. U.S. Food and Drug Admin., (D.D.C. June 12, 2015)
By Shon Wan Lo

The Food and Drug Administration Modernization Act of 1997 granted antibiotics approved after its effective date three years of marketing exclusivity. The Qualifying Individual (QI) Program Supplemental Funding Act of 2008 (QI Act) extended the three-year exclusivity to old antibiotics for which a Section 505(b) new drug application (NDA) was submitted after October 8, 2008.

Astellas Pharma US, Inc. submitted in 2005 a 505(b)(1) NDA for Astagraf XL®, a once-daily, extended-release capsule of the old antibiotic tacrolimus for the prophylaxis of organ rejection. Astellas withdrew its NDA in 2009, and then submitted a new NDA for the same product in 2012. The U.S. Food and Drug Administration (FDA) approved Astagraf XL for the prophylaxis of organ rejection in patients receiving de novo kidney transplants. De novo refers to the initial period after the transplant surgery where an optimum balance between the efficacy and toxicity of the immunosuppressive regimen is determined. The FDA determined that Astagraf XL should receive three years of marketing exclusivity, set to expire in July 2016 which would result in the expiration of exclusivity.

Plaintiff Veloxis submitted a Section 505(b)(2) NDA for its own once-daily, extended-release tablet version of tacrolimus called Envarsus XR®. The FDA tentatively approved Envarsus XR for the prophylaxis of organ rejection in both de novo and conversion patients. Conversion patients are on the maintenance immunosuppressive regimen that was optimized during the de novo period. One of the drugs in the regimen can be discontinued and replaced with another drug in conversion patients. However, the FDA determined that it could not finally approve Envarsus XR in view of Astagraf XL’s marketing exclusivity. As a compromise, the FDA proposed to approve Envarsus XR for conversion patients only. Veloxis elected not to accept the FDA’s proposed compromise, and sought judicial review of the FDA’s decision that it would not approve Envarsus XR until Astagraf XL’s exclusivity expired.

Applying a Chevron framework, the U.S. District Court for the District of Columbia upheld the FDA’s decision. Veloxis Pharms. Inc. v. U.S. Food and Drug Admin., 2015 WL 3750672 (D.D.C. June 12, 2015) (Walton, D.J.). First, the district court found that it was reasonable for the FDA to grant exclusivity to Astagraf XL even though the original NDA was submitted in 2005, before the critical October 8, 2008, date of the QI  Act granting exclusivity to old antibiotics like tacrolimus because it was withdrawn and then resubmitted in 2012.

Second, the court found the FDA “may not approve a second-in-time NDA that shares ‘conditions of approval’ with the first-in-time 505(b) drug,” regardless of whether the second NDA “relied on” clinical investigations from the first NDA. The court elaborated that “[e]xclusivity under 21 U.S.C. § 355(c)(3)(E)(iii) is triggered by an overlap in the conditions of approval between the first-in-time 505(b) drug and the second-in-time 505(b)(2) NDA, and not an overlap between the ‘new clinical investigations’ supporting the first-in-time 505(b) NDA and the second-in-time 505(b)(2) NDA.” (emphasis original) 

The court agreed with the FDA that the “conditions of approval” (and thus limits of exclusivity) for Astagraf XL were the innovations that distinguished it from the prior twice-daily immediate-release tacrolimus product Prograf®, namely, that it is once-daily extended-release formulation for the prophylaxis of organ rejection in de novo kidney transplant patients. Therefore, because Envarus XR is a once-daily extended-release formulation of the same antibiotic for the same indication as Astagraf XL, it shared conditions of approval and was subject to the marketing exclusivity granted to Astagraf XL.

Federal Pharmaceutical Regulations Pre-empt State-Tort Laws
Weeks v. Wyeth, Inc., et al., (M.D. Ala. Aug. 3, 2015)
By Shaun B. Hawkinson

Addressing whether federal labeling requirements imposed on generic drug manufacturers directly conflict with state-tort law claims, the U.S. District Court for the Middle District of Alabama recently determined that federal law pre-empted state-tort law claims against generic drug manufacturers in accordance with Supreme Court and circuit precedent. Weeks v. Wyeth, Inc., et al., 2015 WL 4635176 (M.D. Ala. Aug. 3, 2015) (J. Watkins, D.J.).

This case involves metoclopramide (MCP), the generic counterpart of the prescription drug Reglan®. Reglan is designed to increase the speed at which food travels through the digestive system in order to treat patients suffering from gastroesophageal reflux. The drug was approved by the U.S. Food and Drug Administration (FDA) in 1980 as a short-term therapy.

Plaintiffs Danny and Vicki Weeks sued several pharmaceutical companies, including Wyeth, the manufacturers of MCP. They alleged that Mr. Weeks developed a severe and incurable neurological disorder as a result of ingesting MCP over the course of two years as prescribed by his treating physician. The Weeks asserted that Defendants had actual knowledge of potential neurological side effects from long-term use of Reglan or MCP and that they failed to warn doctors and patients of these risks.

After the Weeks filed suit, the brand-name defendants moved to dismiss, since Mr. Weeks only ingested MCP and that liability against them, as manufacturers of Reglan, must fail. The court granted the motion with respect to the Weeks claims that the brand-name defendants owed Mr. Weeks a duty to disclose information about either Reglan or MCP, but denied the motion with respect to claims that the brand-name defendants owed Mr. Weeks’ prescribing physician the same duty. While the issue of whether brand-name drug manufacturers can be held liable for harm caused by a generic product manufactured and distributed by an un-related generic manufacturer was being decided in the U.S. Court of Appeals for the 11th Circuit, the brand-name defendants moved the court to certify this question to the Supreme Court of Alabama. Ultimately, the Supreme Court of Alabama determined that liability could extend to brand-name manufacturers and developers for fraud or mis-representation made in connection with the manufacture and sale of a brand-name drug, by a plaintiff who was injured by the generic drug manufactured and distributed by a different company.

While the Supreme Court of Alabama was deciding the certification request, the generic defendants filed a motion to dismiss on the grounds that federal law pre-empted state-tort law claims against generic pharmaceutical manufacturers. The court stayed the action while the Supreme Court of Alabama addressed the certified question. Once its decision was issued, the stay was lifted and the generic defendants filed a motion for judgment on the pleadings. Despite the generic defendants having not filed answers to the Weeks’ amended complaint, and consistent with other authorities, the court construed this motion under Rule 12(c) of the Federal Rules of Civil Procedure as a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6).

In addressing the generic defendants’ motion to dismiss based on federal pre-emption, the court relied heavily on the Supreme Court of the United States’ decision in PLIVA, Inc. v. Mensing, 131 S.Ct. 2567 (2011) case. The facts of Mensing are similar to the current case, in which the plaintiffs alleged that long-term use of MCP caused neurological disorders and that the generic drug manufacturers were liable under state-tort laws “for failing to provide adequate warning labels.”  Similar to the generic defendants’ arguments, the Mensing defendants argued that “federal statutes and FDA regulations required them to use the same safety and efficacy labeling as their brand-name counterparts,” which means that they could not “simultaneously comply with both federal law and any state tort-law duty that required them to use a different label.” The Supreme Court found that defendants in these circumstances were without means to comply with both federal and state law, and that federal law prohibited generic drug manufacturers from unilaterally changing their labels or providing additional warnings directly to physicians. Thus, the Supreme Court (in Mensing) held that federal law pre-empted the failure-to-warn state-tort claims.

The U.S. District Court for the Middle District of Alabama recognized that the scope of Mensing covers any state-law claims based on a generic drug manufacture taking unilateral action. In these cases, the state-law claims are pre-empted by federal law, since federal pharmaceutical regulations requiring a “duty of sameness” from generic companies makes them dependent on brand-name manufacturers.

If the brand-name defendants were not required to communicate a warning to physicians or patients, then the generic defendants also would not be required to warn and any state-law claim based on that unilateral action would be pre-empted by federal law. Here, the Weeks expressly alleged in their amended complaint that the brand-name defendants failed to communicate any warnings to Mr. Weeks’ prescribing physician. Accordingly, the district court concluded that the Weeks’ state-law tort claims are pre-empted by federal law and granted the generic defendants’ motion to dismiss.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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