On June 30, 2023, a jury in the Northern District of California found Gilead and Teva not liable in a trial accusing the companies of engaging in an illegal reverse payment to delay generic versions of two HIV drugs, Truvada (emtricitabine/tenofovir) and Atripla (efavirenz-/-emtricitabine-/-tenofovir). Following a five-week trial and two days of deliberations, the jury found that the plaintiffs failed to show that: 1) Gilead had market power within a market that included Truvada and/or Atripla, and 2) Gilead made a reverse payment to Teva to delay the entry of generic competition.1 This case marks the third jury verdict in favor of defendants in reverse-payment cases since the 2013 FTC v. Actavis decision—there have been no verdicts for plaintiffs.2
The antitrust case stems from a 2014 settlement between Gilead and Teva following a patent dispute regarding Gilead’s patents for two blockbuster HIV drugs, Truvada and Atripla. Teva had been the first to file an ANDA, meaning it would have been entitled to 180 days of regulatory exclusivity, but ultimately forfeited its first-to-file status because it failed to secure “Final Approval” from the U.S. Food and Drug Administration in time. The settlement agreement permitted Teva to enter the market with its generic alternatives to Gilead’s HIV drugs in September 2020, or 180 days before Gilead licensed another generic to enter—ostensibly reconferring Teva’s forfeited first-to-file status. The defendants argued throughout the litigation that other generics could have entered before Teva if they won a patent litigation against Gilead.
Two factors distinguished this case from most reverse payment cases. First, in contrast to typical cases, no money was exchanged as part of the settlement. The plaintiffs, a group of insurers, health plans, and other payors, claimed that Gilead’s “payment” to Teva was offering it six months of de facto generic exclusivity, resulting in higher prices and reduced access to lower-cost generics. Second, Teva made the unusual decision to waive privilege over the underlying patent litigation, thereby putting into evidence Teva’s contemporaneous, ordinary course documents demonstrating the company’s belief it would lose the patent litigation.3 The existence of the patents and the likelihood that Teva would have lost at trial interrupted any causal chain.
Market Power
First, the jury found that Gilead lacked market power. The plaintiffs defined the relevant market to encompass only the HIV drugs Truvada, Atripla, and their generic equivalents. In defining the relevant market, the plaintiffs pointed to the steep decline in prices for Truvada and Atripla once many generic equivalents launched, and also noted that few patients switched to lower-cost alternative HIV therapies when they became available. In contrast, the defendants contended the relevant market included Truvada, Atripla, their generic equivalents, and alternative HIV therapies. Within this broader market, the defendants successfully argued that Gilead lacked market power. The defendants noted that Gilead faced strong competition from ongoing innovation and a slew of alternative, more effective HIV therapies entering the market. The defendants also posited that Gilead’s 98 percent profit margin was consistent with other pharmaceutical companies that conduct significant R&D.
Reverse Payment
Second, the jury found there was no reverse payment by Gilead to delay Teva’s generic entry. The plaintiffs alleged that Gilead’s “payment” to Teva was in the form of six months of de facto generic exclusivity that delayed generic competition and prolonged Gilead’s alleged monopoly prices for Truvada and Atripla. As a result, the plaintiffs claimed they were overcharged by $3.6 billion for Gilead’s branded drugs and for Teva’s generic alternatives. The plaintiffs stated that generic HIV drugs would have entered the market sooner but for the settlement agreement between Gilead and Teva, either because Teva would have prevailed in its patent case against Gilead, or Teva would have negotiated an earlier entry date had it not received the payment from six months of exclusivity.4
The defendants countered that there was both no payment between Gilead and Teva and no delayed entry. The defendants submitted that Teva knew that Gilead’s HIV patents were strong and that Teva was unlikely to prevail in the patent trial. Notably, Teva waived its attorney-client privilege with regard to the underlying patent litigation against Gilead, while Gilead did not waive privilege. The plaintiffs criticized this one-sided waiver and suggested that Gilead’s documents would undermine the defendants’ arguments. The plaintiffs claimed that Gilead thought its chances of winning the patent litigation were higher than Teva’s likelihood of successfully invalidating its patents, so the settlement must have provided significant value to Gilead. Given Gilead maintained privilege over its documents, the jury remained unaware of Gilead’s views in 2014 of its likelihood of winning the patent litigation. The district court also had previously granted a motion in limine preventing the plaintiffs from arguing for “an adverse inference from Gilead’s failure to waive the attorney-client privilege.”5 The defendants thus relied heavily on materials for which Teva waived privilege. For example, Teva’s chief IP counsel believed it only had a 17.5 percent chance of winning the patent litigation.6
The defendants rejected the assertion that Teva was delayed in entering the market as a result of its settlement with Gilead; instead, the settlement allowed Teva to enter in 2020 rather than waiting until 2021 when some of Gilead’s HIV drug patents expired. Moreover, the defendants argued that the settlement did not provide Teva true “exclusivity” for six months, because there were other ways for generic competitors to come to market at the same time as Teva. For example, other generic companies could also bring suit to invalidate Gilead’s patents and enter in the market if they won. Ten companies did enter the market six months after reaching their own settlements with Gilead that provided an entry date 180 days after Teva’s. Teva’s sales forecasts also contemplated a market where Teva was one of several generic competitors upon launch, indicating that Teva did not understand the settlement agreement to provide it true “exclusivity.”7
Key Takeaways
- Plaintiffs face an arduous challenge to win reverse payment cases at trial. This marks the third straight loss for plaintiffs before juries in reverse payment cases, after the decisions in Nexium8 and Opana ER.9 Since the 2013 Actavis decision, plaintiffs have not won a single reverse-payment case before a jury. The verdict here indicates that where no money is exchanged, it may be hard to convince a jury that a quid pro quo “payment” was made. By contrast, the jurors in Nexium ruled for the defendants finding that the plaintiffs did not show the brand and generic would have otherwise reached an agreement for an earlier entry date, and the jurors in Opana ER found that the anticompetitive effects of the settlement were outweighed by the procompetitive benefits. These cases exemplify the numerous pitfalls plaintiffs face, as plaintiffs have now lost before a jury by failing to show a relevant market, an anticompetitive agreement, and antitrust impact.
- One-sided waiver of privilege in reverse payment cases may be a keystone, rather than a detriment, to a strong defense. Regardless of the contents of Gilead’s privileged documents from the underlying patent litigation, the verdict indicates that Gilead’s move to maintain its attorney-client privilege did not harm (and potentially even helped) its defense. On the other hand, Teva’s decision to waive privilege on its documents surrounding the patent litigation likely bolstered its defense as it provided the jury the opportunity to see documents showing that Teva did not think it had a strong patent case against Gilead. Indeed, Teva emphasized during the trial that its chief IP counsel only believed it had a 17.5 percent chance of winning the patent litigation. Given the jury’s finding that there was no anticompetitive agreement, the jury likely credited Teva’s assertion that the settlement did not delay its entry.
- Without concrete evidence, juries are unlikely to credit a plaintiff’s alleged “but-for world.” The plaintiffs spent substantial time trying to convince the jury that, absent the Gilead-Teva settlement agreement, Teva and other generic competitors would have entered the market as early as February 2018. However, while the plaintiffs had little evidence to bolster their conclusion that Teva and others would have entered the market before 2020, the defendants were able to point to Teva’s documents that showed it believed it could not successfully defeat Gilead’s patents. Ultimately, the jury appeared to credit the defendants’ refrain that the plaintiffs’ but-for world relied on too many assumptions and failed to consider the strength of Gilead’s patents.
[1] Verdict, In re HIV Antitrust Litig., 3:19-cv-02573-EMC (N.D. Cal. June 30, 2023). The court will soon set up for trial a separate case involving allegations that Gilead entered into an agreement with other branded companies to make combination products using each other’s product rather than generic versions of the products.
[2] See also Verdict, In re Nexium Antitrust Litig., 1:12-md-02409 (D. Mass. Dec. 5, 2014); Judgment in a Civil Case, In re Opana ER Antitrust Litig., 1:14-cv-10150 (N.D. Ill. July 1, 2022).
[3] See also Brendan Coffman, Nathan Mendelsohn, and Anna Neill, Privilege Waiver by a Defendant in a Reverse Payment Case: Views from the Defendants and the Plaintiffs Based on Glumetza, 36 Antitrust Health Care Chron. 9 (Dec. 2022) https://www.wsgr.com/a/web/fS7wNiMnWcTfyYGYH9T3ha/antitrust_health_care_chronicle-vol_36_iss_1_december_2022.pdf#page=9.
[4] This was the first case to go to a verdict on a theory that, but for the settlement, the generic would have won the patent litigation. The Nexium court rejected this theory, finding it unduly speculative and in contravention of Actavis. In re Nexium Antitrust Litig., 42 F. Supp. 3d 231, 289-90 (D. Mass. 2014). In Opana ER, the plaintiffs’ sole liability theory was “absent the illegal reverse payment, [the brand and generic] would have entered an alternative settlement agreement with an earlier generic entry date.” Pls.’ Post-Trial Mot. J. Matter Law or New Trial at 5, In re Opana ER Antitrust Litig., No. 1:14-cv-10150 (July 27, 2022), Dkt. No. 1048.
[5] Order, In re HIV Antitrust Litig., 3:19-cv-02573 (N.D. Cal. Mar. 19, 2023), ECF No. 1716.
[6] Trial Tr. 1083:10-21, In re HIV Antitrust Litig., 3:19-cv-02573 (N.D. Cal. June 7, 2023).
[7] Trial Tr. 2366:21-2371:10, In re HIV Antitrust Litig., 3:19-cv-02573 (N.D. Cal. June 21, 2023).
[8] Verdict, In re Nexium Antitrust Litig., 1:12-md-02409 (D. Mass. Dec. 5, 2014).
[9] Judgment in a Civil Case, In re Opana ER Antitrust Litig., 1:14-cv-10150 (N.D. Ill. July 1, 2022); Tr. for July 1, 2022, Proceedings, In re Opana ER Antitrust Litig., 1:14-cv-10150 (N.D. Ill July 11, 2022).
