This marks the second issue of WilmerHale’s The Interplay: Key Decisions at the Intersection of Antitrust & Life Sciences, a monthly bulletin that will highlight developments in the antitrust and life sciences space. We will cover important decisions in the appellate courts, dispositive decisions from district courts and relevant updates and developments from the FTC. This will serve as a reliable and informative resource for readers who wish to stay current on this dynamic area of litigation.
FTC Issues Policy Statement Concerning Improper Listing of Patents in the Orange Book. On September 14, the Federal Trade Commission put branded drug companies on notice that it intends to investigate and prosecute wrongful Orange Book listings as an unfair method of competition in violation of Section 5 of the FTC Act. The FTC may also pursue a monopolization theory and intends to evaluate whether the acquiring firm has a history of wrongful patent listings as part of merger reviews. Under the Hatch-Waxman Act, patents listed in the Orange Book must either claim the listed drug or a method of using the drug. The FTC will investigate listed patents that do not claim the drug or method of using the drug in compliance with the statutory listing requirements articulated in 21 C.F.R. § 314.53 to determine whether the patents were listed to block or delay generic or follow-on entry by wrongfully obtaining the automatic 30-month stay for each patent listed under the Hatch-Waxman framework. The FTC says that it plans to pursue both companies and individuals involved in wrongful Orange Book listings and may refer false Orange Book certifications filed in connection with Orange Book listings to the Department of Justice for possible criminal prosecution.
New York v. CVS Pharmacy, Inc. (N.Y. Supreme Court) – On August 30, the New York Attorney General's Office filed a complaint against CVS, Wellpartner, and Caremark, alleging that a partnership among the defendants that is intended to integrate 340B services in CVS's pharmacy model constitutes an unlawful tying scheme. Under the alleged scheme, hospitals and clinics that provide healthcare to patients regardless of their insurance status, i.e., safety net hospitals and clinics, in New York could only process federal subsidy claims under the 340B Drug Pricing Program for purchases at CVS if they use the CVS-owned third-party administer (TPA), Wellpartner. According to the complaint, patients previously could choose their TPA, but are now required to use Wellpartner. The State alleges two distinct markets: “the CVS Contract Pharmacy Market,” which it defines as “the market for 340B services arising from prescriptions filled at CVS by CVS’ customers” and the “TPA Services Market,” which is CVS’s Wellpartner TPA services. The plaintiffs allege that CVS has market power in the tied market (the CVS Contract Pharmacy Market) and is illegally conditioning supply in the tied market to customers using Wellpartner in the tying market for TPA Services.
Dozens of Pharmaceutical Companies and Associations Form PULSE to Encourage Pharmaceutical Mergers. Over 30 pharmaceutical companies and associations, including AbbVie and Merck, formed “Partnership for the U.S. Life Science Ecosystem” (PULSE). According to PULSE, it “is dedicated to raising awareness about the unique life sciences ecosystem and the importance of M&A in leveraging efficiency and experience across companies of all sizes” and will “help advance a national dialogue focused on fostering innovation across the life sciences while supporting a competitive U.S. market that advances next generation treatments and cures for patients.” PULSE is seemingly an effort to address the current FTC’s skepticism regarding mergers in the pharmaceutical industry, including as to whether they bring procompetitive benefits, and claims that the Commission has historically underenforced against industry mergers.
