Pfizer, Teva, Ranbaxy Must Litigate Revived Antitrust Claims

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By Eleanor Tyler

A federal appeals court Aug. 21 revived large antitrust cases against drugmakers Pfizer Inc., Ranbaxy Inc., Wyeth Inc., and Teva Pharmaceuticals USA Inc. alleging they agreed to stifle competition for blockbuster drugs Lipitor and Effexor XR ( In re: Lipitor Antitrust Litigation Rite Aid Co. , 2017 BL 291934, 2017 BL 291934, 3d Cir., Nos. 14-4202, 14-4203, 14-4204, 14-4205, 14-4206, 14-4602 Nos. 15-1184, 15-1185, 15-1186, 15-1187, 15-1274, 15-1323 & 15-1342, 8/21/17 ).

Buyers of each drug claimed that the drug companies conspired to delay marketing generic versions with an illegal settlement agreement. They also said the drugmakers engaged in various unfair practices before the U.S. Patent Office and the Food and Drug Administration. The district court had dismissed the plaintiffs’ claims in opinions that were among the first discussing how to apply the Supreme Court’s 2013 decision that patent settlements can be antitrust violations in FTC v. Actavis.

The appeals court’s complete reversal means that essentially all claims in two consolidated cases, from multiple plaintiffs, are back on the table, in some cases years after the lower court dismissed them. The appeals court held that the plaintiffs’ claims are plausible enough to proceed through discovery. It also said the lower court didn’t properly credit the plaintiffs’ allegations with the benefit of the doubt in deciding whether to allow them to proceed.

Circuit Judges D. Brooks Smith, Thomas L. Ambro, and D. Michael Fisher held that the plaintiffs may pursue their antitrust claims from two broad cases: The consolidated Lipitor case is against Pfizer Inc. and Ranbaxy Inc. The consolidated Effexor XR case is against Wyeth Inc. (now part of Pfizer) and Teva Pharmaceuticals USA Inc.

“We are disappointed with the court’s decision and will evaluate our legal options,” a spokeswoman for Pfizer told Bloomberg BNA. “We believe that plaintiffs’ claims were appropriately dismissed by the district court and that the procurement and enforcement of our patents — including settlements we and our subsidiary Wyeth agreed to — were proper, lawful, and in line with the Supreme Court’s decision in FTC v. Actavis.”

The Pfizer spokeswoman added that her company “will continue to vigorously protect and defend our intellectual property.”

Teva Pharmaceuticals declined to comment. Sun Pharmaceuticals, the current owner of Ranbaxy, didn’t respond to requests for comment.

‘Excessively High Standard’

Both cases consider whether the patent holder made a large, unexplained payment to a generic drugmaker to end patent infringement litigation. Such “reverse payments” look like settlements but actually divide up the monopoly proceeds between the drugmaker and the generic company. In exchange, the generic company agrees to delay marketing its competing drug.

In both these cases, the plaintiffs allege that what changed hands between the drug companies in question wasn’t money, but they were valuable promises that have a tangible worth. District Judge Peter G. Sheridan held that a reverse payment need not be money, but held that it can’t qualify as “large” even at the pleading stage unless the plaintiffs can make a “reliable estimate” of the value exchanged.

“The Third Circuit appropriately overturned the district court, which had imposed an excessively high standard that would have been effectively impossible for a plaintiff to satisfy,” Rutgers Law School Professor Michael A. Carrier told Bloomberg BNA.

Carrier — who filed an amicus brief with other law, economics, and business professors supporting the plaintiffs — said that the court’s opinion is important given that most payments between drug companies settling patent cases now take the form of non-cash trade-offs. “The pleading standard is critical, and this decision will prove important in future cases,” he said.

Both the Lipitor and Effexor suits consist of several cases being litigated together by groups of direct purchasers, end payors, and large retailers that claim they overpaid for each drug.

Sheridan has had five completed cases involving patent law cross his desk, and three of them have been affirmed on appeal, according to Bloomberg Law’s Litigation Analytics. One was reversed in full and the other was reversed in part.

To contact the reporter on this story: Eleanor Tyler in Washington at etyler@bna.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bna.com

For More Information

The court's opinion is at http://src.bna.com/rPR.

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