Third Circuit Won’t Shunt ‘Pay-For-Delay’ Cases to Special Court

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By Eleanor Tyler

Drugmakers lost an attempt April 13 to move a battle with buyers of blockbuster drugs Effexor XR and Lipitor into what would likely be a friendlier court ( In re: Effexor XR Antitrust Litig. , 3d Cir., 15-01342, 4/13/17 ).

The U.S. Court of Appeals for the Third Circuit rejected arguments from Wyeth Pharmaceuticals, Pfizer Inc., Ranbaxy Inc., Teva Pharmaceuticals USA Inc. and other drugmakers that claims they illegally delayed generic competition for Effexor and Lipitor belong in the U.S. Court of Appeals for the Federal Circuit, which has exclusive jurisdiction of cases based on patent law.

The court that hears the case will impact the developing law around “pay for delay” agreements between generic and brand drugmakers settling patent disputes. The exact legal details of a “pay for delay” settlement are still in flux after the Federal Trade Commission convinced the Supreme Court in FTC v. Actavis that such payments violate antitrust law.

Had the defendants been successful in moving the case to the specialty federal circuit, “the post-Actavis law could have developed in this patent-friendly court,” said Rutgers Law School Professor Michael Carrier.

Suit Didn’t Come Under Patent Law

The Third Circuit said the plaintiffs’ claims that the drugmakers engaged in illegal reverse payments and lied to the U.S. Patent Office didn’t arise under patent law, so they don’t belong before the Federal Circuit. The court said that, based on that decision, the same panel of Circuit Judges D. Michael Fisher, Thomas L. Ambro and D. Brooks Smith will hear the merits of the plaintiffs appeals.

For purposes of this opinion, the court combined two appeals: one in In re Lipitor Antitrust Litigation, Nos. 14-4202 through -4206 and 14-4602, and In re Effexor XR Antitrust Litigation, 14-01342. Each consists of several cases being litigated together.

Lower Court Dismissed

In both appeals, direct and indirect buyers of each drug alleged that the drug companies conspired to delay generic entry with a reverse-payment settlement agreement and also engaged in various unfair practices before the Patent Office and/or the Food and Drug Administration.

In both cases, the lower court dismissed the plaintiffs’ reverse payment claims. The Federal Trade Commission and a group of professors, including Carrier, have filed briefs in the Effexor case supporting some of the plaintiffs’ arguments on the merits. The same group of professors has also weighed in on the plaintiffs’ behalf in the Lipitor case.

The Pharmaceutical Research and Manufacturers of America and the Generic Pharmaceutical Association—now the Association for Accessible Medicines— filed briefs supporting the drugmakers in both cases.

The court remanded one of the individual Lipitor cases for clarification on whether the district court had jurisdiction of the case when it entered judgment. If the district court lacked jurisdiction, the appellate court likewise wouldn’t be able to review the case.

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/nWG.

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