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From Antitrust Law Daily, September 11, 2017

Alleged product-hopping, sham petition to delay generic suffice to state claims against drug makers

By E. Darius Sturmer, J.D.

Pharmaceutical manufacturers Indivior, Inc., and MonoSol Rx, LLC, were not entitled to dismissal of federal and state antitrust claims brought against them by the attorneys general of 35 states and the District of Columbia alleging a multi-pronged scheme to prevent or delay less expensive generic versions of the prescription opioid addiction drug Suboxone, the federal district court in Philadelphia has ruled. The states’ allegations of anticompetitive behavior—"product-hopping" and other delay tactics aimed at exploiting the Food and Drug Administration’s generic drug approval process—sufficed to support monopolization and attempted monopolization claims, and the conspiracy claims contained adequate factual assertions to establish concerted action taken in restraint of trade. The companies’ motion to dismiss was therefore denied (In re Suboxone (Buprenorphine Hydrochloride and Naloxone) Antitrust Litigation, September 8, 2017, Goldberg, J.).

The branded drug at issue, Suboxone, was introduced by Indivior in 2002 as a sublingual tablet comprised of naloxone and buprenorphine, neither of which was subject to any patent protection. According to the amended complaint, as the orphan drug exclusivity period for Suboxone tablets neared expiration, Indivior worked with MonoSol to formulate a "Buprenorphine Generic Offensive Strategy" that involved first developing a new version of Suboxone that could be used to secure patent protection and then converting the market for co-formulated buprenorphine/naloxone from the tablets to the newly-developed version.

The lawsuit filed by the states—Alabama, Alaska, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Vermont, Virginia, Washington, and Wisconsin—and the District of Columbia, follows previously-filed claims brought by several putative classes and a generic drug company accusing the same companies of unlawfully delaying and impeding competition from generic versions of Suboxone tablets, resulting in ongoing overpayments by consumers. These cases, consolidated with each other and with the instant multidistrict litigation, remain pending before the same court, though each has seen claims pared or dismissed.

Monopolistic conduct. The states’ theory that Indivior engaged in anticompetitive product hopping—seeking to introduce Suboxone in a siblingual film form knowing that any generic tablets would not be substitutable by a pharmacist, thereby converting the market to purely film—was allowed by the court to proceed. The plaintiffs claimed that the company had acted solely to prolong its control over the burprenorphine/naloxone market without concern for the fact that the film had substantial disadvantages in comparison to the tablet form. While simply introducing a new product on the market did not by itself constitute exclusionary conduct, the court said, Indivior’s other alleged wrongful conduct taken in conjunction with the "hard-switch" introduction of the new product, which consisted of the near-simultaneous release of the film into the market, the removal of its own tablets, and a marketing campaign to disparage the tablets, stated a plausible claim of anticompetitive activity.

Arguments by the defending pharmaceutical makers that the plaintiffs fatally failed to include allegations of actual foreclosure in the market and neglected to include crucial allegations of a price disconnect within the pharmaceutical market were rejected in turn by the court. The Third Circuit did not require averment of total foreclosure in order for a product-hopping claim to survive, the court noted. The states’ complaint allowed a plausible inference that the alleged conduct "resulted in substantial foreclosure of competition."

Regarding the defendants’ second argument, the court remarked that allegations of a price disconnect in the pharmaceutical industry were not essential to plausibly pleading an antitrust violation, but that the states had relied on more than just the existence of a price disconnect anyway, pleading facts that allowed a logical inference that they had been substantially foreclosed. By allegedly causing a hard product switch, the court stated, the company purportedly "avoided, and continues to avoid, automatic substitution" of the FDA’s "AB-rated" generics under state generic substitution laws, thereby limiting competition with generic substitutes for Suboxone tablets.

Delay of generic entry. Likewise, the states’ allegations of a second broad category of anticompetitive behavior to delay generic entry could also rise to the level of monopolistic conduct in violation of Sec. 2 of the Sherman Act. Indivior’s ultimate refusal to participate in any aspect of the shared generic development process and its alleged filing of a sham citizen petition with the FDA raising concerns about the safety of Suboxone tablets adequately described anticompetitive conduct actionable under federal antitrust law. A single sham petition could violate antitrust law, provided it was both objectively and subjectively baseless, the court observed, and the complaint set forth multiple facts that could create an inference that the challenged petition was so baseless.

Furthermore, the court noted, the defendants were attempting to improperly compartmentalize the plaintiffs’ delay claim into separate causes of action, while their overall claim of monopolization consisted of a broad scheme that survived dismissal as a whole.

In addition, the plaintiffs adequately alleged concerted action among entities for antitrust purposes, the court found. The complaint described a course of events ultimately concluding that Indivior and MonoSol entered into the agreement with the specific intent and for the purpose of extending Indivior’s monopoly power and for the purposes of preventing generic competition with its branded product. This scheme allegedly included MonoSol convincing Indivior to introduce the Suboxone film as a means of preserving market share/exclusivity, the companies working jointly to develop, patent, and bring that product to market before generic entry, their discussion of Suboxone tablet market exit, and cost adjustments made to ensure profitability of the film despite that fact that it was launched at a lower price to encourage the product switch. The companies did not share a unity of interest; rather, their relationship was "one of competitive reality" that did not possess either the unitary decision-making quality or the single aggregation of economic power characteristic of independent action. Considered collectively, the allegations plausibly pleaded that the conspiracy was designed squarely to "stymie competition, prevent consumer choice, and reduce the market’s ambit.

The case is MDL No. 2445.

Attorneys: Gwendolyn J. Cooley, Attorney General of Wisconsin, for State of Wisconsin. Jonathan Berman (Jones Day) for Indivior Inc. f/k/a Reckitt Benckiser Pharmaceuticals, Inc. and Indivior PLC f/k/a Reckitt Benckiser Group PLC. Benjamin Ernst (Wilmer Cutler Pickering Hale & Dorr LLP) for Reckittbenchiser Healthcare [UK] Ltd.

Companies: Indivior Inc. f/k/a Reckitt Benckiser Pharmaceuticals, Inc.; Indivior PLC f/k/a Reckitt Benckiser Group PLC; Reckittbenchiser Healthcare [UK] Ltd.

MainStory: TopStory Antitrust PennsylvaniaNews

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