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From Antitrust Law Daily, February 8, 2017

Claims that Takeda blocked Teva’s generic version of diabetes drug revived

By Jeffrey May, J.D.

Drug purchasers who allegedly were forced to pay monopoly prices for the diabetes drug ACTOS can pursue claims that Takeda Pharmaceuticals, which had held a patent on the active ingredient in ACTOS, unlawfully delayed generic competition from Teva Pharmaceutical Industries, Ltd. in the market, the U.S. Court of Appeals in New York City has decided. However, the plaintiffs could not proceed with monopolization and attempted monopolization claims based on efforts to delay other generic manufacturers. A decision of the federal district court in New York City dismissing the suit with prejudice was affirmed in part, vacated in part, and remanded for further proceedings (In re Actos End Payor Antitrust Litigation, February 8, 2017, Rakoff, J.).

A number of generic manufacturers had attempted to compete with Takeda in the market for ACTOS. According to the plaintiffs, Takeda delayed mass generic entry into the market until more than two years after the patent on the active ingredient in ACTOS expired by falsely describing two patents to the Food and Drug Administration (FDA).

Takeda settled pending patent infringement suits with the generic manufacturers, including Teva. Under the settlements, the first three generic manufacturers that filed (all on the same day) an Abbreviated New Drug Application (ANDA) to market a generic version of the drug, as well as Teva, where kept out of the market until August 2012. Teva was permitted to distribute Takeda-manufactured ACTOS product beginning in August 2012, and otherwise enter the market 180 days later. The other six later-filing generic manufacturers were kept from the market for another 180 days after that, i.e., until at least February 2013. January 17, 2011, was the earliest point at which generic forms of ACTOS could have been marketed.

All of the generic drug companies, except Teva, filed a "Paragraph IV certification," certifying that each of the brand’s patents "is invalid or will not be infringed by the manufacture, use, or sale of the new drug for which the application is submitted." The plaintiffs claimed that but for Takeda’s false patent descriptions, the generic applicants (other than Teva) would not have been forced to make Paragraph IV certifications, no 180-day "bottleneck" delay would have arisen, and one or more generics would have entered the market as early as January 2011.

Teva had sought approval via another regulatory mechanism, known as a Section viii ANDA, which is used primarily when the brand’s patent on the drug compound has expired and the brand holds patents on only some approved methods of using the drug. The FDA first preliminarily approved Teva’s application, which would have avoided the 180-day "bottleneck" delay for late filers. Later, the FDA entertained a citizen petition from another drug maker arguing that Teva’s Section viii application should not be approved and seeking to force all applicants to make Paragraph IV certifications. In connection with the citizen petition, Takeda confirmed to the FDA that its patents had been correctly described as both drug product and method-of-use patents in its ACTOS NDA. As a result, the FDA announced that all generic manufacturers would be required to take the bottlenecked route. The FDA’s announcement was expressly based on Takeda’s representations that it had correctly described its patents.

The appellate court rejected the plaintiffs' theory based on the delay in the marketing of generic alternatives to ACTOS by all of the generic applicants other than Teva. That theory was implausible because it rested on a necessary premise that those generic applicants were aware of Takeda’s allegedly false patent descriptions when they filed their applications, which was not supported by well-pleaded factual allegations, according to the appellate court. The plaintiffs were required to allege that the generic applicants were aware of Takeda's false descriptions when they filed their ANDAs. Even though the plaintiffs amended their complaint several times, they failed to allege facts in support of the theory. Thus, the plaintiffs’ theory of causation based on the delay of generic applicants other than Teva failed.

Teva’s delayed entry. On the other hand, the plaintiffs’ theory as to Teva did not require any knowledge of the false patent descriptions. The FDA’s announcement that it would consider any ANDA referencing ACTOS that lacked appropriate Paragraph IV certifications ineligible for final approval was itself expressly based on Takeda’s repeated and allegedly false patent descriptions. Thus, Teva's Section viii ANDA was derailed because the FDA credited Takeda’s allegedly false claims. Finding this theory highly plausible, the appellate court rejected the defendants’ assertions that the plaintiffs were required to rule out a litany of alternative possible causes of Teva’s delayed market entry. "Dismissal at this early stage on the basis of speculation about possible and not inherently more plausible alternative causes would be premature," the court explained.

The case is No. 15-3364-cv.

Attorneys: Steve D. Shadowen (Hilliard Shadowen, LLP), Kenneth A. Wexler (Wexler Wallace LLP), and Jayne A. Goldstein (Pomerantz LLP) for United Food and Commercial Workers Local 1776 & Participating Employers Health and Welfare Fund and 199 SEIU-National Benefit Fund. Rohit K. Singla, Blanca F. Young, Jeffrey I. Weinberger, and Adam R. Lawton (Munger, Tolles & Olson LLP) for Takeda America Holdings, Inc., Takeda Pharmaceuticals, USA, Inc. and Takeda Development Center Americas, Inc. Thomas M. Sobol, Davis S. Nalven, Gregory T. Arnold, and Kristen A. Johnson (Hagens Berman Sobol Shapiro LLP) and Linda P. Nussbaum and Bradley J. Demuth (Nussbaum Law Group, P.C.) for amicus curiae Direct Purchasers in support of no party.

Companies: United Food and Commercial Workers Local 1776 & Participating Employers Health and Welfare Fund; 199 SEIU-National Benefit Fund; Takeda America Holdings, Inc.; Takeda Pharmaceuticals, USA, Inc.; Takeda Development Center Americas, Inc.

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