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From Antitrust Law Daily, September 19, 2018

Eye drop maker could have caused injury by delaying FDA approval of generics

By E. Darius Sturmer, J.D.

Pharmaceutical maker Allergan, Inc. could have violated federal or state antitrust law by allegedly engaging in improper efforts to delay generic versions of Restasis, its branded and patented dry-eye medication, the federal district court in Brooklyn, New York has ruled. The court found it plausible that Allergan’s alleged actions—including submitting sham citizen petitions to the Food and Drug Administration, defrauding the U.S. Patent and Trademark Office into issuing second-wave patents, wrongfully listing those patents in the FDA’s Orange Book, filing sham infringement lawsuits to enforce those patents, and attempting to avoid invalidation of the second-wave patents by selling them to a Native American tribe—could have caused a delay in the FDA approval process and, thus, antitrust injury in the form of inflated prices to the complaining putative classes of direct purchasers and end-payors. Allergan’s argument that dismissal was warranted because the citizen petitions were protected from antitrust scrutiny by Noerr-Pennington immunity was also rejected. Allergan’s motion to dismiss the consolidated complaints for failure to adequately allege causation was therefore denied (In re Restasis (Cyclosporine Ophalmic Emulsion) Antitrust Litigation, September 18, 2018, Gershon, N.).

The lawsuit, consolidated from 13 separate cases into a single multidistrict litigation in January of this year, consists of charges by the two separate groups of plaintiffs, who purchased Restasis after the date that Allergan’s original, lawfully-obtained patent had expired in 2014, that the price they paid for the medication would have been lower if Allergan had been required to face competition from generic manufacturers. According to the complaints, Allergan’s numerous unlawful, anticompetitive measures to delay generic market entry allowed it to continue charging monopoly prices for the cyclosporine-based eye drops.

Restasis. Restasis is a formulation developed by Allergan using an oil-in-water emulsion technique that contains a small amount of castor oil, which dissolves the pharmaceutical ingredient cyclosporine, together with glycerin, an emulsifier, and an emulsion stabilizer, in water. The formulation fell within the ratios covered by Allergan’s original 1995 patent on the cyclosporine/castor oil emulsion, though it was not one of the specific examples listed. The FDA approved Allergan’s New Drug Application seeking to market that particular formulation in December 2002, and since Restasis’s launch in 2003, it has been the only FGA approved therapeutic treatment for dry eyes available on the U.S. market. With a 100 percent market share and annual sales of approximately 1 billion, the plaintiffs say, every month that Allergan maintains its monopoly results in another $125 million in revenue.

For purposes of the motion, Allergan did not challenge the allegations of its misconduct; rather, it argued only that the actions were harmless and caused no injury because, its misbehavior aside, the FDA was simply not ready to approve any of the five Abbreviated New Drug Applications (ANDAs) for generic Restasis that have been submitted thus far.

To accept the defendant’s harmlessness argument, however, would be "to find, as a matter of law, that this conclusion is the only plausible one and therefore none of its alleged actions—which were taken with the sole objective of delaying market entry of competitors to Restasis—could have been successful in causing any such delay," the court said. It was unwilling to make such a finding.

Noerr-Pennington immunity. As an initial matter, the court found that citizen petitions submitted to the FDA by Allergan starting in January 2014, which attacked the FDA’s draft guidance on generic cyclosporine approval, were not protected from antitrust review under the doctrine of Noerr-Pennington immunity. It was easily established, in view of the allegations in the complaints, that Allergan’s subjective intent in filing citizen petitions was to frustrate generic competition, the court said. Further, Allergan’s contention that the FDA’s mildly-accommodating responses to its petitions showed that they were not shams fell "far short of demonstrating that [the] plaintiffs’ allegations of objective baselessness were implausible." The FDA denied every substantive request made by Allergan in each of its three petitions, the court observed. Moreover, the second and third petitions largely rehashed the claims of the first and were denied on the same grounds. Whether, on all of the evidence, a factfinder would find that the petitions were not baseless remains to be seen, the court noted. However, the inferences drawn by Allergan, "considering the other possible inferences, were not sufficient to find as a matter of law that the First Amendment shields Allergan’s citizen petitions from antitrust liability."

Plausibility of delay in FDA approval process. Allergan’s assertion that the plaintiffs failed to plausibly allege that the petitions delayed the FDA’s approval of generic drugs was similarly shot down by the court. The plaintiffs’ claim that the FDA in practice did delay approval of generics while responding to citizen petitions had been recognized as a plausible inference by other courts, it was noted. It was also reasonable to infer that the stay resulting from the patent infringement litigation led the FDA to divert its resources away from the ANDAs at issue, the court added. It also was plausible that Allergan’s actions resulted in a delay in the approval process that continues to this day," the court noted. "[T]he likelihood that Allergan’s citizen petitions and its efforts to protect fraudulent patents resulted in the plaintiffs’ injury increases when these actions are viewed in the aggregate," the court concluded.

This case is No. 1:18-md-02819-NG-LB.

Attorneys: Adam Gitlin (Lieff Cabraser Heimann & Bernstein, LLP) and Dan Drachler (Zwerling, Schachter & Zwerling, LLP) for American Federation of State, County and Municipal Employees District Council 37 Health & Security Plan and 1199SEIU National Benefit Fund. Daniel C. Girard (Girard Gibbs LLP) and Peter G. Safirstein (Safirstein Metcalf LLP) for Sergeants Benevolent Association Health & Welfare Fund. Jack Wesley Hill (Ward, Smith & Hill, PLLC) and Jason McKenney (Gibson, Dunn & Crutcher, LLP) for Allergan, Inc.

Companies: American Federation of State, County and Municipal Employees District Council 37 Health & Security Plan; 1199SEIU National Benefit Fund; Sergeants Benevolent Association Health & Welfare Fund; Allergan, Inc.

MainStory: TopStory Antitrust NewYorkNews

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