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From Antitrust Law Daily, July 24, 2018

FTC to appeal parts of Androgel pay-for-delay decision

By Jody Coultas, J.D.

Despite an award of $448 million in its favor, the FTC has notified the federal district court in Philadelphia that it will appeal to the Third Circuit the lower court’s ruling in an action against AbbVie, Inc. for using sham litigation to illegally maintain its monopoly over the testosterone replacement drug Androgel. The lower court found that the defendants possessed monopoly power, illegally and willfully maintained that monopoly power through the filing of sham litigation, which delayed the entry of much less expensive competitive generic products into the market, and ordered disgorgement. However, the court declined to consider any "but-for" entry date of a generic manufacturer when calculating defendants’ illegal financial gains, and denied the FTC’s request for injunctive relief. AbbVie and Besins Healthcare, Inc. will also appeal the award of monetary relief, an award that represents the largest monetary award ever in a FTC antitrust case (U.S. v. AbbVie, Inc., Case No. 2:14-cv-05151-HB).

In 2014, a divided FTC voted to file a federal district court complaint against AbbVie, Besins Healthcare, and Teva Pharmaceuticals USA, Inc., challenging conduct allegedly intended to delay generic competition for the drug AndroGel. According to the agency, the "narrow" patent on branded AndroGel covered only a formulation of isopropyl myristate or IPM, a "penetration enhancer" that speeds the delivery of the drug’s active ingredient, testosterone, through the skin and into the bloodstream. The FTC claimed that AbbVie and Besins Healthcare filed patent litigation against Teva and Perrigo, even though the testosterone gel products that these potential rivals were developing did not contain IPM. Teva and Perrigo developed testosterone gel formulations containing penetration enhancers (isopropyl palmitate and isostearic acid) not claimed in the so-called '894 Patent. The FTC alleged that the patent litigation was sham litigation designed to preserve monopoly power in the United States with respect to AndroGel.

The FTC also alleged that AbbVie had entered into a "pay-for-delay" settlement with Teva of their underlying patent infringement litigation. The restraint-of-trade count was dismissed in 2015.

The relevant market is the market for all transdermal testosterone replacement therapies within the United States. AndroGel’s share of the market was 71.5% at the time of its first sham lawsuit against generic drug company Teva, the court noted. The court found that AndroGel had a dominant share of the market, and there were high entry barriers. Finally, the court decided on $448 million, which represented disgorgement of the defendants’ ill-gotten profits from June 2013, when generic drug maker Perrigo Company would have entered the market for topical testosterone replacement therapies or transdermal testosterone replacement therapies, through August 2017.

The court, however, denied injunctive relief, suggesting that the injunction sought by the FTC was "overbroad and punitive in nature." The FTC had sought an injunction: (1) to prohibit the filing of certain patent infringement claims; (2) to prohibit the defendants from filing any other sham litigation; (3) to prohibit the defendants from engaging in any action that misuses government processes for anticompetitive purposes; and (4) to require defendants to certify that any patent infringement litigation or other use of governmental processes has an objectively reasonable basis. The agency had claimed that the injunctive relief was necessary to restore competitive market conditions.

Despite the record-setting award, the FTC will ask the Third Circuit to review the 2015 district court’s ruling dismissing the restraint-of-trade count to the extent it was premised on the settlement agreements that resolved Abbott Products, Inc. v. Teva Pharmaceuticals USA, Inc., Civil Action No. 11-384 (D. Del.). Also, the FTC will ask the appellate court to review the lower court’s denial of the FTC’s motion for reconsideration. Finally, the FTC appeals the portions of the Findings of Fact and Conclusions of Law denying an injunction and the amount of monetary relief.

Companies: AbbVie Inc.

MainStory: TopStory Antitrust PennsylvaniaNews FederalTradeCommissionNews

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