Valley Drug Co. v. Geneva Pharm., Inc.

Citation344 F.3d 1294
Decision Date15 September 2003
Docket NumberNo. 02-12091.,02-12091.
PartiesValley Drug Company, Louisiana Wholesale Drug Company, Inc., et al., Plaintiffs-Appellees, v. Geneva Pharmaceuticals, Inc., Abbott Laboratories, Defendants-Appellants.
CourtU.S. Court of Appeals — Eleventh Circuit

Jon W. Zeder, Ferrell, Schultz, Carter, Zumpano & Fertel, P.A., Miami, FL, Wayne A. Cross, Robert A. Milne, Dewey Ballantine LLP, New York City, Jeffrey I. Weinberger, Stuart N. Senator, Munger, Tolles & Olson, LLP, Los Angeles, CA, for Defendants-Appellants.

Richard B. Drubel, Jr., Boies, Schiller & Flexner, LLP, Hanover, NH, Eric L. Cramer, Daniel Berger, David Sorenson, Berger & Montague, P.C., Philadelphia, P.A., Scott E. Perwin, Kenny, Nachwalter, Seymour, Arnold Critchlow & Spector, P.A., Miami, FL, Barry S. Taus, Garwin, Bronzaft, Gerstein & Fisher, L.L.P., New York City, Mitchell W. Berger, Berger, Davis & Singerman, P.A., Fort Lauderdale, FL, for Plaintiffs-Appellees.

Richard A. Samp, Washington Legal Foundation, Washington, DC, for Washington Legal Foundation, Amicus Curiae.

Barbara B. Smithers, Asst. Atty. Gen., Antitrust Enforcement Div., Orlando, FL, for State of Florida, Amicus Curiae.

S. Lawrence Kocot, Don L. Bell, II, Mary Ellen Fleck, National Ass'n of Chain Drug Stores, Alexandria, VA, for National Ass'n of Chain Drug Stores, Amicus Curiae.

Paul E. Slater, Chicago, IL, for American Antitrust Institute, Amicus Curiae.

Bruce B. Vignery, Sarah Lenz Lock, Michael Robert Schuster, AARP Litigation Foundation, Washington, DC, for AARP, Amicus Curiae.

Tracy W. Wertz, Harrisburg, PA, for Pennsylvania Atty. Gen., Amicus Curiae.

Appeal from the United States District Court for the Southern District of Florida.

Before TJOFLAT and ANDERSON, Circuit Judges, and STAFFORD*, District Judge.

ANDERSON, Circuit Judge:

This case comes to us on interlocutory appeal from the district court's order granting plaintiffs' motion for partial summary judgment. The issue with which we are presented is whether the district court properly determined that two agreements among the defendants were per se violations of § 1 of the Sherman Act, 15 U.S.C. § 1. Because we conclude that the district court incorrectly applied the law, the order below will be reversed and the case remanded for further proceedings consistent with this opinion.

I. BACKGROUND

This is a private antitrust lawsuit, or rather numerous private antitrust lawsuits brought against three pharmaceuticals manufacturers. The various cases asserting antitrust injury from the actions of the defendants have been consolidated by the Judicial Panel on Multidistrict Litigation in the Southern District of Florida. Plaintiffs basically assert that two agreements, one between defendant-appellant Abbott Laboratories ("Abbott") and defendant-appellant Geneva Pharmaceuticals ("Geneva") and another between Abbott and defendant Zenith Goldline Pharmaceuticals ("Zenith"),1 entered into in 1998, violated the Sherman Act's prohibition against contracts in restraint of trade. Abbott, a manufacturer of the pioneer drug Hytrin, entered separate agreements with generic manufacturers Zenith and Geneva while those companies were pursuing FDA approval of generic versions of Hytrin and while embroiled in patent litigation with those companies. Because the facts of this case took place against a complex regulatory background, we will first describe the relevant regulatory context, then the facts of the case as they appear in the current procedural posture, and then the relevant procedural history.

A. Regulatory Framework

No new drug can be marketed or sold in the United States without approval from the Food and Drug Administration ("FDA"). 21 U.S.C. § 355(a). Applications for FDA approval can be filed in one of two ways: as a new drug application ("NDA") under § 355(b), or as an abbreviated new drug application ("ANDA") under § 355(j). A new drug application must include exhaustive information about the drug, including reports of safety and efficacy studies. See 21 U.S.C. § 355(b)(1).

Prior to 1984, the NDA was the only method of obtaining FDA approval of a new drug. Every applicant had to submit safety and efficacy studies, even if such studies had already been performed for identical drugs or drugs with identical active ingredients. Adding to this inefficiency was the fact that the conduct of safety and efficacy studies would, if the new drug was the subject of a patent, constitute infringement of that patent under 35 U.S.C. § 271(a).2 In an effort to eliminate these twin impediments to the introduction of generic drugs to the market, Congress enacted the Drug Price Competition and Patent Term Restoration Act, Pub. L. No. 98-417, 98 Stat. 1585 (1984), commonly known as the Hatch-Waxman Act. The primary accomplishments of the Hatch-Waxman Act were the creation of the ANDA, allowing a new drug applicant to piggyback on the safety and efficacy studies conducted for the pioneer drug, see generally 21 U.S.C. § 355(j); modification of the definition of infringement, so that the conduct of safety and efficacy studies for FDA approval is no longer infringing activity, see generally 35 U.S.C. § 271(e); and allowing the extension of patent terms to compensate for the period when a patented drug could not be marketed because it was undergoing the FDA approval process, see generally 35 U.S.C. § 156.

Several of Hatch-Waxman's additions to 21 U.S.C. § 355 govern FDA approval of ANDAs in the face of patent claims by pioneer drug makers. NDA applicants are required to submit the patent number and expiration date of any patent that a generic manufacturer might infringe.3 If such a patent issues after approval of the NDA, the holder of the application is required to file the patent number and expiration date with the FDA no later than 30 days after the patent issues. See 21 U.S.C. § 355(c)(2). The FDA publishes this patent information, along with other information about the drug, in what is popularly known as the Orange Book. See 21 U.S.C. § 355(j)(7)(A).

An ANDA applicant relying on the safety and efficacy studies filed with the application of a drug listed in the Orange Book must make a certification with respect to each patent claiming the listed drug or a method of using the listed drug of which the applicant is aware. See 21 U.S.C. § 355(j)(2)(A)(vii). The applicant must certify either that (1) the patent information has not been filed with the FDA; (2) the patent is expired; (3) the patent will expire, identifying the expiration date; or (4) the patent is invalid or will not be infringed by the manufacture, use, or sale of the new drug. If the applicant certifies (1) or (2), FDA approval proceeds in regular fashion, see 21 U.S.C. § 355(j)(5)(B)(i); if the applicant certifies (3), the application will not be approved until the date the relevant patent expires, see 21 U.S.C. § 355(j)(5)(B)(ii).

If the ANDA applicant certifies that the relevant patents are invalid or will not be infringed, commonly called a "paragraph IV certification," several things happen. First, the applicant must notify the patent holder. 21 U.S.C. § 355(j)(2)(B). If the patent holder brings suit for patent infringement4 within forty-five days of receiving this notice, the FDA automatically delays approval of the ANDA for thirty months. See 21 U.S.C. § 355(j)(5)(B)(iii).5 If the court hearing the infringement action declares the patent invalid or not infringed, this automatic delay in FDA approval terminates, 21 U.S.C. § 355(j)(5)(B)(iii)(I), or, if the court finds the patent valid and infringed, the approval date will be set for a date on or after the patent's expiration, 21 U.S.C. § 355(j)(5)(B)(iii)(II); 35 U.S.C. § 271(e)(4)(A). If the court grants the patent holder a preliminary injunction prior to the expiration of the 30-month stay, the application will be approved on the date on which the court later holds the patent invalid or not infringed. See 21 U.S.C. § 355(j)(5)(B)(iii)(III).

The timing of FDA approval is affected by another provision of Hatch-Waxman in the event that a listed drug is subject to more than one paragraph IV certification. Approval of an ANDA that contains a paragraph IV certification is automatically delayed if another ANDA was previously filed based on the same listed drug and the previous ANDA contains a paragraph IV certification. Approval of the subsequent ANDA is delayed until 180 days after the earlier of (1) the first commercial marketing of the drug under the previous application or (2) the date a court hearing an infringement action brought against the previous filer holds the patent invalid or not infringed.6 See 21 U.S.C. § 355(j)(5)(B)(iv). This delaying mechanism gives the first generic manufacturer to file a paragraph IV certification and successfully challenge the scope or validity of a patent on a pioneer drug a 180-day period during which it is the exclusive competitor of the pioneer manufacturer. This exclusivity period is a significant incentive for generic manufacturers to challenge weak or narrow drug patents.

B. Factual History7
1. Zenith's and Geneva's ANDAs

Abbott manufactures Hytrin, a brand-name drug with the active ingredient dihydrate terazosin hydrochloride.8 Hytrin is used to treat hypertension and enlarged prostate, and has been a very successful product for Abbott. Abbott obtained FDA approval of its NDA for Hytrin in 1987 and has held a number of patents related to terazosin hydrochloride over the years. Its first patent, issued in 1977, covered the basic terazosin hydrochloride compound. See Abbott Labs. v. Novopharm Ltd., Nos. 96-C-611 & 95-C-6657, 1996 WL 131498, *1 (N.D.Ill. March 15, 1996). That patent has since expired, though Abbott has been issued other patents for various crystalline forms of the compound and various methods of using and preparing the compound.

Geneva filed four ANDAs based on Hytrin between 1993 and 1996, each time making paragraph IV certifications...

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