In re Suboxone (Buprenorphine Hydrochloride & Naloxone) Antitrust Litig.

• Decision Date: 03 December 2014
• Docket Number: MDL No. 2445, 13–MD–2445.
• Parties: In re SUBOXONE (BUPRENORPHINE HYDROCHLORIDE AND NALOXONE) ANTITRUST LITIGATION. This Document Applies to: All Actions.
• Court: U.S. District Court — Eastern District of Pennsylvania

64 F.Supp.3d 665

In re SUBOXONE (BUPRENORPHINE HYDROCHLORIDE AND NALOXONE) ANTITRUST LITIGATION.

This Document Applies to: All Actions.

MDL No. 2445, 13–MD–2445.

United States District Court, E.D. Pennsylvania.

Signed Dec. 3, 2014.

MEMORANDUM OPINION

GOLDBERG, District Judge.

This multidistrict litigation raises the following question: can a pharmaceutical company marketing brand-name prescription drugs be subject to antitrust liability for engaging in what has been referred to as a “product hopping” scheme? Plaintiffs urge that the answer to this question is “yes,” and allege that as the period of exclusivity on the brand-name drug, Suboxone

, expired and generic versions of that drug were to become available, Reckitt Benckiser, Inc. effectuated inconsequential changes to the Suboxone dosage form to prevent competition from generic formulations. More specifically, Plaintiffs, the Direct Purchasers of Suboxone (“Direct Purchasers”) and the End Payors of Suboxone (“End Payors”) claim that Reckitt and its affiliates (“Reckitt”) switched from sublingual Suboxone tablets to a sublingual Suboxone film for the purpose of stymying generic competition. This switch was allegedly accompanied by Reckitt falsely disparaging the tablet through fabricated safety concerns and ultimately removing Suboxone tablets from the market just as generic Suboxone tablets were able to begin competing. Reckitt is also alleged to have manipulated FDA regulations to delay the entry of generic Suboxone onto the market, thereby unlawfully maintaining a monopoly in violation of § 2 of the Sherman Act and state law. According to Plaintiffs, Reckitt's conduct negatively affected competition and resulted in ongoing overpayments by consumers.

Before me is Reckitt's motion to dismiss which essentially argues that Plaintiffs' complaint describes nothing more than new product development and marketing. Reckitt is correct that the development and marketing of new products is typically viewed as procompetitive. However, due to market characteristics unique to the pharmaceutical industry, I conclude that some of Plaintiffs' claims do plausibly allege antitrust violations and should survive Defendants' motions to dismiss. This opinion explains the bases for my ruling.

I. FACTUAL AND PROCEDURAL BACKGROUND

The facts alleged by Plaintiffs are as follows:¹ Suboxone

(BuprenorphineNaloxone or “BPN/NLX”) is a prescription drug used for the maintenance treatment of opioid dependence. It is the only pharmaceutical on the market that provides maintenance treatment for patients suffering from opioid addiction that can also be prescribed in an office setting for the patient's home use. All other opioid addiction maintenance treatments, such as methadone, can only be dispensed at a clinic. Suboxone has been approved for home use because it is co-formulated to help prevent abuse, containing both: (1) buprenorphine, an opioid which treats the withdrawal symptoms; and (2) naloxone, an opioid antagonist, which causes the immediate onset of withdrawal symptoms if the product is inappropriately melted and injected. Today, Suboxone has annual sales of over one billion dollars and accounts for 20% of Reckitt's profits. (DP Compl. ¶¶ 5, 74–77.)

Under the Federal Food, Drug and Cosmetic Act (“FDCA”), 21 U.S.C. §§ 301 et seq., a manufacturer that creates a new drug must obtain the approval of the Food and Drug Administration (“FDA”) to sell the drug by filing a New Drug Application (“NDA”). Under the Drug Price Competition and Patent Term Restoration Act, Pub.L. No. 98–417 (1984), commonly known as the Hatch–Waxman Act, certain pioneer drugs can gain periods of exclusivity. However, Hatch–Waxman also simplified the process by which generic manufacturers can compete with brand-name drugs on the market through the filing of an Abbreviated New Drug Application (“ANDA”). For example, Hatch–Waxman eliminated the need for generic manufacturers seeking ANDA approval to duplicate clinical studies that had already been performed by a bioequivalent brand-name drug manufacturer. (Id. at ¶¶ 38–42.)

In order for a drug to be deemed bioequivalent, the generic product must be shown to deliver the same amount of active ingredient into a patient's blood stream for the same amount of time as the brand-name drug. ANDA filers demonstrating bioequivalence generally seek to have their product deemed “AB-rated” to the brand-name drug. This rating means that in addition to being bioequivalent, the two drugs are also pharmaceutically equivalent—which includes such considerations as having the same active ingredient, the same strength, the same route of administration and the same dosage form. A pharmacy may not substitute a generic drug for a brand-name drug unless the generic is AB-rated. (Id. at ¶¶ 42–44.)

Competition from low cost AB-rated generic drugs saves consumers billions of dollars a year. When an AB-rated generic drug enters the market, the brand-name company often suffers a rapid, steep decline in sales—on average 80% within the first year. AB-rated generic competition enables direct and indirect purchasers to obtain both the generic drugs and the brand-name drugs at substantially lower prices. (Id. at ¶¶ 9, 51, 55.)

The FDA approved Reckitt's NDA for Suboxone

tablets in 2002. Although Reckitt did not have a patent for Suboxone tablets, it was able to obtain a seven-year period of exclusivity from the FDA because Suboxone was found to be an orphan drug.² Reckitt's period of exclusivity for

Suboxone

tablets was scheduled to expire on October 8, 2009. (Id. at ¶¶ 78–80.) Plaintiffs allege that Reckitt, knowing its period of exclusivity would soon be over, began developing Suboxone film and obtaining patent protection for this new product. Reckitt's actions while developing and marketing its new product are described as a “product-hopping scheme” and are alleged to be anticompetitive with the aim of maintaining Reckitt's monopoly in the Suboxone market.

A. Description of Alleged Conduct

1. Product–Hopping: Development of Suboxone

Film and the Alleged Destruction of the Tablet Market

The NDA for Suboxone

film was submitted on October 20, 2008 and was approved August 30, 2010. The patent for Suboxone film—patent 8,017,150 (“the '150 patent”) —expires septembeR 2023. generic suboxone tablets cannot be AB-rated to branded Suboxone film due to the differences in dosage form—that is, sublingual tablet versus sublingual film. Therefore, a pharmacist cannot provide a patient with generic Suboxone tablets when a patient has a prescription for Suboxone film. (Id. at ¶¶ 81, 88.)

Plaintiffs allege that there are few differences between Suboxone

film and Suboxone tablets, and that the film is not superior to the tablets. In support of this assertion, Plaintiffs claim that the two products are so similar that Reckitt submitted safety and efficacy studies performed on Suboxone tablets when seeking approval of the Suboxone film NDA. The two products are alleged to have equivalent bioavailability, meaning that the products release the same amount of active ingredients into a patient's bloodstream. Although Reckitt indicated in its NDA that the film's individual packaging reduced the risk for accidental pediatric exposure to the drug, Plaintiffs assert that the evidence provided by Reckitt on this issue was flawed. Indeed, Plaintiffs argue that the film may present increased risk for accidental pediatric exposure because the filmstrip dissolves more quickly than the tablet, and therefore may be more difficult for a child to spit out in the event of exposure. Plaintiffs also allege that the film has a higher risk of abuse than the tablets. (Id. at ¶¶ 82–86, Exs. A, B.)

Plaintiffs explain that once the FDA approved the Suboxone

film NDA in 2010, Reckitt launched a fraudulent sales and marketing campaign against the tablet for the purpose of diverting sales from the tablet, which would soon face generic competition, to the patent-protected film. Reckitt sales associates allegedly met with physicians and, in addition to promoting Suboxone film, disparaged Suboxone tablets and warned of false safety concerns. It is also alleged that Reckitt publicly announced the removal of Suboxone tablets from the market for these fabricated safety reasons, although it did not actually remove the tablets until six months later—once the generic Suboxone ANDAs obtained FDA approval. Reckitt also reportedly raised the price of its tablets in relation to the film formulation despite the fact that the film was more expensive to manufacture and package. Plaintiffs conclude that Reckitt was successful in its scheme, and had managed to convert 64% of all

Suboxone

prescriptions from tablet to film by the end of 2012. (Id. at ¶¶ 89–92.)³

2. Reckitt Allegedly Delayed ANDA Approvals by Feigning Cooperation in the REMS Process

On December 22, 2011, the FDA approved a Risk Evaluation and Mitigation Strategy (“REMS”)⁴ performed by Reckitt on the issue of the risk of pediatric exposure to Suboxone

tablets. Through the REMS, the FDA required that Reckitt address pediatric exposures via FDA-approved labeling. (DP Compl. ¶ 99.)

Pharmaceutical companies Actavis, Inc. and Amneal (“the Generics”) filed ANDAs for generic Suboxone

tablets in 2009 and May 2011 respectively. On January 6, 2012, the FDA sent all sponsors of pending ANDAs for Suboxone tablets a notification letter stating that all branded and generic Suboxone products would be subject to a Single Shared REMS program (“SSRS”). ANDA filers were directed to contact Reckitt to collaborate on the creation of an SSRS program. The FDA gave a compliance date of May 6, 2012 for the SSRS. Plaintiffs explain that the FDA gave a short turn-around time, assuming that the recently approved REMS performed by Reckitt would simply be amended to add the bioequivalent generic products. (Id. at ¶¶ 98–102.)

Plaintiffs allege that Reckitt used the SSRS as a means to undermine and delay generic entry by making unnecessary,...