In re Actos End-Payor Antitrust Litig.

• Decision Date: 30 September 2019
• Docket Number: No. 13-CV-9244 (RA),13-CV-9244 (RA)
• Citation: 417 F.Supp.3d 352
• Parties: IN RE ACTOS END-PAYOR ANTITRUST LITIGATION
• Court: U.S. District Court — Southern District of New York

417 F.Supp.3d 352

IN RE ACTOS END-PAYOR ANTITRUST LITIGATION

No. 13-CV-9244 (RA)

United States District Court, S.D. New York.

Signed September 30, 2019

OPINION AND ORDER

RONNIE ABRAMS, United States District Judge:

This case concerns whether Defendants Takeda Pharmaceutical Company Limited, Takeda America Holdings, Inc., Takeda Pharmaceuticals U.S.A., Inc., and Takeda Development Center Americas, Inc. (collectively "Takeda") are liable to the indirect purchasers of Takeda's diabetes medication called ACTOS

("End-Payor Plaintiffs" or "EPPs"), for unlawfully inflating that drug's prices in violation of state antitrust laws. In September 2015, this Court granted Defendants' motion to dismiss. See Op. & Order re: Mot. to Dismiss ("2015 Op.") at 51 (Dkt. 221), available at 2015 WL 5610752 (" Actos I "). On appeal from that decision, the Second Circuit largely affirmed the dismissal, except with respect to Takeda's two monopolization claims, which were remanded to proceed on a narrower theory. See

In re Actos End-Payor Antitrust Litig. , 848 F.3d 89, 102 (2d Cir. 2017) (" Actos II "). Following remand, EPPs moved for leave to amend, seeking to add new allegations concerning causation, which the Court granted in part and denied in part. EPPs then filed the operative Fourth Consolidated Amended Complaint ("Complaint"). Now before the Court is Takeda's motion to dismiss. For the following reasons, the motion is denied.

BACKGROUND

Both this Court and the Second Circuit have recounted this case's factual background and explained the relevant regulatory scheme at length. See In re Actos , 848 F.3d at 93–97 ; 2015 Op. at 1–16. For the purposes of this Opinion, the Court assumes the reader's familiarity with the case and will restate only those facts relevant to resolving Takeda's motion.

I. Regulatory Background

The issues in this case largely revolve around the proper interpretation of a provision of the Hatch-Waxman Act (the "Act"), which controls how and when manufacturers of brand name drugs, and their generic counterparts, can lawfully enter the market. Normally, inventors obtain patents for their brand-name drugs. Patents that protect a drug may include claims directed to: (1) a single active ingredient of the drug, that is, a chemical compound, referred to in the Act's supporting regulations as a "drug substance" claim; (2) multiple active ingredients of the drug, that is, a chemical composition, referred to as a "drug product" claim; or (3) a method of using the drug, referred to as a "method-of-use" claim.

Inventors must get FDA approval to lawfully sell their drugs. To do so, they must file New Drug Applications (NDAs) with the FDA. When filing an NDA that seeks approval to market a particular brand drug, inventors are required to submit information concerning related patents. The scope of one of the Act's provisions governing when (and what) information about such patents must be submitted with an NDA is at the heart of this case.

For each patent that is submitted as part of an NDA, the applicant must describe the patent as a drug substance, drug product, or method-of-use patent, depending on the nature of the claims included in each patent. See In re Actos , 848 F.3d at 98–99. When an NDA is approved, the patent description and other information submitted with the application is listed in conjunction with the NDA number and the drug name, among other things, in the FDA's so-called "Orange Book."

If generic-drug manufacturers wish to sell a generic version of a brand-name drug they must first file with the FDA an Abbreviated New Drug Application (ANDA). Any ANDA must contain "an appropriate certification" for each patent listed in connection with the NDA in the Orange Book. If the generic-drug manufacturer intends to market a drug before a listed patent has expired, then it must tell the FDA that the generic will either not infringe the brand's patents, or that the brand's patents are invalid. Under the Act, there are two primary ways by which generics can do so.

First, generics can certify that the brand's patents are "invalid or will not be infringed by" their generic, which is referred to as a "Paragraph IV certification." See 21 U.S.C. § 355(j)(2)(A)(vii)(IV). Because the Act provides that the filing of a Paragraph IV certification constitutes an act of infringement, the brand may then sue the generic accordingly. To incentivize generic manufacturers to challenge invalid patents (and therefore run the risk of being sued by patent holders), the first generic to file a Paragraph IV certification may receive a 180-day period during which it has the exclusive right to market a generic version of the drug. See id. § 355(j)(5)(B)(iv). This exclusivity period can be very lucrative for the generics who successfully challenge patents.

Second, if the generic is seeking to market only a new method of using a drug, it can "carve out" any patented methods of use in its proposed label for the drug and proceed with a lower risk of a patent-infringement lawsuit by submitting a so-called Section viii statement. Id. § 355(j)(2)(A)(viii) ("Section viii statement"). Successful applications that carve out patented methods of use under Section viii allow generics to enter the market even during the 180-day exclusivity period held by the first successful Paragraph IV filer. See In re Actos , 848 F.3d at 95. If a patent submitted with an NDA includes both drug substance or drug product claims, in addition to method-of-use claims, the generic can either file an ANDA with Paragraph IV certifications as to all claims, or they can file one with a so-called "split certification." In a split-certification, the generic submits a Paragraph IV certification as to the drug substance and/or drug product claims, and Section viii statements as to the claims covering the patented methods of use that it intends to carve out from its label.

II. Factual Background

Starting in the 1980s, Takeda obtained several patents related to its diabetes

medicines. The first of those patents, U.S. Patent. No. 4,687,777 (the "'777 patent"), claimed the compound "pioglitazone," the active ingredient in Takeda's brand-name drug ACTOS. Takeda later obtained two other patents— U.S. Patent Nos. 5,965,584 (the "'584 patent") and 6,329,404 (the "'404 patent") —which claimed compositions of pioglitazone combined with other drugs and methods of using those compositions. To obtain FDA approval to sell ACTOS, Takeda filed a New Drug Application (NDA) in January 1999, in which it submitted information regarding the '777 patent and described it as a drug substance patent. The FDA approved the NDA in July 1999 and listed the '777 patent in the Orange Book. Later in 1999, and then in 2002, Takeda submitted information with respect to the '584 and '404 patents, respectively, in connection with the ACTOS NDA, describing those two patents (hereinafter "the Patents") as both drug product patents and method-of-use patents (and improperly so, in EPPs' view). Those patents were also subsequently listed in the Orange Book for the ACTOS NDA. At the time, however, the Orange Book was only capable of displaying one description per patent listed. Thus, although the Patents were described to the FDA as both drug product patents and method-of-use patents, the Orange Book listings displayed only that they were described as method-of-use patents until starting in 2003.

At the start of 2003, several generics also began applying to enter the ACTOS

market upon the expiration of the '777 patent, which would occur on January 17, 2011. The first four companies—Mylan Pharmaceuticals, Inc., Alphapharm (together, "Mylan"),¹ Watson Laboratories, Inc., now known as Actavis PLC ("Actavis"), and Ranbaxy Laboratories, Inc. ("Ranbaxy")—who sought to compete with ACTOS filed their applications on the same day. These generics, the so-called first filers, challenged the validity and potential for infringement of the Patents with respect to their proposed ACTOS generics by submitting Paragraph IV certifications as to the Patents' drug product claims. They also submitted Section viii statements with respect to the Patents' method-of-use claims, seeking to market ACTOS for uses not covered by those patents. Over the following years, six other generics, the later-filers, submitted similar applications with split certifications. Just one manufacturer—Teva Pharmaceutical Industries, Ltd., and Teva Pharmaceuticals USA, Inc. (collectively "Teva")—submitted an application including only Section viii statements with respect to the Patents' method claims (and which made no certifications as to the Patents' drug product claims). According to EPPs, Teva did not file a Paragraph IV certification as to the drug product claims because it believed that the Patents were not properly listed as drug product patents for the ACTOS NDA and that a Paragraph IV certification was therefore unnecessary.

In 2003, Takeda sued the generics who had filed applications with Paragraph IV certifications challenging the validity of the Patents. Six years later, Takeda initiated a separate infringement lawsuit against Teva. Soon thereafter, the FDA received a citizen petition from non-party Sandoz Inc., essentially asking it to deny Teva's ANDA on the ground that it lacked a Paragraph IV certification as to the drug product claims. Critically, as a result of that petition, Takeda informed the FDA in January 2010 that the Patents had been properly described as both drug product and method-of-use patents for the ACTOS

NDA. As a matter of practice, the FDA relies on such representations without independent evaluation. See

In re Actos , 848 F.3d at 96–97. Based on Takeda's representations, the FDA granted the citizen petition on March 15, 2010. The FDA thus required that the ACTOS ANDAs, including Teva's, contain an appropriate Paragraph IV certification for the Patents explaining why the generic did not infringe those patents' drug product claims or that...