IN RE ANDROGEL ANTITRUST LITIGATION (NO. II)

• Decision Date: 22 February 2010
• Docket Number: MDL No. 2084 ALL CASES. No. 1:09-MD-2084-TWT.
• Parties: In re ANDROGEL ANTITRUST LITIGATION (NO. II).
• Court: U.S. District Court — Northern District of Georgia

687 F.Supp.2d 1371

In re ANDROGEL ANTITRUST LITIGATION (NO. II).

MDL No. 2084 ALL CASES. No. 1:09-MD-2084-TWT.

United States District Court, N.D. Georgia, Atlanta Division.

February 22, 2010.

Eric Grannon, J. Mark Gidley, Stephen LeBlanc, White & Case LLP, New York, NY, for Par Pharmaceutical Companies and Paddock Laboratories.

ORDER

THOMAS W. THRASH, JR., District Judge.

This is a Multidistrict Litigation proceeding involving antitrust actions that are consolidated for pretrial proceedings. It is before the Court on the Defendants' Motions to Dismiss the Indirect Purchaser Plaintiffs' Complaints MDL Doc. 8, 9; the Defendants' Motions to Dismiss the Second Amended Complaint MDL Doc. 22, 23, 24, 26 and 28; and the Defendants' Motions to Dismiss the Private Plaintiffs' Second Amended Complaints MDL Doc. 25, 27 and 29. For the reasons set forth below, the Defendants' motions are GRANTED in part and DENIED in part.

I. Background

AndroGel is a prescription gel used to treat male hypogonadism. Male hypogonadism is a medical condition where the body does not produce normal levels of testosterone. Symptoms include depression, fatigue, loss of muscle mass, and decreased libido. Physicians prescribe AndroGel to increase levels of testosterone in their patients. Patients apply the gel directly onto their skin. The testosterone penetrates the skin and gradually enters the bloodstream, providing for a sustained release of testosterone. AndroGel is not the only available method of testosterone replacement therapy. Physicians also prescribe testosterone injections or skin patches. But these other methods have not been as effective or as popular as AndroGel. AndroGel has quickly become the most popular form of testosterone replacement therapy. From 2000 to 2007, sales of AndroGel in the United States were over $1.8 billion.

Besins Healthcare, S.A. developed the pharmaceutical formulation for AndroGel. In August 1995, Besins granted Solvay Pharmaceuticals, Inc., a license to sell AndroGel in the United States. Besins also agreed to produce AndroGel and supply it to Solvay once Solvay received approval to sell the drug. To sell any new drug in the United States, a person must file a New Drug Application (NDA) with the Food and Drug Administration (FDA). 21 U.S.C. § 355(a). The NDA must contain a complete report about the drug, including safety and efficacy studies, the composition of the drug, description of how the drug is produced, and proposed labeling. 21 U.S.C. § 355(b). In April 1999, Solvay filed a NDA for AndroGel with the FDA. In February 2000, the FDA approved Solvay's NDA, and soon after Solvay began selling AndroGel.

Like most pharmaceutical companies that sell new drugs, Solvay sought legal protection against generic versions of AndroGel. Solvay first sought protection under federal drug laws. In April 1999, when Solvay filed its NDA for AndroGel, Solvay also asked the FDA for new drug product exclusivity. This exclusivity prevents the FDA from approving any other application to sell the same drug until the exclusivity period ends. The FDA will grant five years of exclusivity for any NDA that contains active ingredients never previously approved by the FDA. See 21 U.S.C. § 355(c)(3)(F)(ii). The FDA will grant three years of exclusivity for any NDA that contains an active ingredient that has previously been approved by the FDA but still includes new clinical investigations essential to approval of the NDA. See 21 U.S.C. § 355(c)(3)(F)(iii). AndroGel fell into the latter category, and so in February 2000, the FDA granted Solvay three years of exclusivity.

Solvay also sought protection under federal patent laws. In August 2000, employees from Solvay and Besins filed a patent application with the Patent and Trademark Office (PTO). The application claimed the gel formulation used in AndroGel. It did not claim testosterone itself or testosterone replacement therapy. In January 2003, the PTO granted the application and issued U.S. Patent No. 6,503,894 ('894 patent).¹ In June 2003, Solvay requested that the PTO correct certain mistakes that it made in the patent. In December 2003, the PTO granted the request and issued a certificate of correction. See 35 U.S.C. § 255. Solvay and Besins jointly own the '894 patent. It expires in August 2020. Within thirty days after the PTO issued the '894 patent, Solvay submitted the '894 patent to the FDA for listing in the Orange Book. The Orange Book is a publication by the FDA containing information about each approved drug. 21 U.S.C. § 355(j)(7)(A). For any NDA, a person must also submit any patent that the person believes would be infringed by a generic drug. 21 U.S.C. § 355(b)(1). This requirement applies even if the PTO issues the patent after the person filed a NDA. 21 U.S.C. § 355(c)(2). The FDA accepted Solvay's submission and listed the '894 patent in the Orange Book.

Other pharmaceutical companies soon developed a generic version of AndroGel. To sell a generic drug, a person may file an Abbreviated New Drug Application (ANDA) with the FDA. 21 U.S.C. § 355(j). The Hatch-Waxman Act created the ANDA procedure. Pub.L. No. 98-417, 98 Stat. 1585 (1984). One goal of the Hatch-Waxman Act was to streamline the process for approving generic drugs. See id. As a result, an ANDA does not need to contain a complete report about the drug. It can show that the generic drug is bioequivalent to a previously approved drug and then rely on that drug's NDA. See 21 U.S.C. § 355(j)(2)(A)(iv). But if there is a patent that claims the previously approved drug, the ANDA must contain an additional certification. The ANDA must certify that (1) the patent has not been listed in the Orange Book, or (2) the patent has expired, or (3) the patent will expire on a certain date, or (4) the patent is invalid or will not be infringed by the generic drug. See 21 U.S.C. § 355(j)(2)(A)(vii). When the ANDA certifies that the patent is invalid or will not be infringed, it is known as a Paragraph IV certification. For any ANDA with a Paragraph IV certification, the applicant must also notify the patent holder of the ANDA. 21 U.S.C. § 355(j)(2)(B).

Once Solvay's new drug product exclusivity expired in February 2003, the FDA was authorized to approve generic versions of AndroGel. In May 2003, two companies each submitted ANDAs with Paragraph IV certifications for generic AndroGel. Watson Pharmaceuticals, Inc. submitted the first ANDA, and Paddock Laboratories, Inc. submitted the second ANDA. Both companies also sent notice of their ANDAs to Solvay and Besins. In July 2003, Paddock reached an agreement with Par Pharmaceuticals, Inc. Par agreed to share any litigation costs with Paddock and to sell Paddock's generic AndroGel. In return, Paddock agreed to share profits with Par.

Solvay responded to the ANDAs by asserting its rights under the '894 patent. In August 2003, Solvay's subsidiary, Unimed Pharmaceuticals, Inc., filed patent infringement actions against Watson and Paddock in this Court. See Unimed Pharm., Inc. v. Watson Pharm., Inc., No. 1:03-CV-2501-TWT, 2003 WL 23824320 (N.D.Ga. Aug. 21, 2003); Unimed Pharm., Inc. v. Paddock Labs., Inc., No. 1:03-CV-2503-TWT, 2003 WL 23824347 (N.D.Ga. Aug. 21, 2003). Solvay alleged infringement based on the filing of the ANDAs. See 35 U.S.C. § 271(e)(2)(A). This is not an ordinary infringement action. It is an "artificial" one based solely on the filing of an ANDA. See Glaxo, Inc. v. Novopharm, Ltd., 110 F.3d 1562, 1569 (Fed.Cir.1997). If a patent holder files such infringement action within forty-five days of receiving notice of an ANDA with a Paragraph IV certification, the FDA will stay approval of that ANDA for thirty months. 21 U.S.C. § 355(j)(5)(B)(iii). But if before the thirty month period ends a district court decides that the patent is invalid or not infringed, the FDA may approve the ANDA effective on the date of such judgment. Id.; see In re Tamoxifen Citrate Antitrust Litig., 466 F.3d 187, 192 n. 4 (2d Cir.2006). Because Solvay filed infringement actions against Watson and Paddock within forty-five days of receiving notice, the FDA stayed approval of their ANDAs for thirty months.

For the next few years, Solvay, Watson, and Paddock litigated the infringement actions. The two infringement actions followed a similar schedule. From late 2003 to the middle of 2005, the parties engaged in discovery, scheduling, and other initial litigation matters. By August 2005, the parties had filed motions for claim construction. By December 2005, Watson and Paddock had filed motions for summary judgment on the validity of the '894 patent. All of the motions were fully briefed and ready for decision. While the motions were pending, Watson and Paddock moved towards entering the market with generic AndroGel. In January 2006, the thirty month stay ended, and the FDA approved Watson's ANDA. The FDA, however, continued to stay approval of Paddock's ANDA. The first person to file an ANDA with a Paragraph IV certification receives generic exclusivity. This exclusivity prevents the FDA from approving any subsequent person's ANDA for the same drug until 180 days after the earlier of (1) the date the first person begins commercial marketing of its generic drug or (2) the date a district court enters judgment that the patent is invalid or not infringed, whichever date is earlier. 21 U.S.C. § 355(j)(5)(B)(iv); see In re Tamoxifen, 466 F.3d at 193 n. 5. Because Watson was the first to file an ANDA for generic AndroGel, it received generic exclusivity over Paddock. In February 2006, Watson prepared a report predicting that it would sell generic AndroGel by January 2007 and that the price would be 75 percent less than brand name AndroGel. In the same month, Par prepared a report predicting that Watson would sell generic AndroGel as early as March 2006 and that Par and Paddock would follow in September 2006.

Before the Court decided any motions in the infringement actions, and...