In re Cardizem Cd Antitrust Litigation

• Decision Date: 06 June 2000
• Docket Number: No. 99-MD-1278.,99-MD-1278.
• Citation: 105 F.Supp.2d 682
• Parties: In re CARDIZEM CD ANTITRUST LITIGATION. This Document Relates To All Actions.
• Court: U.S. District Court — Eastern District of Michigan

105 F.Supp.2d 682

In re CARDIZEM CD ANTITRUST LITIGATION.

This Document Relates To All Actions.

No. 99-MD-1278.

United States District Court, E.D. Michigan, Southern Division.

June 6, 2000.

COPYRIGHT MATERIAL OMITTED

Patrick E. Cafferty, Miler Faucher and Cafferty LLP, Ann Arbor, MI, for Plaintiffs Charles Zuccarini, Albert Eirich and Jan Gabriel.

Scott E. Perwin, Kenny Seymour Arnold Critchlow & Spector, Miami, FL, for The Kroger Co., et al.

Bruce E. Gerstein, Garwin, Bronzaft, New York City, for Louisiana Wholesale Drug Co., Inc., Sixteenth Street Community Health Center.

Stephen Lowey, Lowey, Dannenberg, White Plains, NY, for Betnor, Inc.

Elwood S. Simon, Elwood S. Simon Assoc., Birmingham, Mi, for Albert Eirich.

Joseph J. Tabacco, Berman, DeValerio, San Francisco, CA, for Aetna U.S. Healthcare, Aetna U.S. Healthcare of Cal., Inc.

Richard B. Drubel, Boies & Schiller, Hanover, NH, for Duane Reade, Inc.

Joseph J. Tabacco, Elwood S. Simon, Michael G. Wassmann, Lance C. Young, Elwood S. Simon Assoc., Birmingham, AL, Stephen Lowey, Lowey, Dannenberg, White Plains, NY, for State law Plaintiffs.

Joe Rebein, Shook, Hardy, Kansas City, MO, for Hoechst AG, Hoechst Aktiengesellschaft.

Craig L. John, Dykema Gossett, Bloomfield Hills, MI, Joe Rebein, Shook, Hardy, Kansas City, MO, for Hoechst Marion Roussel Inc.

Norman C. Ankers, Honigman, Miller, Detroit, MI, Colin A. Underwood, louis M. Solomon, Hal S. Lazaroff, Solomon, Zauderer, New York City, for Andrx Pharmaceuticals, Inc., Andrx Corp.

Michael D. Hausfeld, Cohen, Milstein, Washington, DC, for Eugenia Wynne Sams.

Andrew J. McGuinness, Dykema Gossett, Ann Arbor, MI, Craig L. John, Dykema Gossett, Bloomfield Hills, MI, for Aventis Pharmaceuticals, Inc.

Elwood S. Simon, Elwood S. Simon Assoc., Birmingham, Mi, Stephen Lowey, Richard W. Cohen, Lowey, Dannenberg, White Plains, NY, Angela K. Green, Niewald, Waldeck, Kansas City, MO, for Philip Neal, movant.

ORDER NO. 13

MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFFS' MOTIONS FOR PARTIAL SUMMARY JUDGMENT

EDMUNDS, District Judge.

State Law Plaintiffs and Sherman Act Plaintiffs¹ are before the Court on motions brought pursuant to Fed.R.Civ.Pro. 56(a), for partial summary judgment. Plaintiffs' motions raise a single issue, whether Defendants' September 24, 1997 Agreement ("HMRI/Andrx Agreement") constitutes a restraint of trade that is illegal per se under section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1, and under the various state antitrust laws at issue here. This Court answers this question in the affirmative. It concludes that the HMRI/Andrx Agreement is an agreement between horizontal competitors that allocates the entire United States market for Cardizem CD and its bioequivalents to Defendant HMRI, and thus constitutes a restraint of trade that has long been held illegal per se under established Supreme Court precedent. See Palmer v. BRG of Georgia, Inc., 498 U.S. 46, 111 S.Ct. 401, 112 L.Ed.2d 349 (1990); United States v. Topco Associates, Inc., 405 U.S. 596, 92 S.Ct. 1126, 31 L.Ed.2d 515 (1972); United States v. Cooperative Theatres of Ohio, Inc., 845 F.2d 1367 (6th Cir.1988). Accordingly, Plaintiffs' motions for partial summary judgment are GRANTED.

I. Facts

A. Relevant Statutory and Regulatory Framework

The manufacture and distribution of pharmaceutical drugs are regulated by the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 301, et seq. (1994). Congress passed the "Hatch-Waxman Amendments" to the Act in 1984 after concluding that the Act's "cumbersome drug approval process delayed the entry of relatively inexpensive generic drugs into the market place." Mylan Pharm., Inc. v. Shalala, 81 F.Supp.2d 30, 32 (D.D.C.2000). The Hatch-Waxman Amendments, 21 U.S.C § 355 (1994), embody Congress' intent "to make available more low cost generic drugs" and its attempt "to balance two conflicting policy objectives: to induce name-brand pharmaceutical firms to make the investments necessary to research and develop new drug products, while simultaneously enabling competitors to bring cheaper, generic copies of those drugs to market." Id. (internal quotes and citations omitted).

"[T]he Hatch-Waxman Amendments established new guidelines for the approval of generic drugs. Generic drug makers were permitted to file an Abbreviated New Drug Application ("ANDA") which incorporated data that the `pioneer' manufacturer had already submitted to the FDA regarding the pioneer drug's safety and efficacy. In order to obtain FDA approval, the ANDA must demonstrate, among other things, that the generic drug is `bioequivalent' to the pioneer drug". 21 U.S.C. § 355(j)(2)(A)(iv). As protection for pioneer drug makers, the applicant is also required to certify in one of four ways that the generic drug will not infringe on any patent which claims the pioneer drug. "See id. at § 355(j)(2)(A)(vii)." Mylan Pharm., 81 F.Supp.2d at 32.

Applicable here is the fourth type of certification. Paragraph IV certification "permits the applicant to allege that the patent for the pioneer drug is either invalid or will not be infringed by the marketing of the generic drug. See id. at § 355(j)(2)(A)(vii)(IV)." Mylan Pharm., 81 F.Supp.2d at 32. As the District Court for the District of Columbia recently observed, "[a] generic drug manufacturer's filing of a so-called `Paragraph IV' certification has important legal ramifications. It automatically creates a cause of action for patent infringement. Upon receiving notice of a Paragraph IV certification's filing, the patent holder or pioneer manufacturer has 45 days within which to file suit against the generic manufacturer. See id. at § 355(j)(5)(B)(iii). If such an action is brought, the FDA cannot approve the generic manufacturer's ANDA for 30 months. See id. However, if the court hearing the infringement action rules before the expiration of the 30-month period that the patent at issue is `invalid or not infringed,' then `the approval shall be made effective on the date of the court decision[.]' Id. at § 355(j)(5)(B)(iii)(I)." Mylan Pharm., 81 F.Supp.2d at 32-33.

To encourage competitors to bring cheaper generic drugs to market, and acknowledging that they will likely incur "potentially substantial litigation costs associated with challenging pioneer drug makers' patents, the Hatch-Waxman Amendments provide an added incentive for generic drug producers to file Paragraph IV certifications. The first generic manufacturer to file an ANDA containing a Paragraph IV certification with respect to a specific patent is awarded a 180-day period of exclusive marketing rights for a generic version of the drug claimed by that patent. In other words, no other ANDA for the same generic drug product will be approved during those 180 days." Id. at 33.

Section 355(j)(5)(B)(iv) provides that:

If the [ANDA] contains a certification described in [Paragraph IV] and is for a drug for which a previous application has been submitted under this subsection [containing a Paragraph IV] certification, the application shall be made effective not earlier than one hundred and eighty days after —

(I) the date the Secretary receives notice from the applicant under the previous [ANDA] of the first commercial marketing of the drug under the previous [ANDA], or

(II) the date of a decision of a court in an action described in clause (iii) holding the patent which is the subject of the certification to be invalid or not infringed,

whichever is earlier.

Id. (quoting 21 U.S.C. § 355(j)(5)(B)(iv)). Accordingly, the 180-day period of exclusivity "can be triggered in one of two ways — either (1) when the generic producer begins commercial marketing of its drug (the `commercial marketing trigger'), or (2) when there is a court decision finding the pioneer drug maker's patent invalid or not infringed (the `court-decision trigger')." Mylan Pharm., 81 F.Supp.2d at 33 (footnote omitted).

B. Andrx's ANDA, the HMRI/Andrx Patent Suit, ANDA Supplements, and the September 1997 HMRI/Andrx Agreement

Prior to August 1995, Defendant Andrx had been developing its own generic version of Cardizem CD, and provided samples of its proposed generic substitute for Cardizem CD to the Hoechst Defendants so they could perform their own tests to confirm that there was no infringement of the patents claiming Cardizem CD and thus avoid litigation.

On September 22, 1995, Andrx filed its Abbreviated New Drug Application ("ANDA") No. 74-752 with the United States Food & Drug Administration ("FDA") seeking approval to manufacture and sell a generic form of Cardizem CD, a once-daily, controlled release dosage of the chemical compound diltiazem hydrochloride, manufactured and sold by Defendant HMRI.

On November 28, 1995, two months after Andrx filed its ANDA, the U.S.Patent and Trademark Office issued U.S.Patent No. 5,470,584 ("the '584 patent") to Carderm which then licensed it to HMRI. The '584 patent claims a delayed release diltiazem formulation with an in-vitro dissolution profile where from 0-45% of total diltiazem is released after 18 hours and not less than 45% of total diltiazem is released after 24 hours.

On December 31, 1995, Andrx made a Paragraph IV Certification with regard to all unexpired patents listed in the FDA's Orange Book² allegedly claiming Cardizem CD and certified to HMRI that the product reflected in its ANDA did not infringe the patents owned or controlled by HMRI or its affiliates, including the '584 patent.

On January 31, 1996, HMRI and Carderm filed a patent infringement suit against Andrx in the District Court for the Southern District of Florida ("HMRI/Andrx patent case"). The filing of the suit triggered the 30-month Hatch-Waxman waiting period, which expired on or before July 8, 1998. Thus, Andrx's ANDA could not be finally approved and it could not begin commercial marketing of its generic version of Cardizem CD until the 30-month waiting period expired or the court hearing the infringement action ruled that...