In re Intuniv Antitrust Litig.

• Decision Date: 21 September 2020
• Docket Number: Civil Action Nos. 1:16-cv-12653-ADB,1:16-cv-12396-ADB
• Citation: 496 F.Supp.3d 639
• Parties: IN RE INTUNIV ANTITRUST LITIGATION (Both Direct and Indirect Cases)
• Court: U.S. District Court — District of Massachusetts

496 F.Supp.3d 639

IN RE INTUNIV ANTITRUST LITIGATION (Both Direct and Indirect Cases)

Civil Action Nos. 1:16-cv-12653-ADB

1:16-cv-12396-ADB

United States District Court, D. Massachusetts.

Signed September 21, 2020

Filed October 9, 2020

REVISED MEMORANDUM AND ORDER ON MOTIONS FOR SUMMARY JUDGMENT

BURROUGHS, District Judge

This "pay-for-delay" or "reverse settlement" case arises from an alleged anticompetitive agreement made between the brand and generic manufacturers of Intuniv, a medication used to treat Attention Deficit Hyperactivity Disorder ("ADHD"). Defendants Shire LLC and Shire U.S., Inc. (collectively, "Shire") manufacture Intuniv, which is the brand-name for extended release guanfacine

hydrochloride. Defendants Actavis Elizabeth LLC, Actavis Holdco U.S., Inc., and Actavis LLC (collectively, "Actavis" and, together with Shire, "Defendants") manufacture a generic version of Intuniv. Plaintiffs, who include both Direct Purchaser Plaintiffs ("DPPs") and Indirect Purchaser Plaintiffs ("IPPs"), allege that they paid inflated prices for Intuniv due to Defendants’ having improperly agreed to delay competition for both brand Intuniv and generic Intuniv in violation of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 – 2. See generally [FWK 140].¹ The IPPs additionally bring state-law claims under the laws of Massachusetts, Florida, Missouri, New York, and Wisconsin, most of which are premised on alleged violations of the Sherman Act. [Picone 39 ¶¶ 155–508].

Presently before the Court are the parties’ motions for summary judgment.² Plaintiffs have filed motions for summary judgment on Shire's market power, [FWK 294], and Defendants’ readiness and ability to launch an authorized generic ("AG"), [FWK 295].³ Defendants have moved for summary judgment on a number of issues: (1) Defendants did not agree that Shire would not launch an Intuniv AG; (2) there was no payment to delay generic competition; (3) Plaintiffs cannot recover based on a causal theory premised on launch at risk; (4) Plaintiffs cannot recover for purchases made before any anti-competitive agreement between Shire and Actavis; (5) Plaintiffs cannot establish market power; and (6) there is no evidence to support some of the IPPs’ state-law claims. [FWK 327; Picone 244].

I. BACKGROUND

A. Factual Background

For the purposes of summary judgment, the following facts are undisputed. Defendants Shire LLC, a New Jersey corporation, and Shire U.S., Inc., a Kentucky corporation, are subsidiaries of Takeda Pharmaceutical Company Limited ("Takeda") and Shire PLC. [FWK 380-1 ¶ 7]. During the class period, Shire had its U.S. headquarters in Pennsylvania, which is where the employees who negotiated the underlying agreement worked at the time of the settlement. [FWK 380-1 ¶ 8]. Shire's headquarters is now in Massachusetts. [Id. ].

Actavis Elizabeth LLC, Actavis Holdco U.S., Inc., and Actavis LLC are affiliates of Teva Pharmaceuticals Industries Limited and subsidiaries of Actavis, Inc. [FWK 380-1 ¶ 9]. The Actavis companies are incorporated in Delaware and have their principal places of business in New Jersey. [Id. ].

On September 2, 2009, the Food and Drug Administration ("FDA") approved a New Drug Application ("NDA") for Shire's brand-name drug, Intuniv, a non-stimulant, once-daily, extended release formulation of guanfacine

hydrochloride prescribed for pediatric and adolescent patients with ADHD. [FWK 380-1 ¶¶ 14–15; FWK 374-1 ¶ 2]. As a result, Intuniv received three years of regulatory exclusivity, during which time the FDA could not approve a generic version of Intuniv. [FWK 380 ¶ 15; FWK 374-1 ¶ 5]. Shire listed three patents in the FDA Orange Book as covering Intuniv: U.S. Patent Nos. 5,854,290 ("the ’290 Patent"),⁴ 6,287,599 ("the ’599 Patent"),⁵ and 6,811,794 ("the ’794 Patent" and, collectively with the ’290 Patent and the ’599 Patent, "the Patents").⁶ [FWK 380-1 ¶ 26; FWK 374-1 ¶ 3].

A few months later, on December 29, 2009, Actavis filed an Abbreviated New Drug Application ("ANDA") for its proposed generic version of Intuniv. [FWK 380-1 ¶ 29; FWK 374-1 ¶ 7]. As part of that ANDA, Actavis argued that each patent listed in the Orange Book covering Intuniv was invalid or would not be infringed by Actavis’ manufacture, use, or sale of generic Intuniv. [FWK 374-1 ¶ 8]. Several other companies subsequently sought FDA approval to manufacture their own generic alternatives to Intuniv. [FWK 380-1 ¶¶ 30–31, 34–35; FWK 374-1 ¶ 13]. As the first generic manufacturer to file an ANDA, Actavis would have enjoyed "a 180-day period of exclusivity" during which no other generic manufacturer could have manufactured an Intuniv alternative. In re Loestrin 24 Fe Antitrust Litig. (Loestrin I), 814 F.3d 538, 543 (1st Cir. 2016). During that exclusivity period, Shire and Actavis would have been the only manufacturers approved by the FDA to produce Intuniv or a generic alternative. [FWK 374-1 ¶ 9].

Actavis notified Shire of its ANDA on April 2, 2010. [FWK 374-1 ¶ 10]. On May 12, 2010, Shire filed suit, in the United States District Court for the District of Delaware, against Actavis pursuant to 21 U.S.C. § 335(j)(5)(B)(iii), [FWK 380-1 ¶ 33; FWK 374-1 ¶ 16], which triggered a 30-month stay of the FDA's approval of Actavis’ ANDA for generic Intuniv, see Fed. Trade Comm'n v. Actavis, Inc., 570 U.S. 136, 143, 133 S.Ct. 2223, 186 L.Ed.2d 343 (2013) ("If the brand-name patentee brings an infringement suit within 45 days, the FDA then must withhold approving the generic, usually for a 30-month period, while the parties litigate patent validity (or infringement) in court." (citing 21 U.S.C. § 355(j)(5)(B)(iii) )).

The Honorable Richard G. Andrews, United States District Judge for the District of Delaware, held a Markman hearing on the Patents on February 14, 2012. [FWK No. 380-1 ¶ 37]. The ’599 Patent and ’794 Patent each reference a formulation of guanfacine

hydrochloride that has three essential components: (1) an active pharmaceutical ingredient that is "pH dependent"; (2) a "non-PH dependent sustained release agent"; and (3) a "pH dependent agent" that increases the rate of release of the active ingredient at a pH greater than 5.5. [FWK 380-1 ¶ 37]. The court found that the active pharmaceutical ingredient referenced in component (1) must be a separate component from the non-pH dependent agent referenced in component (2). [Id. ]. Therefore, Shire could not prove that Actavis had infringed on its patent through the presence of a single ingredient. [Id. ]. Shire would have needed to prove that Actavis’ allegedly infringing product contained at least one ingredient that was a non-pH dependent sustained release agent and a different ingredient that functioned as the pH-dependent agent. [Id. ]. Shire moved for reconsideration, which the court denied. [Id. ].

The court denied Actavis’ motion for summary judgment on September 6, 2012, [FWK No. 380-1 ¶ 38], and held a bench trial from September 17 to September 20, 2012 on Shire's infringement claims on the ’599 Patent and the ’794 Patent, [FWK 380-1 ¶ 39; FWK 374-1 ¶ 23].

Prior to this trial, on June 29, 2012, the FDA tentatively approved Actavis’ ANDA. [FWK 380-1 ¶ 47; FWK 374-1 ¶ 20]. On August 7, 2012, Jennifer Wu, the Actavis project manager in charge of meeting Actavis’ generic Intuniv launch deadlines, reported that Actavis had sufficient raw materials to manufacture launch quantities of generic Intuniv. [FWK 374-1 ¶ 36; FWK 380-1 ¶ 48]. Over the next few months, from August until October 2012, Actavis manufactured twelve process validation batches of generic Intuniv. [FWK 374-1 ¶¶ 37–38]. Wu notified the generic Intuniv team that the process validation batches were "launch ready" on October 19, 2012. [FWK 374-1 ¶ 39].

On October 5, 2012, the FDA gave final approval to Actavis’ ANDA. [FWK 380-1 ¶ 47; FWK 374-1 ¶ 24].

Around this same time, Shire was also preparing test batches of generic Intuniv, one lot of each strength, in preparation for launching its own AG. [FWK 374-1 ¶¶ 59–61]. Those lots of generic Intuniv were delivered to Shire's distribution warehouse by November 20, 2012. [FWK 374-1 ¶¶ 62–63].

Throughout the underlying patent litigation, Shire and Actavis engaged in settlement negotiations. On April 19, 2012, Shire's in-house patent counsel sent Actavis’ Director of IP Law a proposed settlement. [FWK 380-1 ¶ 49]. Shire's proposal included a January 2019 license effective date for Actavis’ generic Intuniv, provided Shire with a 60% royalty, which would decline to 15% as more generic alternatives entered the market,⁷ and reserved Shire's right to launch an AG, either itself or by using a third party. [Id. ].

On September 21, 2012, after the bench trial before Judge Andrews, Actavis sent a counter-proposal to Shire. [FWK 380-1 ¶ 50]. Actavis’ proposed settlement provided that Shire would grant Actavis a royalty-free license effective October 2013 and that Shire would not launch an AG. [Id. ]. Shire responded on November 2, 2012, by sending a proposal to Actavis’ Vice President and Intellectual Property and Patent Counsel, which included a January 1, 2016 license effective date, a 15% royalty to Shire when Shire was in the market with another generic or an AG, which would decline to 5% as more generics entered the market, and a provision indicating that Shire would retain the right to launch an AG, either itself or through an affiliate, but would not launch that AG using a third party during the first 180 days of Actavis’ generic entering the market. [Id. ¶ 51]. Between November 20, 2012 and January 7, 2013, Defendants’ respective General Counsels had six telephone calls to discuss settlement. [Id. ¶ 53].

On January 16, 2013, Actavis’ General Counsel sent Shire's General Counsel a mark-up of Shire's November 2, 2012 settlement offer. The mark-up proposed a September 2014 launch date for Actavis’ generic, an unspecified royalty that would terminate upon another generic or AG entering the market, and forfeited Shire's right to launch an...