In re Lamictal Direct Purchaser Antitrust Litig.

• Decision Date: 24 January 2014
• Docket Number: No. 12–cv–995 WHW.,12–cv–995 WHW.
• Citation: 18 F.Supp.3d 560
• Court: U.S. District Court — District of New Jersey
• Parties: In re LAMICTAL DIRECT PURCHASER ANTITRUST LITIGATION. This Document Relates to: All Direct Purchaser Actions.

18 F.Supp.3d 560

In re LAMICTAL DIRECT PURCHASER ANTITRUST LITIGATION.

This Document Relates to: All Direct Purchaser Actions.

No. 12–cv–995 WHW.

United States District Court, D. New Jersey.

Signed Jan. 24, 2014.

Elena K. Chan, Kimberly Marion Hennings, Garwin Gerstein & Fisher LLP, New York, NY, Peter S. Pearlman, Cohn, Lifland, Pearlman, Herrmann & Knopf, LLP, Saddle Brook, NJ, for Plaintiff.

Meijer Inc., pro se.

Douglas Scott Eakeley, Michael J. Hahn, Miguel A. Pozo, Ryan John Cooper, Lowenstein Sandler LLP, Roseland, NJ, Melissa J. Hatch, Evan Wainhouse Davis, Pepper Hamilton LLP, Philadelphia, PA, Allyn Zissel Lite, Mayra Velez Tarantino, Michael E. Patunas, Lite DePalma Greenberg, LLC, Newark, NJ, for Defendants.

OPINION

WALLS, Senior District Judge.

This Court dismissed the complaint of Direct Purchaser Plaintiffs Louisiana Wholesale Drug Company, Inc. and King Drug Company of Florence, Inc. for failure to state a claim upon which relief could be granted. Plaintiffs appealed, and the Third Circuit remanded the case to this Court in light of the Supreme Court's decision in FTC v. Actavis, ––– U.S. ––––, 133 S.Ct. 2223, 186 L.Ed.2d 343 (2013). The Court affirms its order of dismissal.

FACTUAL AND PROCEDURAL BACKGROUND

GlaxoSmithKline LLC (“GSK”) sells Lamictal Tablets and Lamictal

Chewables, which treat epilepsy and bipolar disorder. Am. Compl. ¶ 46 (ECF No. 55). These products are very profitable. As example, from March 2007 to March 2008, GSK's domestic sales of Lamictal Tablets exceeded $2 billion. Id. The lower-dosage Lamictal Chewable products had domestic sales of about $50 million from 2004 to 2005. Id. The active ingredient in Lamictal products is lamotrigine, covered by U.S. Patent No. 4,602,017 (“the '017 patent”). Id. ¶ 11. GSK's patent for lamotrigine expired in July 2008. Id.

In 2002, Defendants Teva Pharmaceutical Industries Ltd. and Teva Pharmaceuticals (“Teva”) sought to produce generic versions of lamotrigine

and filed Abbreviated New Drug Applications (“ANDAs”) with the Food and Drug Administration (“FDA”). Id. ¶ 50. As the first generic manufacturer to file an ANDA for lamotrigine, Teva would be entitled to a 180–day period during which it would be the only generic manufacturer authorized to market the drug (the “first-filer exclusivity period”). Id. ¶ 12. In response to Teva's ANDA, GSK sued Teva for patent infringement. Id. ¶ 54. On January 27, 2005, Judge Bissell ruled from the bench that claim 1 of the '017 patent was invalid as anticipated by prior art. Id. ¶ 56. On February 2, 2005, the parties had a conference before Judge Bissell to announce that they were in settlement negotiations and asked the court to refrain from any further rulings. Id. ¶¶ 68–69. There are three key terms of the resulting settlement, which the Court paraphrases:

1) Chewables: Teva was permitted to sell generic lamotrigine

chewables by June 1, 2005. Id. ¶ 70. This “early entry” period was approximately 37 months before the expiration of the '017 patent, and also before the FDA approved Teva's ANDA for lamotrigine chewables. Id. GSK supplied the chewables to Teva and Teva began selling them on May 25, 2005. Id.

2) Tablets: Teva was permitted to sell generic lamotrigine

tablets during an “early entry” period of about six

months before the expiration date of the '017 patent. Id. ¶ 71; GSK Mot. Dis., Ex. A (“License and Supply Agreement” (“Settlement”)) at 11–12 (ECF No. 72–2). At the time, GSK did not know if it would receive “pediatric exclusivity” from the FDA which, if awarded, adds an additional six months of protection to the existing patent term. If GSK did not receive pediatric exclusivity, Teva would have been allowed to enter the tablet market on March 1, 2008. Settlement at 12. If GSK did receive pediatric exclusivity, Teva would have been allowed to enter July 21, 2008—the date the '017 patent was originally due to expire—via an exclusive waiver from the pediatric exclusivity extension.Id. ¶ 71; Settlement §§ 2.2(b) (regarding chewables), 2.3(b) (regarding tablets). In 2007, GSK received pediatric exclusivity and thus an extra six months of patent protection, so the latter date applied. Id. ¶ 49.

3) The “No–AG Agreement”: GSK agreed not to launch its own generic versions of Lamictal

products (or “authorized generics,” the common name for products manufactured by the brand name manufacturer but without the brand name) during Teva's first-filer exclusivity period—i.e., the 180 days after Teva first marketed the generic version of the drug. Am. Compl. ¶¶ 76, 81. Because GSK received pediatric exclusivity, extending its patent protection from July 2008 to January 2009, Teva enjoyed its first-filer exclusivity period at the same time. This agreement arises from the exclusive license provisions, which specifically made the license exclusive “including as to GSK and its Affiliates and Third Parties with respect to Generic Equivalents.” Settlement §§ 2.2(a), 2.2(b) (regarding chewables), 2.3(a), 2.3(b) (regarding tablets); Pls.' Opp'n Br. at 21–22, 22 n. 17 (ECF No. 86).

In sum, in exchange for dropping its challenge to GSK's patents, the settlement allowed Teva to market generic lamotrigine

before the relevant patent expired and ensured that once it did so, its generic tablets and chewables would not face competition from GSK's own “authorized generic” for a certain period of time. Id. ¶¶ 76, 81, 86.

Plaintiffs allege that the settlement violates federal antitrust laws. Id. ¶¶ 108–50. Defendants filed a motion to dismiss the complaint on August 15, 2012, ECF Nos. 72–73, which this Court granted. Op. of Dismissal (ECF No. 105), In re: Lamictal, No. 12–cv–995 (WHW), 2012 WL 6725580 (Dec. 6, 2012).

At the time, the circuits were split about when and under what standard district courts should scrutinize “reverse payment settlements” between a brand name and generic drug manufacturer under the Drug Price Competition and Patent Term Restoration Act of 1984, 98 Stat. 1585, as amended, commonly known as the Hatch–Waxman Act. In 2012, the Third Circuit announced that the appropriate test was a “quick look”: if a patent holder makes a reverse payment to a generic patent challenger, that payment is “prima facie evidence of an unreasonable restraint of trade.” Id. at *4, citing In re K–Dur Antitrust Litig., 686 F.3d 197, 218 (3d Cir.2012). Other circuits, including the Federal Circuit, applied the “scope of the patent” test, according to which reverse payment settlements are immune from antitrust scrutiny as long as the settlement falls within the scope of the patent. Id. at *5. Under “quick look,” most reverse payment settlements get antitrust scrutiny, and under “scope of the patent” most do not. See Actavis, 133 S.Ct. at 2230 (describing the “quick look” standard as “settlements presumptively unlawful” and the “scope of the patent” standard as “settlements generally immune from antitrust attack”).

Applying K–Dur (the standard more lenient to plaintiffs), this Court found that its decision rested on a preliminary question: whether the settlement at issue contained a “reverse payment.” Defendants argued that it did not because there was no transfer of money; Plaintiffs argued that it did because Teva had received “significant consideration, incentives, and benefits.” Lamictal, 2012 WL 6725580, at *6. The Court sided with Defendants, finding that because the settlement did not involve a transfer of money, it “[was] not subject to antitrust scrutiny”: “The Third Circuit's K–Dur opinion is directed towards settlements when a generic manufacturer is paid off with money, which is not the case here.” Id. The Court concluded that Plaintiffs had failed to state a claim for which relief could be granted. Id. at *7.

Plaintiffs appealed. ECF No. 107. On February 26, 2013, the Third Circuit stayed proceedings pending the Supreme Court's decision in FTC v. Actavis.¹ Third Circuit Do. No. 12 –4584, Doc. No. 003111176912. The Supreme Court issued its opinion on June 17, 2013. ––– U.S. ––––, 133 S.Ct. 2223, 186 L.Ed.2d 343 (2013). Two days later, the Third Circuit lifted the stay and Defendant–Appellees promptly moved to remand the case to this Court in light of Actavis. Defs.-Appellees' Mot. for Remand, Third Circuit Do. No. 12 –4584, Doc. No. 003111300341. Plaintiff–Appellants opposed the move to remand, arguing that even if Actavis changed the antitrust standard for review, this Court's opinion granting Defendants' motion to dismiss was based not on the antitrust standard but on the insufficiency of Plaintiffs' pleadings. Pls.-Appellants' Opp'n to Mot. for Remand at 6, Do. No. 12 –4584, Doc. No. 003111305434. On July 2, 2013, the Third Circuit remanded the case to this Court “... for further proceedings.” Do. No. 12 –4584, Doc. No. 003111312528.

On July 26, 2013, Plaintiffs filed a motion for reconsideration of the opinion and order granting Defendants' motion to dismiss. ECF No. 113. After Defendants opposed the motion and Plaintiffs replied, ECF Nos. 119–20, 122, there followed a flurry of letters regarding additional authority Plaintiffs wanted the Court to consider: an amicus brief the Federal Trade Commission (“FTC”) filed in In re Effexor Antitrust Litigation, Do. No. 11 –cv–5479, a case in this district before Judge Sheridan, ECF No. 117; an opinion from a different case before Judge Sheridan, In re: Lipitor Antitrust Litigation, No. 3:12–cv–2389 (PGS), 2013 WL 4780496 (D.N.J. Sept. 5, 2013), ECF No. 123; and an opinion from the District of Massachusetts, In re: Nexium (Esomeprazole) Antitrust Litigation, 968 F.Supp.2d 367 (D.Mass.2013), ECF No. 125. Defendants asked this Court to ignore these submissions or, in the alternative, find them unpersuasive. ECF Nos. 121, 127.

STANDARD OF REVIEW

I. Reconsideration

“The first question to be decided is the nature of the reconsideration which the Third Circuit mandated.” Rolo v. City Investing Co. Liquidating Trust, 897 F.Supp. 826, 830 (D.N.J.1995)aff'd, 155 F.3d 644 (3d Ci r.1998). In Rolo, the...