In re Lipitor Antitrust Litig.

• Decision Date: 21 August 2018
• Docket Number: Civil Action No. 3:12-cv-2389 (PGS)(DEA)
• Parties: IN RE LIPITOR ANTITRUST LITIGATION
• Court: U.S. District Court — District of New Jersey

336 F.Supp.3d 395

IN RE LIPITOR ANTITRUST LITIGATION

Civil Action No. 3:12-cv-2389 (PGS)(DEA)

United States District Court, D. New Jersey.

Signed August 21, 2018

MEMORANDUM AND ORDER

SHERIDAN, U.S.D.J.

Presently before the Court is Defendants Pfizer Inc., Pfizer Manufacturing Limited, Pfizer Ireland Pharmaceuticals, Warner-Lambert Co., and Warner-Lambert Co. LLC's Motion for Judgment on the Pleadings pursuant Federal Rule of Civil Procedure 12(c), regarding End-Payor Plaintiffs' Second Amended Consolidated Complaint. (ECF No. 755). This case arises from allegations that two drug companies, Pfizer and Ranbaxy, engaged in an anticompetitive scheme that prevented the generic drug of Lipitor from entering the market. Plaintiffs are end-payor purchasers (hereinafter "EPP") who claim to have paid inflated costs for the brand-named drug, Lipitor, due to, among other things, a delayed entry provision included in Pfizer and Ranbaxy's settlement agreement. Unlike the Direct Purchaser Plaintiffs, who assert claims under the Sherman Act, the EPPs base their claims on their respective state's antitrust and consumer protection acts.

BACKGROUND

I. Parties

Plaintiffs are a collection of organizations including insurance carriers, Taft-Hartley funds, municipalities, and individuals, who have been indirectly affected by Defendants' alleged schemes. For example, jointly administered Taft-Hartley fund and employee welfare benefit plaintiffs include: A.F.L.-A.G.C. Building Trades Welfare Plan, a self-insured health and welfare benefit plan in Alabama (Id. at ¶ 24); New Mexico United Food and Commercial Workers Union's and Employers' Health and Welfare Trust Fund, a Taft-Hartley fund (Id. at ¶ 26); Bakers Local 433 Health Fund of South Dakota; and Minnesota's Twin Cities Bakery Workers Health and Welfare Fund. (Id. at ¶¶ 28-29).

Health insurance carrier plaintiffs include: Louisiana Health Services Indemnity Company d/b/a Bluecross/Blueshield of Louisiana, a corporation licensed to conduct business in Louisiana that provides health benefits to covered members (Id. at ¶ 27); Fraternal Order of Police, Fort Lauderdale Lodge 31, Insurance Trust Fund, a governmental health insurance plan that provides health and major medical insurance to active and retired Fort Lauderdale police officers and their dependents. (Id. at ¶ 30).

Municipality plaintiffs include: the Mayor and City Council of Baltimore, Maryland (Id. at ¶ 25), and the City of Providence, Rhode Island, both municipal corporations with self-insured health and welfare benefit plans. (Id. at ¶ 31).

Finally, the six individual plaintiffs are Edward Czarnecki, a Wisconsin resident; Emilie Heinle, a North Dakota resident; Andrew Livenzey from Massachusetts; Edward Ellenson from Hawaii; Jean Ellyne Dougan, an Arkansas resident; and Nancy Billington of Montana (Id. at ¶¶ 32-37).

All plaintiffs claim to have purchased or provided partial payment for some of, or the entire price of, Lipitor or its generic version. (Id. at ¶¶ 24-46). Plaintiffs contend that they were all injured as a result of Defendants' anticompetitive schemes, since they paid a premium for the medication. (Id. ).

Defendants in this case are Pfizer and Ranbaxy. (Id. at ¶¶ 38-46). Pfizer Inc., Pfizer Ireland Pharmaceuticals, and Warner-Lambert Company are collectively referred to as Pfizer. (Id. at ¶¶ 38-42). Pfizer Inc. is the parent company of Pfizer Ireland Pharmaceuticals, an Irish unlimited liability company that is a wholly owned, indirect subsidiary of Pfizer Inc. (Id. at ¶¶ 38-39). Pfizer acquired Warner-Lambert Company in 2000. (Id. at ¶ 40). According to the Complaint, reference to Warner-Lambert also includes, but is not limited to, Warner-Lambert employees Bruce D. Roth, Joan Thierstein, and Jerry F. Janssen. (Id. at ¶ 41). In addition, the Complaint names Defendants Ranbaxy Laboratories Limited, Ranbaxy Inc., and Ranbaxy Pharmaceuticals Inc. collectively as Ranbaxy. (Id. at ¶¶ 43-46). Ranbaxy Laboratories Limited is an Indian corporation that wholly owns Ranbaxy Inc., which has a place of business in New Jersey. (Id. at ¶¶ 43-49).

II. Facts

In the Complaint, EPPs identify several anticompetitive schemes that purportedly give rise to the present lawsuit. Specifically, Plaintiffs allege that Defendants fraudulently obtained a second, duplicative, patent from the United States Patent and Trademark Office (PTO); listed that patent in the book of Approved Drug Products with Therapeutic Equivalence Evaluations (the "Orange Book"); engaged in sham litigation relating to the second patent; filed a sham citizen petition with the FDA; entered into an unlawful reverse payment agreement with Ranbaxy; and manipulated the statutorily created 180 day first-to-file period¹ to sustain Pfizer's and Ranbaxy's exclusivity and collectively prevent other generic companies from entering the market. The Court discusses each allegation in turn.

1. Walker Process and Fraudulent Orange Book Allegations

EPPs first present a Walker Process² claim against Pfizer, based on Pfizer's enforcement of an invalid patent and fraudulent listing of the patent in the Orange Book. By way of background, Warner-Lambert, which was later acquired by Pfizer in 2000, applied for the Original Lipitor Patent on March 30, 1986 and subsequently received Patent No. 4,681,893 ('893 Patent) on July 21, 1987. (Id. at ¶¶ 95, 104). The Original Lipitor Patent was for a racemic mixture, which contains equal amounts of two enantiomers that inhibit the production of cholesterol. (Id. at ¶ 7). Enantiomers are made of mirrored images of stereoisomers, which are two or more compounds with the same atoms but arranged differently. (Id. at ¶¶ 85-86). In a racemic mixture, it is common for one enantiomer to have all or most of the biological activity, while the other is largely inactive. (Id. at ¶ 89).

According to the Complaint, the compounds in the '893 Patent were not limited to any particular stereochemistry; instead, the structure included four different stereoisomers possibilities: R-trans, S-trans, R-cis, and S-cis isomers. (Id. at ¶ 103). Even though the '893 Patent covered the multiple possibilities, Warner-Lambert focused on developing the R-trans enantiomer of the compound, in calcium salt form, which would eventually be sold as Lipitor. (Id. at ¶¶ 106-07). Warner-Lambert achieved patent extensions and regulatory exclusivities that postponed the patent's expiration from May 30, 2006 to March 24, 2010. (Id. at ¶ 104).

On July 21, 1989, Warner-Lambert applied for a patent to specifically protect the R-trans enantiomer, which later became the '995 Enantiomer Patent. (Id. at ¶ 126). According to the Complaint, Warner-Lambert had to prove the R-trans enantiomer's activity had a "surprising" or "unexpected" characteristic to procure a subsequent patent; put differently, they had to justify why the proposed patent was not already protected by the by the '893 Patent. (Id. at ¶ 109). Plaintiffs allege Warner-Lambert tasked its senior management with finding "something that could be mischaracterized as surprising." (Id. at ¶¶ 110-14). Warner-Lambert included a table in the '995 Patent application to demonstrate the surprising results that the R-trans enantiomer was one hundred times more active than the S-trans enantiomer and ten times more active than the racemic mixture. (Id. at ¶ 128). However, Plaintiffs claim that one skilled in the art would know "one enantiomer is the ‘active’ isomer, while the other is ‘inactive,’ and thus the active enantiomer is about twice as active as the racemic mixture." (Id. at ¶ 121). Further, the Complaint states Warner-Lambert would have known, through testing and experimentation, that the R enantiomer was likely to be the active isomer. (Id. at ¶ 122). Plaintiffs allege that Warner-Lambert failed to calculate the average result from its various tests and, instead, "cherry-picked from among the results [of the tests] in order to generate a table that supported its claim of ‘surprising activity.’ " (Id. at ¶ 135). As a result, the data Warner-Lambert provided in its application was allegedly both false and misleading, since the R-trans enantiomer is approximately twice as active as the racemic mixture, not ten times. (Id. at ¶ 133).

The PTO originally rejected the '995 Patent application, since the invention was already covered and anticipated by the claims in the previously procured '893 Patent. (Id. at ¶ 153). Under patent law, a patent application can be rejected "if the differences between the subject matters sought to be patented and the prior art [are] such that the subject matter as a whole would have been obvious at the time of the invention was made to a person having ordinary skill in the art to which said subject matter pertains." (Id. at ¶ 154). In response to the PTO's rejection, Warner-Lambert then requested to amend its application to provide a declaration by Dr. Bruce Roth, who participated in developing Lipitor, in support of the newfound information regarding the R-trans enantiomer's activity. (Id. at ¶¶ 159-60). In his declaration, Roth asserted that the available data "shows the activity of [the R-trans enantiomer] is surprising and unexpected because if the [S-trans enantiomer] is accepted as inactive, the activity of [the R-trans enantiomer] would be expected to be only twice that of the racemic mixture" and not the ten times that occurred. (Id. at ¶¶ 165-66). Warner-Lambert argued the surprising nature of this information overcomes the obvious inclusion under the '893 Patent and, thus, warrants the issuance of the '995 Patent. (Id. at ¶ 161). Plaintiffs contend the data presented to the PTO, including the Roth Declaration were knowingly false and misleading and used to fraudulently convince the PTO to procure the new patent. (Id. at ¶¶ 133, 165, 170-74). Persuaded by the data submitted, the PTO eventually issued the '995 Enantiomer Patent on December 28, 1993. (Id. at ¶ 182).

As a result of its two approved patents,...