In re Terazosin Hydrochloride Antitrust Litigation

• Citation: 335 F.Supp.2d 1336
• Decision Date: 31 August 2004
• Docket Number: No. 99-MDL-1317.IN.,99-MDL-1317.IN.
• Parties: In re: TERAZOSIN HYDROCHLORIDE ANTITRUST LITIGATION
• Court: U.S. District Court — Southern District of Florida

Page 1336

335 F.Supp.2d 1336

In re: TERAZOSIN HYDROCHLORIDE ANTITRUST LITIGATION

No. 99-MDL-1317.IN.

United States District Court, S.D. Florida.

August 31, 2004.

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Mitchell Wayne Berger, Jeffrey Scott Wertman, Candice Diane Tobin, Rene Devlin Harrod, Berger Singerman, Bradley Joseph Gross, Barrett, Gravante, Carpinello & Stern, Fort Lauderdale, FL, Daniel Berger, David Sorensen, Eric L. Cramer, Berger & Montague, P.C., Joseph C. Kohn, Kohn, Swift & Graf, Philadelphia, PA, David Boies, Boies, Schiller & Flexner, Armonk, NY, Jack Staph, Jack Staph & Associates, Pepper Pike, OH, Richard Drubel, R. Bryant McCulley, Boies, Schiller & Flexner, Hanover, NH, Samuel D. Heins, Daniel E. Gustafson, Karla M. Gluck, Heins, Mills & Olson, Minneapolis, MN, Robert Scott Palmer, C. Oliver Burt, III, Berman, Devalerio, Pease, Tabacco, Burt & Pucillo, West Palm Beach, FL, Bruce E. Gerstein, Stephen H. Schwartz, Garwin, Bronzaft, Gerstein & Fisher LLP, Nicholas A. Gravante, Jr., Ryan Kees Higgins, Barrett, Gravante, Carpinello & Stern, New York City, Aubrey B. Calvin, The Calvin Law Firm, Mark S. Armstrong, Squire, Sanders & Dempsey, Houston, TX, David P. Smith, Percy, Smith, Foote & Gadel, Alexandria, LA, John Gregory Odom, Stuart E. Des Roches, Randall Acree, Odom & Des Roches, New Orleans, LA, Scott Eliot Perwin, Kenny, Nachwalter, Seymour, Arnold, Critchlow & Spector, Douglas E. Patton, Dewsnup, King & Olsen, Salt Lake City, UT, Michael Straus, Straus & Boies, Birmingham, AL, Michael I. Endler, Barrett, Gravante, Carpinello & Stern, Albany, NY, Mary Boies, Boies & McInnes, Bedford, NY, for Plaintiffs.

Herman Joseph Russomanno, Robert John Borrello, Russomano & Borello, David Scott Mandel, Mandel & Cale, Daniel I. Small, Paul Alan Shelowitz, Candace Dohn Banks, Jay Brian Shapiro, Stearns, Weaver, Miller, Weissler, Alhadeff & Sitterson, Jon W. Zeder, Ferrell, Schultz, Carter & Fertel, Miami, FL, Pamela B. Slate, Slate Kennedy, Kimberly R. West, Wallace, Jordan, Ratliff & Brandt, Elwood S. Simon, John Zuccarini, Elwood S. Simon & Associates, Birmingham, AL, Gary Robert Fine, Fort Lauderdale, FL, James R. Dugan, II, Gauthier, Downing, Labarre, Beiser & Dean, Metairie, LA, Steve D. Shadowen, Hangley, Aronchick, Segal & Pudlin, Harrisburg, PA, Michael D. Hausfeld, Cohen, Milstein, Hausfeld & Toll, Kathleen Daly Pitzer, W. Scott Simmer, Andrew Craig Udin, Robins, Kaplan, Miller & Ciresi, Gerson A. Zweifach, Kevin M. Downey, Kirsten M. Schimpff, Kathleen L. Jennings, Manish K. Mital, Williams & Connolly, Kevin Clark MaClay, Jones Day Reavis & Pogue, Washington, DC, Robert C. Schubert, Juden Justice Reed, Willem F. Jonckheer, Schubert & Reed, Samuel N. Weinstein, Munger, Tolles & Olson, San Francisco, CA, Geoffrey L. Taylor, Rawlings & Associates, Van Nuys, CA, Jason L. Solotaroff, Stamell & Schager, Michelle Wilhelm, Joseph Angland, Dewey Ballantine, Robert Alexander Milne, Wayne A. Cross, M. Victoria Bayoneto, Paul Olszowka, Brendan G. Woodard, Sean Douglas Burke, Dana Evans Foster, White & Case, New York City, Christina Anne Lopez, Lopez Hodes et al., Newport Beach, CA, Stephen Lowey, Lowey, Dannenberg, Bemporad & Selinger, White Plains, NY Robert Cecil Gilbert, Coral Gables, FL, Scott Ray Strand, Robins, Kaplan, Miller & Ciresi, Minneapolis, MN, Jon W. Borderud, Kevin M. Prongay, Prongay & Borderud, Stephen E. Morrissey, Jeffrey I. Weinberger, Stuart N. Senator, David M. Rosenzweig, Rohit K. Singla, Munger Tolles & Olson, Los Angeles, CA, Elizabeth J. Basten, Clark Hill, Detroit, MI, Andrew J. McGuinness, Dykema Gossett, Ann Arbor, MI, Laura J. Schumacher, Abbott Park, IL, Cory A. Johnson, Attorney General Office, Department of Legal Affairs, Tallahassee, FL, Barbara B. Smithers, Florida Attorney General's Office, Orlando, FL, for Defendants.

ORDER (1) GRANTING DEFENDANT ABBOTT LABORATORIES' MOTION FOR SUMMARY JUDGMENT ON SHERMAN ACT SECTION 2 (AND ANALOGOUS) CLAIMS; AND (2) DENYING PLAINTIFF KAISER FOUNDATION HEALTH PLAN INC.'S MOTION FOR SUMMARY JUDGMENT ON SHAM LITIGATION¹

SEITZ, District Judge.

THIS CAUSE is before the Court on Defendant Abbott Laboratories' ("Abbott") Motion for Summary Judgment on Sherman Act Section 2 (and Analogous) Claims and Kaiser Foundation Health Plan Inc.'s ("Kaiser") Motion for Summary Judgment on Sham Litigation. These are essentially cross motions for summary judgment. The Court has considered the motions, responses, replies, supporting exhibits, and oral argument of counsel. Having considered the undisputed material facts² in the light most favorable to Plaintiffs, the Court concludes that no genuine issue of material fact exists for trial on the Section Two and analogous claims. Therefore, on these claims, Defendant Abbott is entitled to summary judgment as a matter of law, and Plaintiff Kaiser's Motion must be denied.

There are five grounds for granting Abbott's motion. First, Plaintiffs have failed to show that any of the seventeen patent infringement law suits in question was objectively baseless. Second, even assuming that Plaintiffs could establish that some of these actions were objectively baseless, they did not, and apparently cannot, proffer any admissible evidence of a subjective bad-faith intent to abuse the judicial process in violation of the Sherman Act. Third, even viewing the seventeen lawsuits as a serial pattern of baseless anti-competitive actions filed automatically and without probable cause, the Court must find as a matter of law, based on the record evidence, that Defendant did not lose its Noerr-Pennington³ immunity because there was a legal basis for filing each of these lawsuits and a significant percentage of the suits were successful. Fourth, excluding the patent infringement lawsuits related to the '207 patent, the remaining lawsuits concluded prior to the generic drug competitor receiving tentative Food and Drug Administration ("FDA") approval for its generic bioequivalent drug. Thus, there is only speculation, rather than evidence, that Abbott's filing of these lawsuits caused the alleged antitrust injury, namely, the prevention of generic market entry. Finally, in connection with the Walker Process⁴ claim regarding the allegedly fraudulent procurement of the '207 patent, there is no record evidence of fraud or an attempt to commit fraud to procure the patent. Therefore, the Court will grant summary judgment in favor of Defendant Abbott on the Section Two and analogous state claims.

Factual Background

I. Nature of the Action

This multi-district antitrust litigation ("MDL") originates at the intersection of antitrust and patent law. At its core, this case revolves around Abbott's attempts to protect its patents' exclusivity with respect to the brand name drug Hytrin, and the competing efforts of generic manufacturers to develop and launch bioequivalent drugs for entry in the terazosin hydrochloride market. Between May 31, 1977, and August 13, 1999, pursuant to several patents, Abbott exclusively manufactured and marketed terazosin hydrochloride under the brand name of Hytrin. Hytrin is a drug prescribed for the treatment of high blood pressure and benign prostatic hyperplasia ("BPH"), an enlargement of the prostate gland that surrounds the urinary canal. Hytrin proved to be a lucrative drug for Abbot; for example, in 1998, Hytrin generated $540 million in sales which accounted for more than twenty percent of Abbott's sales of pharmaceutical products in the United States that year. Geneva Pharmaceuticals Inc. ("Geneva"), Zenith Goldline, Inc. ("Zenith") — now known as IVAX Pharmaceuticals, Inc. ("IVAX") — and other generic drug manufacturers developed generic versions of Hytrin for sale in the United States to compete for the Hytrin market. Whereas the first generic drug manufacturer, Geneva, began the regulatory process to enter the market in January 1993, generic entry only occurred in August 1999. Generic market entry not only provides less expensive drugs for consumers, but also eliminates a brand name drug company's patent monopoly.

Plaintiffs Kaiser, Individual Direct Purchasers, Indirect Purchaser Class Plaintiffs, and State Plaintiffs (collectively, "Plaintiffs")⁵ sued Defendant Abbott alleging, inter alia, claims under Section Two of the Sherman Act ("Section Two")⁶ and analogous state laws for monopolization and attempted monopolization. Plaintiffs' Section Two claims have two bases. The first basis is the allegation that Abbott filed seventeen "sham" patent infringement lawsuits to delay market entry of competing generic bioequivalent drugs for Hytrin and thus illegally maintained Abbott's patent monopoly beyond the life of its patents. Second, Plaintiffs claim that Abbott fraudulently procured one of its Hytrin patents, the '207 patent, which allowed it to maintain a monopoly on the terazosin hydrochloride market.

To place the patent infringement litigation at issue in context, it is necessary to set out the pertinent framework for drug regulation in the United States and then discuss the parties' undisputed underlying material facts as to Abbott's patents, the generic drug manufacturers' applications to market their generic bioequivalent drugs, and the patent lawsuits themselves.

II. The FDA Regulatory Framework Under Hatch-Waxman

A drug patent gives its owner the right to exclude others from making, using, or selling the drug in the United States for the duration of the patent. However, the FDA regulates the sale of drugs in the United States pursuant to the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 301, et seq. Thus, drug companies must apply for and obtain approval from the FDA before they can sell a drug in the United States. S. ¶¶ 1-2. To secure FDA approval to market a new drug, a pharmaceutical company must first file a New Drug Application ("NDA") with the FDA and may not market a new drug until the NDA is approved. S. ¶ 3. The NDA...