In re Wellbutrin XL Antitrust Litig., CIVIL ACTION NOS. 08-2431

• Decision Date: 23 September 2015
• Docket Number: CIVIL ACTION NOS. 08-2431,08-2433
• Citation: 133 F.Supp.3d 734
• Parties: In re: Wellbutrin XL Antitrust Litigation This Document Relates to: All Actions
• Court: U.S. District Court — Eastern District of Pennsylvania

133 F.Supp.3d 734

In re: Wellbutrin XL Antitrust Litigation

This Document Relates to: All Actions

CIVIL ACTION NOS. 08-2431

08-2433

United States District Court, E.D. Pennsylvania.

Signed September 23, 2015

MEMORANDUM

McLaughlin

, District Judge

This lawsuit is one of many in the federal courts involving the application of the Supreme Court's decision in FTC v. Actavis, Inc. , –––U.S. ––––, 133 S.Ct. 2223, 186 L.Ed.2d 343 (2013)

, to settlements between branded and generic pharmaceutical manufacturers. In this case, direct and indirect purchasers of Wellbutrin XL have brought claims under the Sherman Act and state antitrust and consumer protection statutes, alleging that the defendants SmithKline Beecham Corporation d/b/a GlaxoSmithKline and GlaxoSmithKline plc (collectively, "GSK") delayed the entry of generic versions of Wellbutrin

XL to the American market by entering into illegal agreements with generic drug companies to settle patent infringement lawsuits.

In Actavis , the Supreme Court held that settlements in which the holder of a pharmaceutical patent makes a payment to an alleged patent infringer to resolve a challenge to the patent—so-called "reverse payment settlements"¹ —"can sometimes violate the antitrust laws." Actavis , 133 S.Ct. at 2227

. The Supreme Court explained that such settlements are neither presumptively unlawful nor presumptively lawful, and instructed district courts to evaluate the settlements under the long-standing rule of reason framework. Id. at 2237–38. Reverse payment settlements, the Court cautioned, could present the following anticompetitive harm: eliminating "the risk of patent invalidation or a finding of non-infringement" that the underlying patent lawsuit presented. Id. at 2236–37.

The settlements challenged in this case (collectively the "Wellbutrin

Settlement") resolved patent disputes among GSK, GSK's business partner Biovail, and multiple generic manufacturers who had filed Hatch-Waxman Act Paragraph IV Certifications challenging the Wellbutrin XL patent. The Wellbutrin Settlement, reached in February 2007, allowed the underlying Hatch-Waxman litigation to continue, and provided for entry of generic Wellbutrin XL immediately upon a finding of non-infringement or patent invalidity, and in any case no later than May 30, 2008, 10 years before the expiration of the patent. The settlement also granted the generic manufacturers sublicenses to patents (which expired in 2022) at issue in a separate patent lawsuit, and provided a guaranteed generic supply of Wellbutrin XL; it also provided for enhanced review of the settlement by the Federal Trade Commission. In the settlement, GSK agreed not to launch an authorized generic Wellbutrin XL product during the generic manufacturer's period of Hatch-Waxman guaranteed exclusivity.

GSK has filed three motions for summary judgment: one motion for summary judgment as to all claims made by the plaintiffs; one motion for summary judgment addressing only the issue of causation; and one motion for summary judgment as to the indirect plaintiffs' Cartwright Act cause of action. In connection with its motions for summary judgment, GSK has filed Daubert motions to exclude the plaintiffs' experts. In addition to their oppositions to GSK's motions for summary judgment, the plaintiffs have filed Daubert motions to exclude GSK's expert Dr. Martin Adelman. The court will grant summary judgment to GSK.

The series of settlement agreements challenged here contains a provision not present in any other post-Actavis case of which the Court is aware: the generic manufacturer did not abandon its challenge to the patent held by GSK's business partner, Biovail. The settlement provided that if the generic manufacturer prevailed on its appeal in the Federal Circuit, it could immediately enter the market with generic Wellbutrin

XL. GSK, therefore, argues that the Wellbutrin Settlement does not come within the purview of Actavis and should be exempt from antitrust scrutiny. The Court is reluctant to apply such a mechanical test, because it could offer blanket immunity to any reverse payment settlement in which the underlying patent litigation continues; this could create an easily exploited loophole. The Supreme Court in Actavis —and antitrust law historically—rejects such a formalistic approach to evaluating an agreement.

The fact that the Wellbutrin

Settlement allowed the underlying patent litigation to continue, however, is a factor to be considered in the rule of reason analysis mandated by Actavis . The plaintiffs cannot establish the anticompetitive harm contemplated by Actavis : that the defendant in the patent infringement lawsuit would abandon its patent claim, eliminating the risk of patent invalidation or a finding of non-infringement. The plaintiffs' necessary alternate theory of anticompetitive harm is that the Wellbutrin Settlement delayed the launch of a generic product. But the plaintiffs have not established a proper foundation for such a claim by showing either that an alternate settlement would have been reached absent a no authorized generic agreement, or that continued litigation would have resulted in earlier generic entry through an at risk launch.

As to a settlement without a no authorized generic provision, there is no evidence that such a settlement was ever contemplated, much less that it would have resulted in an earlier entry date. The summary judgment record shows that the generic manufacturers regarded the no authorized generic agreement as an essential term. As to continued litigation and the at risk launch, the plaintiffs have not made an adequate showing that a separate patent would not have been an independent bar to market entry.

Even if the plaintiffs had shown that the Wellbutrin

Settlement had anticompetitive effects, the Court finds that a reasonable jury could not find that any anticompetitive effects outweigh the procompetitive benefits of the settlement. The Wellbutrin Settlement provided sublicenses to a generic patent that was the subject of separate infringement actions brought by a different pharmaceutical company, and obligated Biovail to supply the generic manufacturer with generic Wellbutrin XL, two results not achievable through successful litigation alone.

Finally, the plaintiffs cannot prove that they suffered antitrust injury or that the Wellbutrin

Settlement was the proximate cause of any injury suffered because they have not presented evidence that the Wellbutrin Settlement, as opposed to an independent patent, prevented market entry of generic Wellbutrin XL.

I. Summary Judgment Record ²

The settlement agreement at issue in these cases—the Wellbutrin

Settlement—involves the interplay between complex statutory and regulatory schemes, multiple patent infringement lawsuits, and extensive negotiations among numerous parties. The Court has addressed each factual issue individually below.

A. The Drug Approval Process and Regulatory Framework

The Federal Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 301

–92 ("FDCA"), provides that the Food and Drug Administration ("FDA") must approve all drugs before they may be introduced into interstate commerce. Companies seeking to market drugs must file applications for approval under one of two procedures.

Under the first procedure, a new drug (or "brand name" drug) applicant files a New Drug Application ("NDA"), which must include examples of the proposed labeling for the drug and clinical data demonstrating the drug's safety and efficacy. The NDA must also include the patent number and expiration date of any patent that claims either the drug or a method of using the drug if "a claim of patent infringement could reasonably be asserted." Submission of an NDA involved "a long, comprehensive, and costly testing process." Actavis , 133 S.Ct. at 2228

. The FDA publishes the names of approved drugs and their associated patents in what is commonly known as the "Orange Book."³ 21 U.S.C. § 355(a),(b).

Congress established the second new drug approval procedure in 1984 with the Drug Price Competition and Patent Term Restoration Act (the "Hatch–Waxman Act"). Pub.L. No. 98–417, 98 Stat. 1585 (1984).

The Hatch–Waxman Act allows companies seeking to manufacture and market a generic version of a previously approved pioneer drug (known as the "listed drug") to avoid filing an NDA. Instead, generic manufacturers are permitted to file an Abbreviated New Drug Application ("ANDA"). The ANDA permits the applicant to rely on the safety and efficacy data for the listed drug if the applicant can show that the generic product is "bioequivalent" to the listed drug. 21 U.S.C. §§ 355(j)(2)(A)(iv), (j)(8)(B).

As part of the ANDA process, a generic manufacturer must make one of four certifications regarding each patent associated in the Orange Book with the listed drug: (I) that the patent information has not been filed; (II) that the patent has expired; (III) that the patent is set to expire; or (IV) that the patent is invalid or will not be infringed by the generic drug. This fourth certification is known as a "Paragraph IV Certification." 21 U.S.C. § 355(j)(2)(A)(vii)(IV)

. A generic manufacturer that files a Paragraph IV Certification must give notice to the patent holder and provide a "detailed statement of the factual and legal basis of the opinion of the applicant that the patent is invalid or will not be infringed." 21 U.S.C. § 355(j)(2)(B).

The Hatch–Waxman Act provides that if the patent holder files an infringement suit within 45 days after receiving notice of the Paragraph IV Certification, the patent holder benefits from a statutory stay on FDA approval of the ANDA for a period of 30 months or until the resolution of the infringement suit, whichever is shorter. 21 U.S.C. § 355(j)(5)(B)(iii)

. If the generic applicant begins to market its generic product prior to a determination of the patent's validity or scope, the launch is considered to be "at risk" and the manufacturer can be forced to pay damages. See 35...