State v. Pfizer, Inc.

• Decision Date: 13 May 2013
• Docket Number: Civil Action No. 3:13–2546.
• Parties: State of WEST VIRGINIA ex rel. Patrick MORRISEY, Attorney General, Plaintiff, v. PFIZER, INC., Pfizer Ireland Pharmaceuticals, Warner–Lambert Company, Warner–Lambert Company LLC, Ranbaxy Inc., Ranbaxy Pharmaceuticals, Inc., and Ranbaxy Laboratories Limited, Defendants.
• Court: U.S. District Court — Southern District of West Virginia

969 F.Supp.2d 476

State of WEST VIRGINIA ex rel. Patrick MORRISEY, Attorney General, Plaintiff,

v.PFIZER, INC., Pfizer Ireland Pharmaceuticals, Warner–Lambert Company, Warner–Lambert Company LLC, Ranbaxy Inc., Ranbaxy Pharmaceuticals, Inc., and Ranbaxy Laboratories Limited, Defendants.

Civil Action No. 3:13–2546.

United States District Court, S.D. West Virginia.

May 13, 2013.

D. Christopher Hedges, Daniel W. Greear, Office of Attorney General, Troy N. Giatras, The Giatras Law Firm, Charleston, WV, Frederick S. Longer, Levin Fishbein Sedran & Berman, Philadelphia, PA, for Plaintiff.

Brendan G. Woodard, Dimitrios Drivas, R. Gregory Parker, Raj Gandesha, Robert A. Milne, Sheryn Elsa Alexander, White & Case, New York, NY, Paula L. Durst, Spilman Thomas & Battle, Charleston, WV, for Defendants.

MEMORANDUM OPINION AND ORDER

ROBERT C. CHAMBERS, Chief Judge.

Pending before the Court are Plaintiff's motion to remand this action to the Circuit Court of Mason County, ECF No. 10, and Defendants' motion to stay pending transfer to federal multidistrict litigation, ECF No. 21. For the following reasons, the Court DENIES Defendants' motion to stay and GRANTS Plaintiff's motion to remand.

I. BACKGROUND

In January 2013, the State of West Virginia, through its attorney general, ¹ brought suit in the Circuit Court of Mason County, West Virginia. Defendants are corporate entities that manufacture, market, and sell pharmaceuticals. Defendants Pfizer Inc., Pfizer Ireland Pharmaceuticals, Warner–Lambert Company, and Warner–Lambert Company, LLC (collectively, “Pfizer Defendants” or “Pfizer”) develop, manufacture, and sell “branded” or “pioneer” drugs. Defendants Ranbaxy Inc., Ranbaxy Pharmaceuticals, Inc., and Ranbaxy Laboratories Limited (collectively, “Ranbaxy Defendants” or “Ranbaxy”) manufacture and sell generic drug equivalents. The complaint alleges violations of the West Virginia Antitrust Act (“WVAA”), W. Va.Code § 47–18–1 et seq., and the West Virginia Consumer Credit and Protection Act (“WVCCPA”), W. Va.Code § 46A–1–101 et seq. Specifically, Plaintiff claims that Pfizer Defendants submitted false patent information and prosecuted baseless patent infringement actions against prospective competitors regarding the drug Lipitor and its generic equivalent. Second, Plaintiff alleges that Defendants entered into an anticompetitive agreement to restrain trade in the market for the drug Lipitor and its generic equivalent. Finally, Plaintiff claims that these alleged antitrust violations constitute unfair or deceptive acts or practices in violation of the WVCCPA.

The Federal Food, Drug and Cosmetic Act (“FDCA”), 21 U.S.C. §§ 301 et seq., regulates the development, manufacture, and sale of drugs in the United States. To gain approval to sell a new drug, the FDCA requires an applicant to submit a New Drug Application (“NDA”) to the Food and Drug Administration (“FDA”), demonstrating that the drug is safe and effective for its intended use. 21 U.S.C. § 355(b). Once FDA approves an NDA, the applicant owns the exclusive right to manufacture, sell, and license the drug throughout the term of its patent. The NDA applicant then lists its patent and approval information in FDA's List of Approved Drug Products with Therapeutic Equivalence Evaluations (“the Orange Book”). FDA relies on the accuracy of the patent information submitted to it; it does not independently verify such information before listing it in the Orange Book. One of the purposes of the Orange Book is to identify the approved generic therapeutic equivalent of branded drugs. Those interested in applying with FDA to sell a generic drug equivalent may use the patent information documented in the Orange Book when deciding whether and when to submit an application.

After all patents on the pioneer drug expire, competitors are free to enter the market with approved bioequivalent (“generic”) drugs. Typically, generic drugs cost much less than the branded drug and therefore sales of the branded drug decline dramatically in the presence of generic competition. To obtain FDA approval to sell a generic drug, an applicant must file an Abbreviated New Drug Application (“ANDA”) with FDA, which provides an expedient mechanism by which to gain approval. An ANDA must affirm that the generic is bioequivalent to the pioneer drug and contains the same active ingredient(s). Id. § 355(j)(2)(A). Additionally, an ANDA must certify that the patent of the pioneer drug is either invalid or will not be infringed by the generic bioequivalent. Id. § 355(j)(2)(A)(vii). The pioneer NDA holder can challenge an ANDA's certification regarding its patent by bringing suit. A suit triggers a stay of FDA approval of the generic for a period of 30 months or until the date of a final non-appealable determination as to the validity of the patent, whichever is earlier. Id. § 355(j)(5)(B)(iii). Once a generic drug is approved, the ANDA applicant is granted 180 days of exclusivity from the date of the first commercial marketing of the drug. Id. § 355(j)(5)(B)(iv). During this time, no subsequent ANDA for that particular drug will become effective, thereby allowing the first ANDA filer to sell its product for 180 days free of competition from other generics.²

The FDCA and its implementing regulations also allow persons to petition FDA to take a certain action regarding an ANDA; a petition may, for example, raise questions regarding the generic drug's safety or efficacy, or ask FDA to subject the application to particularly high scrutiny. 21 U.S.C. § 355(q); 21 C.F.R. § 10.30. This submission is commonly known as a “citizen petition.”

According to the complaint, the Pfizer Defendants developed, patented, and obtained FDA approval for the drug Lipitor. Lipitor (also known by its chemical name atorvastatincalcium) belongs to a class of drugs called statins and is used to lower cholesterol. Pfizer's original patent for Lipitor(the “893 Patent”) protected various forms of the chemical compound, including the form sold as Lipitor. The 893 Patent expired March 24, 2010. The complaint alleges that Pfizer applied for another patent on the drug to protect its period of exclusivity. This subsequent patent application identified an isolated form of the chemical compound, including the calcium salt sold as Lipitor. The application stated that this isolated form of the compound was ten times more effective in inhibiting the production of cholesterol than its non-isolated form. The patent application was approved, and a new patent was issued (the “995 Patent”). According to Plaintiff, the 995 Patent was obtained by fraud and was duplicative of the 893 Patent. Specifically, Plaintiff claims that Pfizer knowingly misrepresented that the isolated compound was ten times more effective, when it was not. Plaintiff further alleges that Pfizer submitted misleading scientific data in support of the 995 Patent. Without these false and misleading representations, Plaintiff states, the 995 Patent would not have issued and the lower-cost generic form of Lipitor would have entered the market earlier than it ultimately did.

In August 2002, Ranbaxy filed the first ANDA for approval to sell a bioequivalent form of Lipitor. The complaint alleges that Pfizer sued Ranbaxy in federal district court for patent infringement—based on both the 893 and 995 Patents—to trigger the 30–month stay and delay FDA's approval of Ranbaxy's application. Pfizer also filed a citizen's petition with FDA regarding Ranbaxy's ANDA, arguing that the agency should consider additional information in determining approval of Ranbaxy's application. Plaintiff argues that the petition was baseless and designed to keep Ranbaxy's product off the market as long as possible.

The patent litigation proceeded while Ranbaxy's ANDA was pending before FDA. The district court ruled in favor of Pfizer. The Court of Appeals for the Federal Circuit affirmed as to the initial 893 Patent, but reversed as to the subsequent 995 Patent.³ Pfizer then sought reissuance of the 995 Patent. While that application was pending, Pfizer and Ranbaxy entered into an agreement, allegedly to protect Pfizer's exclusive presence on the market. Under the terms of the agreement, Ranbaxy promised not to compete directly with Pfizer by launching its generic version of Lipitor. Ranbaxy also allegedly agreed not to relinquish its 180–day exclusivity period for marketing and selling the generic Lipitor pursuant to an approved ANDA. This provision would effectively grant Pfizer an additional 180 days as the sole seller of Lipitor. In exchange, Pfizer allegedly promised to forgive Ranbaxy's outstanding money judgments and permit generic Lipitor to be sold in at least eleven foreign markets.

These factual allegations comprise the basis for Plaintiff's state law antitrust claims against Defendants. According to Defendants, this case is one of thirty actions that have been filed against them in state and federal court since November 2011, alleging anticompetitive conduct based on nearly identical factual allegations. The other actions have been consolidated as multidistrict litigation before U.S. District Judge Peter G. Sheridan in the District of New Jersey. In re Lipitor Antitrust Litig., 856 F.Supp.2d 1355 (J.P.M.L.2012). The Judicial Panel on Multidistrict Litigation issued a conditional transfer order transferring this action to the MDL court. Plaintiff objected and subsequently filed a motion to vacate the conditional transfer order, which is still pending before the JPML. Plaintiff now moves to remand this action to state court. Defendants in turn ask the Court to stay this case pending transfer to the federal MDL. With this background in mind, the Court now turns to the parties' arguments and applicable legal standards.

II. ANALYSIS

A. Motion to Stay

Defendants suggest that a stay of proceedings is appropriate here because, inter alia, a stay will promote judicial economy and conserve resources. The Court...