United Food & Commercial Workers Unions & Emp'rs Midwest Health Benefits Fund & Laborers Health & Welfare Trust Fund for N. Cal. v. Novartis Pharms. Corp.
| Decision Date | 30 June 2017 |
| Docket Number | Civil Action No. 15-cv-13726,Civil Action No. 15-cv-13461,Civil Action No. 15-cv-13724,Civil Action No. 15-cv-13725,Civil Action No. 15-cv-12732 |
| Parties | UNITED FOOD AND COMMERCIAL WORKERS UNIONS AND EMPLOYERS MIDWEST HEALTH BENEFITS FUND and LABORERS HEALTH AND WELFARE TRUST FUND FOR NORTHERN CALIFORNIA, on behalf of themselves and others similarly situated, Plaintiffs, v. NOVARTIS PHARMACEUTICALS CORP., NOVARTIS AG, and NOVARTIS CORPORATION, Defendants. LOUISIANA HEALTH SERVICE AND INDEMNITY COMPANY d/b/a BLUE CROSS AND BLUE SHIELD OF LOUISIANA, on behalf of themselves and others similarly situated, Plaintiff, v. NOVARTIS PHARMACEUTICALS CORP., NOVARTIS AG, and NOVARTIS CORPORATION, Defendants. AFSCME HEALTH AND WELFARE FUND, on behalf of themselves and others similarly situated, Plaintiff, v. NOVARTIS PHARMACEUTICALS CORP., NOVARTIS AG, and NOVARTIS CORPORATION, Defendants. MINNESOTA LABORERS HEALTH AND WELFARE FUND, on behalf of themselves and others similarly situated, Plaintiff, v. NOVARTIS PHARMACEUTICALS CORP., NOVARTIS AG, and NOVARTIS CORPORATION, Defendants. PENNSYLVANIA EMPLOYEES BENEFIT TRUST FUND, on behalf of themselves and others similarly situated, Plaintiff, v. NOVARTIS PHARMACEUTICALS CORP., NOVARTIS AG, and NOVARTIS CORPORATION, Defendants. |
| Court | U.S. District Court — District of Massachusetts |
BURROUGHS, D.J.
In this putative class action, Laborers Health and Welfare Trust Fund for Northern California and Louisiana Health Service and Indemnity Company d/b/a Blue Cross and Blue Shield of Louisiana ("Plaintiffs") bring state-law claims against Defendants Novartis Pharmaceuticals Corporation, Novartis AG, and Novartis Corporation (collectively, "Novartis"), on behalf of themselves and all others similarly situated, for engaging in an alleged "monopolistic scheme" in connection with Gleevec®, a brand-name prescription drug used to treat certain types of chronic myeloid leukemia and acute lymphoblastic leukemia. Specifically, Plaintiffs allege that Novartis, which held the patent rights to Gleevec, engaged in illegal, anticompetitive conduct designed to delay the entry of generic forms of the drug into the U.S. market. Presently before the Court is Novartis' Motion to Dismiss pursuant to Federal Rules of Civil Procedure 12(b)(6) and 12(b)(1) [ECF No. 111] and End Payer Plaintiffs' Motion for a Rule 26(f) Conference [ECF No. 135]. For the reasons set forth below, the motion to dismiss is GRANTED, and the motion for a conference is DENIED.
Plaintiffs filed their original Class Action Complaint on June 22, 2015, seeking only declaratory and injunctive relief under federal antitrust law. [ECF No. 1]. In July and August 2015, Novartis filed motions to dismiss. [ECF Nos. 53, 60]. On February 1, 2016, while the motions were pending, a generic form of Gleevec was introduced into the market, thus mooting the request for injunctive relief. On March 24, 2016, the Court denied the motions to dismiss as moot and gave Plaintiffs leave to amend their complaint. [ECF No. 104]. In addition, the Court consolidated the action for pretrial purposes with four other cases involving similar claims against Novartis. On April 8, 2016, Plaintiffs filed the operative Consolidated Amended Class Action Complaint ("CAC"). [ECF No. 105]. The parties stipulated that the CAC would supersede all other complaints filed by any plaintiff in any of the consolidated actions. In contrast to the original complaint, the CAC does not contain any claims arising out of federal antitrust law; instead, it asserts only state-law antitrust and unfair trade practices claims, under the laws of 23 states and the District of Columbia. This Court appears to have diversity jurisdiction pursuant to 28 U.S.C. § 1332.
On May 10, 2016, Novartis filed a motion to dismiss for failure to state a claim and lack of jurisdiction [ECF Nos. 111, 112] and a supporting declaration [ECF No. 113]. Plaintiffs opposed the motion [ECF No. 120] and Novartis filed a reply [ECF No. 121]. On August 1, 2016, the Court held a hearing on the motion. [ECF No. 126].
The CAC alleges a single claim for relief on behalf of the putative class—that Novartis' conduct amounted to "monopolization and [a] monopolistic scheme" in violation of the laws of 23 states and the District of Columbia. Specifically, Plaintiffs allege that Novartis "engaged in an exclusionary, anticompetitive scheme designed to create and maintain a monopoly for Gleevec and its generic substitutes," and that "as part of this scheme, Novartis: (1) [w]ith intent to mislead or deceive, failed to disclose to the PTO [U.S. Patent and Trademark Office] material information known to it and made material misrepresentations to the PTO, but for which the '051 patent would not have issued; (2) [i]mproperly listed the '051, '799, and RE'923 patents in the Orange Book; and (3) [p]rosecuted sham patent litigation lawsuits against generic manufacturers." Plaintiffs further allege that at all relevant times, Novartis intended to, and did, maintain and extend its monopoly power, which allowed it to continue charging supra-competitive prices for Gleevec without a substantial loss in sales, and that as a direct and proximate result of this conduct, Plaintiffs and other members of the putative class were injured, in that they paid more for the drug than they would have if a generic had been allowed onto the market.
The following facts are derived from the CAC unless otherwise noted.
Defendant Novartis Pharmaceuticals Corporation (a subsidiary of Defendant Novartis AG), with FDA approval, markets and distributes Gleevec in the United States. Defendant Novartis Corporation is the assignee of U.S. Patent No. 5,521,184 ("the '184 Patent"), which is the basic compound patent claiming Gleevec's active ingredient, commonly known as "imatinib." In addition to claiming the imatinib compound in its "free base" form, the '184 Patent also claims certain "salts" of the imatinib compound and their use as tumor-inhibiting agents.1 The '184 Patent issued on May 28, 1996, and expired on July 4, 2015.
Prior to the expiration of the '184 Patent, Novartis obtained two follow-on patents that claim particular crystalline ("polymorphic") "non-needle" forms of the mesylate salt of imatinib:2 (1) U.S. Patent No. 6,894,051 ("the '051 Patent") issued on May 17, 2005, and (2) U.S. Patent No. 7,554,799 ("the '799 Patent) issued on June 9, 2009, which was subsequently surrendered and reissued as RE43'932 ("the RE'932 Patent")3 (collectively, the "PolymorphPatents"). The CAC alleges that the Polymorph Patents are invalid, although Plaintiffs do not contest the validity of the original '184 Patent.
The application for the '051 Patent, filed in January 2000, purported to disclose and claim the methanesulfonate salt of imatinib, along with a particular polymorphism—namely, the non-needle form, which Novartis referred to as the "β-crystalline" form.4 In September 2000, the patent examiner issued a non-final rejection of Novartis' claims, concluding that the claims were both anticipated and rendered obvious by the '184 Patent. Specifically, the examiner rejected the claims as anticipated by the '184 Patent's disclosure of the "free form" of imatinib and a "list of intended salts, including the methanesulfonate [mesylate] salt." She also held that the burden was on the applicant to show that the claimed β-crystalline form would not be inherently produced using routine procedures described in the '184 Patent. Although Novartis responded to the examiner's rejections, the examiner nonetheless issued a final office action on July 5, 2001 in which she found that Novartis' patent claims were anticipated and rendered obvious by the '184 Patent.
Novartis appealed this rejection to the Patent Board. On November 24, 2003, the Patent Board reversed the examiner's decision. The Patent Board's decision assumed, without deciding, that the original '184 Patent described the mesylate salt of imatinib. The Patent Board nevertheless held that the '184 Patent "contains insufficient disclosure to support a finding of anticipation of the appealed claims which recite a non-hygroscopic or β-crystalline form of the methanesulfonic acid addition [mesylate] salt of imatinib." See Declaration of Wyley S. Proctor[ECF No. 113] ("Proctor Decl."), Ex. D.5 Further, the Patent Board held that the examiner had erred in shifting the burden of persuasion to Novartis "to establish that the β-crystalline form recited in their claims 'cannot be made following routine conditions.'" Id. This, the Patent Board explained, was reversible error, because "before an applicant can be put to this burdensome task, the examiner must provide some evidence or scientific reasoning to establish the reasonableness of the examiner's belief that the functional limitation is an inherent characteristic of the prior art." Id. (internal quotations and citation omitted). Because no such evidence or reasoning appeared in the record, the Patent Board reversed the examiner's rejections based on anticipation.
Similarly, the Patent Board reversed the examiner's rejections based on obviousness. Again, the Patent Board assumed, arguendo, that the '184 Patent described the mesylate salt of imatinib. Id. The Patent Board, however, disagreed with the examiner that this disclosure would render obvious the claims in the '051 Patent. The Board found that the examiner had not adequately explained how a person having ordinary skill in the art "would have been led from 'here to there,' i.e., from the methanesulfonic acid addition [mesylate] salt of imatinib to the . . . β-crystalline form of that compound recited in the appealed claims." Id.; see also CAC ¶ 244.
On December 31, 2003, six weeks after the Patent Board reversed the examiner's rejections and without conducting any...
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