United States v. Janssen Biotech, Inc.

• Decision Date: 17 December 2021
• Docket Number: Civ. No. 19-12107 (KM) (ESK)
• Citation: 576 F.Supp.3d 212
• Parties: UNITED STATES of America, States of California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Louisiana, Michigan, Minnesota, Montana, Nevada, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Rhode Island, Tennessee, Texas, Vermont, and Washington; The Commonwealths of Massachusetts and Virginia; and the District of Columbia, ex rel. Zachary Silbersher, Plaintiffs, v. JANSSEN BIOTECH, INC., Janssen Oncology, Inc., Janssen Research & Development, LLC, Johnson & Johnson, and BTG International, Defendants.
• Court: U.S. District Court — District of New Jersey

576 F.Supp.3d 212

UNITED STATES of America, States of California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Louisiana, Michigan, Minnesota, Montana, Nevada, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Rhode Island, Tennessee, Texas, Vermont, and Washington; The Commonwealths of Massachusetts and Virginia; and the District of Columbia, ex rel. Zachary Silbersher, Plaintiffs,

v.JANSSEN BIOTECH, INC., Janssen Oncology, Inc., Janssen Research & Development, LLC, Johnson & Johnson, and BTG International, Defendants.

Civ. No. 19-12107 (KM) (ESK)

United States District Court, D. New Jersey.

Signed December 17, 2021

Bruce Daniel Greenberg, Lite Depalma Greenberg & Afanador, LLC, Newark, NJ, for Plaintiff Zachary Silbersher.

James E. Cecchi, Lindsey H. Taylor, Carella Byrne Cecchi Olstein Brody & Agnello, P.C., Roseland, NJ, for Plaintiffs Louisiana Health Service & Indemnity Company, HMO Louisiana, Inc., Kentucky Laborers District Council Health and Welfare Fund, Pipe Trades Services MN Welfare Fund.

James E. Cecchi, Lindsey H. Taylor, Carella Byrne Cecchi Olstein Brody & Agnello, P.C., Roseland, NJ, Sharon K. Robertson, Cohen Milstein Sellers & Toll PLLC, New York, NY, for Plaintiff Mayor and City Council of Baltimore.

James E. Cecchi, Lindsey H. Taylor, Carella Byrne Cecchi Olstein Brody & Agnello, P.C., Roseland, NJ, Joseph H. Meltzer, Kessler Topaz Meltzer & Check, LLP, Radnor, PA, Donna Siegel Moffa, Kessler Topaz Meltzer & Check LLP, Radnor, NJ, for Plaintiff Iron Workers District Council (Philadelphia and Vicinity) Benefit & Pension Plan.

Dianne M. Nast, NastLaw LLC, Philadelphia, PA, Michael L. Roberts, Roberts Law Firm, Little Rock, AR, Shelly L. Friedland, Trief & Olk, New York, NY, Ted E. Trief, Trief & Olk, Hackensack, NJ, for Plaintiffs KPH Healthcare Services, Inc., Noble Health Services.

Jeffrey J. Greenbaum, Gregory Edward Reid, Sills Cummis & Gross P.C., Newark, NJ, for Defendants Jannsen Biotech Inc., Janssen Oncology, Inc., Janssen Research & Development LLC, Johnson & Johnson.

Liza M. Walsh, Katelyn O'Reilly, William T. Walsh, Jr., Walsh Pizzi O'Reilly Falanga LLP, Newark, NJ, Zahire Desiree Estrella-Chambers, Kean University, Union, NJ, for Defendant BTG International Limited.

KEVIN MCNULTY, U.S.D.J.:

Plaintiff Zachary Silbersher, as relator, sues Defendants BTG International Ltd. ("BTG"), Johnson & Johnson ("J&J"), and J&J subsidiaries Janssen Biotech, Inc., Janssen Oncology, Inc., and Janssen Research & Development, LLC, (collectively, the "J&J Defendants"), for violations of the False Claims Act ("FCA"), 31 U.S.C. §§ 3729 - 3733, and numerous state laws in connection with their acquisition of a patent covering the pharmaceutical drug Zytiga, U.S. Patent No. 8,822,438 ("the ‘438 Patent"). Now before the Court is Defendants’ motion to dismiss Plaintiff's Second Amended Complaint. (DE 128.)¹ For the following reasons, the motion is GRANTED IN PART and DENIED IN PART .

I. BACKGROUND

A. Factual Allegations

The drug Zytiga, the brand-name version of abiraterone acetate, which is used to extend the lives of individuals with metastatic castration-resistant prostate cancer ("mCRPC"), lies at the center of this litigation. (2AC ¶¶ 5, 59; MTD at 2.) Zytiga was developed and is licensed by Defendant BTG but is marketed and sold by J&J and its subsidiaries.² (2AC ¶¶ 19-23; MTD at 2.) Zytiga was originally approved by the Food and Drug Administration ("FDA") in April 2011 for use with prednisone, an anti-inflammatory steroid, on chemo-refractory patients (i.e., those who have already undergone chemotherapy). It received further approval in 2012 for chemo-naïve patients (i.e., those with no prior chemotherapy). (2AC ¶ 58; MTD at 2.) J&J previously held the chemical compound patent covering Zytiga, U.S. Patent No. 5,604,213 ("the ‘213 Patent"), and in 2014, Defendants obtained the patent at issue here, the ‘438 Patent, which claimed as its proposed invention the co-administration of Zytiga and prednisone at specific dosages to treat prostate cancer.³ (2AC ¶¶ 8, 22, 25, 60-62, 92-93.) The ‘213 Patent expired in December 2016, leaving the ‘438 Patent as the sole patent covering Zytiga until January 2018, when it was invalidated. (Id. ¶¶ 8, 101-03); see also BTG Int'l Ltd. v. Amneal Pharms. LLC , 352 F. Supp. 3d 352, 383-89 (D.N.J. 2018) (finding the ‘438 Patent invalid as obvious in light of prior art).

Plaintiff is a patent attorney and co-founder of a patent consulting firm who conducted "independent research and investigation" allegedly showing that Defendants improperly misrepresented Zytiga's commercial success and withheld information from the U.S. Patent and Trademark Office ("PTO") to obtain the ‘438 Patent, prevent generic competition, and ultimately charge an inflated price for Zytiga to government programs like Medicare and Medicaid. (2AC ¶¶ 8-9, 12, 16-17, 22.)

1. Defendants’ Alleged Misrepresentations and Omissions in Applying for the ‘438 Patent

Defendants began the application process for the ‘438 Patent in 2011 but faced multiple rejections by the PTO, first in February 2012 when the PTO denied the application, stating that the claimed invention was obvious based on prior art, i.e., that it "would have been obvious to one of ordinary skill in the art at the time the invention was made to employ both prednisone and abiraterone acetate in the dosage herein claimed together in a method of treating prostate cancer."⁴ (2AC ¶¶ 68-70, 76, 78.) On July 3, 2012, Defendants tried again to show their proposed invention was non-obvious by submitting evidence of Zytiga's commercial success, specifically that within the first year of its release, Zytiga's "worldwide sales were over $400 million."⁵ (Id. ¶ 77.) The Patent Office again rejected Defendants’ application as obvious in September 2012, finding that Defendants’ evidence of commercial success was unpersuasive because "gross sales figures do not show commercial success absent evidence as to market share, or as to the time period during which the product was sold, or as to what sales would normally be expected in the market." (Id. ¶¶ 75-81 (citations omitted).)

In order to supplement their evidence of commercial success and overcome the PTO's concerns, Defendants submitted additional application materials on June 4, 2013, representing that Zytiga had increased its market share between December 2012 and April 2013. (Id. ¶ 82.) Specifically, they claimed that Zytiga's market share of the "submarket" of chemo-naïve mCRPC patients had increased from fifteen to twenty percent, representing a three percent increase in Zytiga's market share in the mCRPC market overall. (Id. ¶¶ 82-83.) Defendants claimed that this new market share was higher than that of two other therapies for prostate cancer, docetaxel and Xtandi, and was "approaching" the market share of a third drug, bicalutamide. (Id. ¶ 82.)

It is these representations of Zytiga's increase in market share that Plaintiff alleges are "misleading and fraudulent," and therefore violative of Defendants’ duty of candor and good faith to the PTO.⁶ (Id. ¶¶ 42, 58, 63-65, 84.) First, Plaintiff cites Defendants’ comparison of Zytiga with Xtandi in the chemo-naïve mCRPC submarket from December 2012 to April 2013 as a knowing and intentional attempt to mislead the PTO. Xtandi, says Plaintiff, was not approved for chemo-naïve patients until September 2014, and within 16 months of its approval, it had overtaken Zytiga in market share for both chemo-naïve and mCRPC patients overall.⁷ (Id. ¶ 84(a)-(d).) Second, Plaintiff alleges that Defendants improperly based their market share data on Zytiga's patient market share, rather than its direct sales market share compared with other drugs.⁸ (Id. ¶ 84(e).) Finally, Plaintiff claims that Defendants’ comparison of Zytiga to the drug bicalutamide was misleading because bicalutamide, an older drug used for patients with prostate cancer, did not "materially increase[e] survivability" and so by 2012, it was "increasingly being prescribed for specific purposes in conjunction with treatment that was considered to be more efficacious." (Id. ¶ 84(f).)

Following these representations, the PTO issued a Notice of Allowance, leading to the eventual issuance of the ‘438 Patent on September 2, 2014. (Id. ¶¶ 25, 85.) Given the PTO's earlier rejections and its focus on evidence concerning Zytiga's market share, Plaintiff alleges that "the single most reasonable explanation for the Patent Office's approval of the ‘438 Patent was Defendants’ fraudulent and misleading statements concerning Zytiga's growth in the chemo-naïve mCRPC market." (Id. ¶ 86.)

Plaintiff also alleges that Defendants failed to disclose that Zytiga's purported commercial success lacked the requisite nexus to the invention that Defendants claimed, i.e., the co-administration of abiraterone acetate with prednisone. Rather, Plaintiff alleges, its success was due to (1) its novelty and the frequency that mCRPC patients switch medications; (2) being launched before Xtandi in the chemo-refractory mCRPC market; (3) new urology treatment guidelines that, in some cases, recommended Zytiga as the least toxic of relevant medications; (4) the prior ‘213 Patent ’s effect of blocking competition from any generic drug manufacturers; (5) Zytiga not being prescribed to alleviate side effects of prostate cancer, as Defendants represented; (6) Zytiga being between thirty and fifty percent cheaper than competitors Xtandi and Jevtana; and (7) sales of Zytiga that were not used for coadministration with prednisone—the ‘438 Patent ’s claimed invention. (Id. ¶ 87(b)-(f), (h)-(i).) Plaintiff finally alleges that Defendants made other misleading statements to the Patent Office to secure the ‘438 Patent, including (1) that Zytiga was "the most successful oral oncology launch in history" and (2) that Zytiga, an oral medication, had greater success than the medication Jevtana without disclosing that Jevtana...