Antitrust Law Daily Wrap Up, ANTITRUST—3rd Cir.: Drug maker Eisai failed to show competitor’s Lovenox marketing program harmed competition, (May 4, 2016)

By Linda O’Brien, J.D., LL.M.

In an action by Japanese pharmaceutical company Eisai against a brand drug pharmaceutical manufacturer for engaging in anticompetitive practices in the marketing and sale of its Lovenox brand anticoagulant drug, Eisai failed to demonstrate that the competitor’s marketing program was likely to substantially lessen competition, the U.S. Court of Appeals in Philadelphia has ruled. Thus, the district court’s grant of summary judgment in favor of the brand drug manufacturer was affirmed (Eisai, Inc. v. Sanofi Aventis U.S., LLC, May 4, 2016, Roth, J.).

Manufactured by Sanofi Aventis U.S., LLC , Lovenox is an injectable, anticoagulant drug—known as low molecular weight heparin (LMWH)—used in the treatment and prevention of deep vein thrombosis (DVT), a condition in which blood clots develop in a person’s veins. Lovenox was the first LMWH approved by the Food and Drug Administration and has been sold in the United States by Sanofi since 1993. Eisai, Inc. holds an exclusive license to Fragmin, a competing injectable LMWH. Eisai had sold Fragmin in the United States since 2005. On the market were two other competing LMWHs: Innohep and Arixtra.

From 2005 to 2010, Sanofi offered hospital group purchasing organizations (GPOs) a marketing program that featured a contractual offer to sell Lovenox on certain terms and conditions. Under the program, hospitals received price discounts based on their volume of Lovenox purchases and a market share calculation tied to their purchases of the four competing anticoagulant drugs. The program included a formulary access clause that limited a hospital’s ability to give certain drugs priority status on its formulary. Sanofi also marketed Lovenox by presenting educational programs regarding the medical and legal risks of switching from Lovenox. During that time frame, Sanofi maintained a market share of 81.5 to 92.3 percent. Fragmin had the second largest market share at 4.3 to 8.2 percent.

In August 2008, Eisai filed suit against Sanofi, asserting unreasonable restraint of trade, monopolization, and exclusive dealing in violation of the Sherman Act and New Jersey Antitrust Act. Sanofi moved to dismiss the complaint for failure to state a claim. The district court granted summary judgment in favor of Sanofi, and Eisai appealed.

Exclusive dealing arrangement. Eisai failed to show that hospitals were foreclosed from purchasing competing drugs as a result of Sanofi’s conduct, the appellate court found. The district court properly found that hospitals did not risk penalties or supply shortages for terminating the Lovenox program or purchasing competing drugs. Although the discount structure was motivation to purchase more Lovenox, hospitals were not contractually obligated to do so. The consequence of not meeting the market share threshold or formulary requirements was receiving the base discount. If a hospital chose to terminate the contract entirely, then it could still obtain Lovenox at the wholesale price. Under the Sanofi program, Lovenox customers had the ability to switch to competing drugs but chose not to do so. Thus, Eisai did not present sufficient evidence that discount program blocked hospitals’ access to competing drugs, in the court’s view.

Additionally, Eisai failed to show that Sanofi’s conduct caused or was likely to cause harm to competition in the anticoagulant drug market. Eisai’s contention that Lovenox’s price increases from 2005 to 2010—when a generic version entered the market—was evidence of actual or likely anticompetitive conduct was rejected. The court noted that Lovenox’s price was the highest in the market during that time frame and that Sanofi’s list prices increased at a similar rate to Eisai’s prices. Without evidence of substantial foreclosure or anticompetitive effects, Eisai failed to show that the probable effect of Sanofi’s conduct was to substantially lessen competition, the court concluded.

The case is No. 14-2017.

Attorneys: Jay N. Fastow (Ballard Spahr), Joseph C. Amoroso (Coughlin Duffy), and Thomas J. Cullen, Jr. (Goodell, DeVries, Leech & Dann) for Eisai, Inc. George S. Cary and Arminda B. Bepko (Cleary, Gottlieb, Steen & Hamilton) and Marc D. Haefner (Connell Foley) for Sanofi Aventis U.S., LLC and Sanofi U.S. Services, Inc.

Companies: Eisai, Inc.; Sanofi Aventis U.S., LLC; Sanofi U.S. Services, Inc.

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