Antitrust Law Daily Wrap Up, ANTITRUST—C.D. Cal.: Surgeon proceeds with unlawful market allocation claim against Botox® maker, (Dec 16, 2015)

By Greg Hammond, J.D.

The manufacturer of the brand name drug Botox® was denied its motion to reconsider an order denying its October 2015 motion to dismiss antitrust claims that the manufacturer entered into an exclusive license agreement with a foreign manufacturer of a competing neurotoxin product in order to prevent the competitor’s impending entry into the U.S. market. The federal district court in Santa Ana, California, concluded that, although the manufacturer identified factual errors made by the court, the errors did not affect any of the court’s legal conclusions (Tawfilis v. Allergan, Inc., December 14, 2015, Staton, J.).

Allergan, Inc. is a multinational pharmaceutical company that produces Botox, an injectable neuromodulator used for the treatment of facial wrinkles. In February 2015, a licensed dentist and oral surgeon filed a complaint, alleging that Allergan restrained competition and allocated markets for Botox by entering into an exclusive license agreement with Medytox in order to prevent the impending entry of competing product Innotox into the U.S. market. The court denied Allergan’s motion to dismiss the antitrust claims, and Allergan moved for reconsideration.

In support of its motion, Allergan alleged that the court’s assertion—that, “though Medytox may need a U.S.-based partner to sell Meditoxin within the United States, Medytox does not need such a partner to sell Innotox in the United States because it does not contain human albumin”—was erroneous because the first clause was incorrect and the second clause was expressly contradicted by allegations in the first amended complaint.

The court agreed that the first clause—that Medytox may need a U.S.-based partner to sell Meditoxin in the United States—was incorrect, noting that this portion of the order was inconsistent with the remainder of the order. The error, however, was deemed harmless, according to the court, because the relevant product at issue was Innotox, not Meditoxin.

In addition, the court noted that, while it erred in its statement as to why Medytox does not require a U.S.-based partner to sell Innotox in the United States, the court’s order was correct in stating that “Medytox does not need such a partner to sell Innotox in the United States.” The court concluded that because the factual errors did not affect its legal conclusions, its denial of Allergan’s motion to dismiss was proper.

The case is No. SACV 15-307-JLS (JCGx).

Attorneys: Ralph B. Kalfayan (Krause Kalfayan Benink And Slavens LLP) for Adel Tawfilis. Alfred C. Pfeiffer, Jr. (Latham & Watkins LLP) and Bryan A. Merryman (White & Case LLP) for Allergan, Inc.

Companies: Allergan, Inc.

Cases: Antitrust CaliforniaNews