Antitrust Law Daily Wrap Up, ANTITRUST—D. Minn.: Gilead Sciences had valid business reason for denying access to Letairis for bioequivalence testing, (Sep 30, 2015)

By Linda O’Brien, J.D., LL.M.

In an action against pharmaceutical manufacturer Gilead Sciences for allegedly refusing to allow a competing pharmaceutical company access to samples of its brand drug Letairis for the purpose of conducting bioequivalence testing of its proposed generic version of Letairis, the brand drug manufacturer had valid business reasons for refusing to deal and samples for the drug were not completely unavailable, the federal district court in St. Paul, Minnesota has ruled. Therefore, the brand drug manufacturer’s motion to dismiss was granted (Natco Pharma Ltd. v. Gilead Sciences, Inc., September 29, 2015, Frank, D.).

Gilead Sciences, Inc. is the manufacturer of ambrisentan, marketed under the brand name Letairis, which is used for the treatment of pulmonary arterial hypertension. Gilead is the holder of several patents for Letairis that are scheduled to expire in July 2018. Because Letairis poses known safety risks, the drug is available only through the FDA-mandated Risk Evaluation and Mitigation Strategy (REMS) program. Under the Letairis REMS program, Letairis is distributed exclusively by specialty pharmacies, which dispense medications for certain conditions that require ongoing patient education and monitoring. Accredo Health Group, a subsidiary of Express Scripts, is a specialty pharmacy.

Natco is an Indian Company that develops, manufactures, and sells generic pharmaceuticals. In June 2014, for the purpose of developing a generic version of Letairis, Natco attempted to purchase samples of Letairis for bioequivalence testing through normal wholesale channels but was unable to do. Natco also tried to purchase samples of Letairis from Gilead and Accredo. However, Gilead declined to provide the samples. Natco then contacted Express Scripts, one of Gilead’s approved distributors of the drug, and requested to purchase Letairis samples. Express Scripts has failed to respond to Natco’s requests.

In August 2014, Natco filed suit against Gilead, Accredo, and Express Scripts, asserting claims for restraint of trade, monopolization, attempted monopolization, conspiracy to monopolize, and violations of Sections 1 and 2 of the Sherman Act and Minnesota Antitrust Act. The defendants moved to dismiss the complaint.

Unlawful monopolization. The anti-competitive conduct Natco alleged was a refusal to deal. A refusal to deal does not constitute anticompetitive conduct if valid business reasons exist for the refusal. In addition, a refusal to deal claim requires a showing that the requested assets are completely unavailable the court explained.

Natco contended that Gilead designed its REMS program in such a way so as to eliminate generic competition by precluding access to Letairis and thereby allowing Gilead to control prices and destroy competition. Natco also alleged that Gilead entered into distribution agreements with specialty pharmacies that preclude the distribution of Letairis to Natco for use in bioequivalence studies.

The court found that Natco failed to plead facts supporting its refusal to deal claim. Natco’s claim that Gilead refused to deal with Natco by requiring a REMS-certified physician to write a prescription was insufficient since the FDA restricts distribution of Letairis through the REMS protocol and requires a prescription from an enrolled physician with a REMS certification. Gilead accepted the restrictions on distribution as a condition to being able to market Letairis. As authorized distributors of pharmaceuticals, Express Scripts and its subsidiaries, such as Accredo, who dispense prescription drugs as a specialty pharmacy, are prohibited by law from dispensing prescription medication to a buyer without a prescription.

Furthermore, Natco is able to obtain samples by engaging a REMS-certified physician to write a prescription. Thus, Letairis is not completely unavailable. Also, compliance with FDA requirements requiring a valid prescription before dispensing Letairis constitutes a valid business reason to refuse to dispense Letairis outside of the REMS requirements.

Conspiracy. The court also found that, while Natco generally alleged a conspiracy, Natco did not specify any facts supporting the existence of a conspiracy. Natco did not identify anyone who was denied Letairis after presenting a valid prescription. Nor did Natco allege any facts that would explain how a specialty pharmacy could discern that an individual prescription was written for a bioequivalence study. Thus, Natco’s allegations are insufficient to suggest an agreement or conspiracy between the defendants or between Gilead and specialty pharmacies.

The case is No. 0:14-cv-03247-DWF-JSM.

Attorneys: Christopher A. Pinahs, Peter Kohlhepp, and Jeffer Ali (Carlson Caspers Vandenburgh Lindquist & Schuman PA) for Natco Pharma Ltd. Eric Stops, F. Dominic Cerrito, and Steig D. Olson (Quinn Emanuel Urquhart & Sullivan, LLP) and Richard A. Duncan (Faegre Baker Daniels LLP) for Gilead Sciences, Inc. Alfred C. Pfeiffer, Jr., Amanda P. Reeves, and Andrew J. Robinson (Latham & Watkins, LLP) and Steve W. Gaskins (Gaskins Bennett Birrell Schupp, LLP) for Accredo Health Group, Inc. and Express Scripts Holding Co.

Companies: Natco Pharma Ltd.; Gilead Sciences, Inc.; Accredo Health Group, Inc.; Express Scripts Holding Co.

Cases: Antitrust MinnesotaNews