Antitrust Law Daily Wrap Up, ANTITRUST—D. N.J.: Celgene had duty to deal in suit over its denial of access for brand drug bioequivalence testing, (Jan 5, 2015)

By Linda O’Brien, J.D., LL.M.

Generic drug manufacturer Mylan Pharmaceuticals sufficiently pleaded facts to pursue claims against the brand drug maker of Thalomid and Revlimid for allegedly suppressing competition by denying access to its branded drugs for bioequivalence testing, the federal district court in Newark, New Jersey has decided. However, the generic drug maker failed to adequately plead that there was concerted action by the defendant and its distributors to engage in an anticompetitive scheme. Those claims were therefore dismissed (Mylan Pharmaceuticals, Inc. v. Celgene Corporation, December 23, 2014, Salas, E.).

Pharmaceutical company Celgene Corporation manufactures the brand drugs, Thalomid and Revlimid. Thalomid is used in the treatment of complications from leprosy, and Revlimid is used for treating the blood cell disorder, myelodysplastic syndromes (MDS). Due to rigorous restrictions imposed on the distribution of Thalomid and Revlimid, the Federal Drug Administration (FDA) conditioned Celgene’s approval for these drugs on its establishment of a risk management program.

In 2003, generic drug manufacturer Mylan Pharmaceuticals sought approval to develop generic versions of Thalomid and Revlimid by filing an Abbreviated New Drug Application (ANDA) with the FDA. Through the ANDA filing, Mylan was required to demonstrate bioequivalence to the branded drugs. Mylan was unable to obtain samples for testing through wholesale distribution channels or directly from Celgene. Subsequently, Mylan filed suit against Celgene, alleging violations of Sections 1 and 2 of the Sherman Act. Specifically, Mylan asserted that the drug maker suppressed competition and restrained trade for Thalomid and Revlimid by using risk management programs established for FDA approval to deny access to its brand drugs for bioequivalence testing. Celgene moved to dismiss.

Duty to deal. The court determined that Mylan plausibly alleged facts that gave rise to a duty to deal under Section 2 of the Sherman Act. There is an affirmative duty to deal with competitors only when there is a prior course of dealing between the parties or the defendant’s conduct was not justified by any normal business purpose, the court explained. In this case, Mylan alleged that there was no legitimate business purpose for Celgene’s actions. It also alleged that Celgene sold samples of the brand drugs at retail and provided samples to research organizations, but refused to sell to Mylan due to anticompetitive goals. Mylan’s allegations were sufficient in detail to allow the case to proceed at the current stage of the litigation.

Concerted action. However, Mylan failed to adequately plead concerted action by the defendant. To establish concerted action, there must be a unity of purpose, common design, and a “meeting of the minds” in an unlawful arrangement. Mylan contended that Celgene devised an anticompetitive scheme to prevent Mylan from obtaining approval for generic versions of Thalomid and Revlimid, and that Celgene entered into unlawful agreements with wholesale distributors and pharmacies to unduly restrain trade.

According to the court, Mylan’s complaint failed to assert non-conclusory allegations of an unlawful agreement between Celgene and its distributors that would give rise to liability under Section 1 of the Sherman Act. Mylan did not allege that the distributors and pharmacies shared a common purpose, had a common anticompetitive goal, or stood to benefit from the alleged anticompetitive scheme. Moreover, the complaint did not allege that the distributors and pharmacies had knowledge of Celgene’s anticompetitive intent or that restraint of trade was the central purpose of the agreements between Celgene and its distributors and pharmacies. Since the complaint failed to raise a reasonable expectation that discovery would reveal evidence of an illegal agreement, Mylan’s Section 1 claims must be dismissed, the court concluded.

The case is No. 2:14-cv-02094-ES-MAH.

Attorneys: Arnold B. Calmann (Saiber LLC) for Mylan Pharmaceuticals, Inc. Daniel Rene Guadalupe (Norris, Mclaughlin & Marcus, PC) for Celgene Corporation.

Companies: Mylan Pharmaceuticals, Inc.; Celgene Corporation

Cases: Antitrust NewJerseyNews