Antitrust Law Daily Wrap Up, ANTITRUST—D.N.J.: Claims that Lipitor patent was secured by fraud dismissed, (Sep 6, 2013)

By Jody Coultas, J.D.

Direct purchasers of the drug Lipitor failed to state Sherman Act antitrust claims against Pfizer, Inc. for allegedly misrepresenting data concerning the patent covering Lipitor to the U.S. Patent and Trademark Office (USPTO) and to a court in a separate case concerning the patent, the federal district court in Trenton has held (In re Lipitor Antitrust Litigation, September 5, 2013, Sheridan, P.). The court granted the purchasers’ motion to amend the claims to focus on reverse payments made by Pfizer to a generic drug manufacturer in settlement of patent litigation.

The direct purchasers alleged that Pfizer used patents for or related to its cholesterol drug Lipitor to block generic competition for the product, and by paying generic drug manufacturer Ranbaxy Pharmaceuticals, Inc. to settle infringement litigation and stay off the market until an agreed-upon entry date. Specifically, Pfizer allegedly obtained a patent by fraud in order to extend Lipitor’s patent protection 15 months beyond the expiration date of the original patent covering Lipitor, and listed the patent in the Orange Book with the original patent to impose regulatory hurdles and enable it to later bring litigation to stall generic competition. Pfizer and Ranbaxy entered into a settlement agreement that allegedly constituted a reverse payment agreement, and as a result, direct purchasers and members of the class were deprived of the price-reducing benefits of timely generic competition.

Walker Process claims. To state a Walker Process claim, the plaintiff must show:(1) the patent at issue was procured by knowing or willful fraud on the PTO; (2) the defendant was aware of the fraud when enforcing the patent; (3) there is independent evidence of a clear intent to deceive the examiner; (4) there is unambiguous evidence of reliance, i.e., that the patent would not have issued but for the misrepresentation or omission; and (5) the necessary additional elements of an underlying violation of the antitrust laws are present.

The court declined to rule directly on whether the purchasers had standing to assert the Walker Process claims. Purchasers generally lack standing to indirectly challenge pharmaceutical patents through antitrust claims based on fraud on the Patent and Trademark Office, especially absent prior findings that the patents were tarnished by inequitable conduct. The court in this case declined to follow this restriction on purchasers, but also noted there should be limits on finding standing for purchasers.

The direct purchasers’ Walker Process claims failed, instead, on the merits because a previous court had determined that the patent was valid, and the PTO’s reissuance after same, rendered it difficult for the purchasers to meet the demanding proof requirements of a Walker Process claim, according to the court. Pfizer argued that the purchasers sought to assert the same claims previously asserted by Ranbaxy and denied by a court. The previous court addressed allegations that Pfizer submitted false and misleading data to the PTO and that the data deceived the PTO into issuing the patent, and found them to be unsupported. The PTO’s reissuance of the patent also weighed against the purchasers’ claims. It was unlikely that the purchasers would be able to prove an argument that had already been dismissed by another court and the PTO.

The court also dismissed the purchasers’ other Sherman Act claims against Pfizer. The purchasers’ claims regarding the Orange Book listing and “sham” litigation to enforce the patent were based entirely on the purported fraud in obtaining that patent. Listing presumptively valid patents in the Orange Book and enforcing them are statutory in nature. The purchasers also failed to show that the previous litigation was a sham, as a reasonable person would have believed Pfizer had a reasonable expectation of success on its claims. Finally, a citizen petition submitted by Pfizer purporting to alert the FDA to stability and safety issues in certain generic versions of Lipitor was not a “sham” or “objectively baseless.”

Reverse payment claims. The purchasers had standing to assert Sherman Act Section 1 and 2 claims challenging reverse payments, according to the court. To have standing, the purchasers needed to show that they suffered the type of injury the antitrust laws were intended to prevent and that the alleged injury flows from Pfizer’s allegedly unlawful or anti-competitive acts. Absent Pfizer’s anticompetitive conduct, the purchasers would have been able to purchase generic Lipitor at significantly reduced prices.

The court granted the purchasers leave to amend the complaint to focus solely on the reverse payment allegations. The purchasers sought to clarify and augment the reverse payment allegations based on new information they learned in discovery. Specifically, the purchasers sought to demonstrate that the Pfizer/Ranbaxy settlement was actually a payment by Pfizer to Ranbaxy to delay Ranbaxy’s launch of its generic version of Lipitor, regardless of the fact that Ranbaxy made a $1 million payment to Pfizer. The amendment would not be futile as argued by Pfizer.

The case is MDL No. 2332.

Attorneys: Kimberly Marion Hennings (Garwin Gerstein & Fisher LLP) for Burlington Drug Co., Inc. Liza M. Walsh (Connell Foley, LLP) for Pfizer, Inc.

Companies: Pfizer, Inc.; Ranbaxy Pharmaceuticals, Inc.

Cases: Antitrust NewJerseyNews