Antitrust Law Daily Wrap Up, ANTITRUST—DCNJ: Antitrust Challenge to Patent Settlement Not Stayed, (Oct 25, 2012)

By Jeffrey May, J.D.

An antitrust action challenging the terms of a settlement agreement resolving patent infringement litigation between drug companies related to the pharmaceutical lamotrigine was not stayed by a federal district court in New Jersey pending U.S. Supreme Court action with respect to a recent Third Circuit decision—In re K-Dur Antitrust Litigation, 686 F.3d 197, 2012-2 Trade Cases ¶77,971. However, the court said that it might reconsider the defendants' motion for a stay if the Supreme Court were to grant certiorari in K-Dur (In re Lamictal Direct Purchaser Antitrust Litigation, October 23, 2012, Walls, W.).

Pending before the federal district court in New Jersey is an antitrust action brought by direct purchasers of lamotrigine, which is used to treat medical conditions such as epilepsy, bipolar disorder, other disorders involving seizures. It also has several off-label uses.

GlaxoSmithKline LLC (GSK) holds the patent for lamotrigine, which is marketed under the brand Lamictal. Teva, a generic pharmaceutical company, sought Food and Drug Administration approval to market a generic version of Lamictal. GSK sued Teva for patent infringement. After three years of litigation, the parties settled in 2005. The plaintiffs allege that the terms of that settlement between GSK and Teva violate federal antitrust law.

In K-Dur, the Third Circuit examined a so-called “reverse payment patent settlement agreement” between a generic drug manufacturer and a patent holder involving the brand-name sustained-release potassium chloride supplement (K-Dur), which is used to treat high blood pressure, the district court explained. The Third Circuit held that district courts should apply a quick look rule of reason analysis to “reverse payment agreements,” in which patent holders pay the generic manufacturer to drop its patent challenge and refrain from entering the market for a specified period of time.

The settlements in the two cases were reached under similar circumstances. GSK and Teva are likely counting on the Supreme Court granting certiorari and rejecting the Third Circuit's “truncated rule of reason” approach in K-Dur in favor of approaches adopted by other federal circuit courts.

When determining whether to stay an action, a court considers whether the actions: (1) involve the same parties; (2) involve the same issues; or (3) are pending in the same court. Additionally, whether a stay would prejudice the plaintiff and if it would further the interest of judicial economy is to be considered, according to the court.

Applying those factors to the case did not yield the conclusion that the case should be stayed, the court held. While the legal issue was similar, the possibility that the Supreme Court would grant certiorari and alter the legal framework set forth by the Third Circuit was remote, in the court's view. The Supreme Court receives approximately 10,000 petitions for certiorari each year and hears only about 75-80 cases.

Moreover, the federal appellate courts had been split on this issue for over a decade. Over that period of time, the Supreme Court denied certiorari on the issue at least seven times, the district court noted.

FTC Friend-of-the-Court Brief

The FTC has kept a close eye on this pending action. The agency filed an amicus brief with the federal district court on October 5, stating that an agreement by a branded drug company not to launch an authorized generic (AG) drug “provides a convenient method for branded drug firms to pay generic patent challengers for agreeing to delay entry.”

The question before the court, according to the agency, is whether the plaintiffs plausibly alleged a reverse payment triggering a rebuttable presumption of an unreasonable restraint of trade. The agency suggested that the court reject the defendants’ arguments that (1) Teva received nothing more than the ability to market its generic product based on a “negotiated entry date,” a type of settlement permitted under the Third Circuit’s decision in K-Dur; and (2) exclusive licenses are not subject to antitrust scrutiny.

The case is No. 2:12-CV-00995-WHW-MCA.

Cases: Antitrust NewYorkNews