Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Pa.: Rite Aid pay-for-delay suit combined with Niaspan MDL, (May 8, 2015)

By Greg Hammond, J.D.

Rite Aid Corporation’s suit against Abbott Laboratories, Teva Pharmaceuticals, and Barr Pharmaceuticals, over alleged pay-for-delay agreements for the brand name drug Niaspan, was consolidated with the multidistrict litigation In re Niaspan Antitrust Litigation. The federal district court in Philadelphia consolidated Rite Aid Corp. v. Abbott Laboratories with the Direct Purchaser actions, In re Niaspan, for all pretrial purposes (In re Niaspan Antitrust Litigation, May 6, 2015, DuBois, J.).

Rite Aid Corp. operates roughly 4,600 drug stores through its affiliates nationwide that purchase pharmaceuticals and other goods for resale to the public. Its complaint alleges that Kos Pharmaceuticals sold an extended-release niacin product under the brand name Niaspan—a drug primarily used for the treatment of lipid disorders. Since niacin was in the public domain, Kos was unable to patent the active ingredient in Niaspan. However, it received seven patents on the specific formulation and method-of-use for the drug. Subsequently, Niaspan accounted for the vast majority of Kos’ sales revenue. After Barr Pharmaceuticals filed an Abbreviated New Drug Application (ANDA) with the U.S. Food and Drug Administration (FDA), seeking to manufacture a generic equivalent to Niaspan in 2001, Kos filed a series of patent infringement suits against Barr. As the first filer of an ANDA, Barr received a 180-day period during which the FDA did not approve any other ANDAs filed by other generic manufacturers.

The complaint asserts that, while the patent litigation was pending, Barr received tentative FDA approval to market its generic Niaspan equivalents. Kos responded by preparing its own authorized generic version that would have deprived Barr of its 180-day exclusivity period as the sole generic on the market. Both Kos and Barr had enormous incentives to settle the patent infringement action, the complaint alleged.

Consequently, Rite Aid asserts that, in 2005, Kos and Bar entered into three separate but interrelated contracts—a settlement and licensing agreement, a co-promotion agreement, and a manufacturing agreement—resolving the litigation. Abbott Laboratories later acquired Kos, and then spun off its prescription drug business to AbbVie, Inc. Meanwhile, Teva Pharmaceuticals USA, Inc. acquired Barr. The acquiring companies allegedly continued to perform under the terms of Kos’ agreements.

Rite Aid asserts claims for monopolization, attempt to monopolize, and conspiracy to monopolize in violation of Sections 1 and 2 of the Sherman Act, seeking declaratory and injunctive relief, treble damages, costs of suit, and attorney fees.

The case number 13-MD-2460.

Attorneys: David F. Sorensen (Berger & Montague, PC) for direct purchaser putative class. Paul H. Saint-Antoine (Drinker, Biddle & Reath LLP) for defendants.

Companies: Rite Aid Corp.; Abbott Laboratories; AbbVie Inc.; Teva Pharmaceuticals USA, Inc.; Barr Pharmaceuticals Inc.

Cases: Antitrust PennsylvaniaNews