Antitrust Law Daily Wrap Up, ANTITRUST NEWS: AAI supports reversal of dismissed Effexor XR pay-for-delay suit, (Nov 24, 2015)

By Greg Hammond, J.D.

The American Antitrust Institute (AAI) is urging the U.S. Court of Appeals in Philadelphia to reverse a decision by the federal district court in Trenton, New Jersey, dismissing a complaint that alleges Wyeth, Inc. entered into illegal reverse payment settlement agreements concerning Effexor XR, an extended release antidepressant (In re Effexor XR Antitrust Litigation, Lead Case No. 3:11-cv-05479-PGS-LHG).

Companies that directly purchased Effexor XR from Wyeth claimed that Wyeth prevented and delayed the approval and marketing of generic versions of Effexor XR in violation of the Sherman Act. In particular, the plaintiffs asserted that Wyeth engaged in sham litigation to block and delay multiple generic companies from entering the generic Effexor XR market; entered into an illegal horizontal market allocation and price fixing reverse settlement agreement with Teva Pharmaceuticals; and negotiated a settlement with subsequent generic applications for the sole purpose of preserving and protecting its alleged monopoly and market division agreement with Teva.

The district court dismissed the claims in October 2014, finding that the complaint failed to state a claim, in part, because the parties submitted their settlement proposal to the FTC and the Commission declined to file an objection in the underlying patent suit. The case is currently before the U.S. Court of Appeals in Philadelphia.

In its amicus brief, AAI claims that the district court erred in requiring the plaintiffs to produce, at the motion to dismiss stage, evidence generally considered at summary judgment or trial. In addition, AAI asserts that the lower court required plaintiffs to introduce evidence the Supreme Court expected defendants to introduce in justifying payment. Both of these requirements, according to the brief, are inconsistent with the U.S. Supreme Court’s 2013 decision in FTC v. Actavis, 133 S. Ct. 2223, 2013-1 Trade Cases ¶78,419, the appellate court’s 2015 ruling in King Drug Co. of Florence v. Smithkline Beecham Corp. (Lamictal), 791 F.3d 388 (3d Cir. 2015), as well as the Iqbal and Twombly pleading standards.

“The Supreme Court’s landmark decision in Actavis would be undermined if courts were to impose excessive standards at the motion-to-dismiss stage that effectively make it all but impossible for plaintiffs to succeed,” the brief states. “This court’s decision in Lamictal also would be upended if brands’ promises not to introduce authorized generics could be dismissed by requiring the plaintiffs to plead the evidence that will be produced in discovery.” AAI added that, “in creating excessive pleading thresholds not supported by Twombly, Iqbal, or this Court’s precedents, the court below misread those decisions, violated the ‘common sense’ required under Twombly, and contravened multiple decisions that recognized the realities of exclusion-payment litigation in denying motions to dismiss.”

News: Antitrust