Antitrust Law Daily Wrap Up, ANTITRUST NEWS: City charges Reckitt Benckiser with suppressing competition for opioid replacement drug, (Apr 1, 2015)

By Linda O’Brien, J.D., LL.M.

A brand drug manufacturer engaged in an overall scheme to improperly maintain its monopoly power in the market for Suboxone, an opioid replacement drug, and caused end-payor purchasers to pay overcharges for Suboxone prescriptions, according to a complaint filed in the federal district court in Philadelphia (City of Providence v. Reckitt Benckiser Pharmaceutical, Inc., March 26, 2015).

Reckitt Benckiser manufacturers and markets numerous pharmaceutical drugs, including a co-formulated drug under the brand name Suboxone. Suboxone is a combination drug composed of two active pharmaceutical ingredients —buprenorphine and naloxone — used as opioid replacement therapy for the treatment of heroin addiction. The City of Providence is a Rhode Island municipality that operates a self-insured health and welfare benefit plan that provides reimbursement for the purchase price of prescription drugs.

The complaint states that when Reckitt introduced Suboxone tablets in 2002, buprenorphine and naloxone no longer had any patent protection. However, when Reckitt obtained Food and Drug Administration (FDA) approval for Suboxone, it also acquired a seven-year period of regulatory exclusivity when the FDA categorized Suboxone as an “orphan drug.” During the period of exclusivity, Reckitt marketed Suboxone free from competition from generic versions and garnered sales in the United States of over $1 billion per year. The seven-year period of exclusivity expired in October 2009.

The prospect of generic competition allegedly was alarming to Reckitt, since Suboxone was extremely profitable and formed a substantial portion of Reckitt’s profits. Reckitt then began an anticompetitive scheme to maintain its monopoly power over co-formulated buprenorphine and naloxone by illegally preventing generic manufacturers from effectively competing with Suboxone, the complaint alleges.

In order to prevent the vast majority of the Suboxone prescription base from being substituted with less expensive generic versions, Reckitt developed and launched Suboxone in film form before the FDA approved generic Suboxone tablets, according to the complaint. The film version, unlike the tablet, is patent-protected until 2023 and does not face imminent generic competition. Once the film version was FDA-approved, Reckitt employed its sales force to aggressively destroy demand for the unpatented tablet product and switch prescriptions to its patented film product by falsely disparaging and raising the price of tables relative to film. This anticompetitive tactic, known as product hopping, destroys the automatic substitution of generic drugs from their branded counterparts. Once generic Suboxone tablets finally launched in February 2013, the market for tablets had been eliminated by Reckitt’s product hopping tactics.

The complaint alleges that, before Reckitt’s exclusivity on its tablet formation was set to expire, the FDA rejected Reckitt’s application to market a film formulation of Suboxone. Reckitt therefore gained more time to destroy demand for Suboxone tablets by sabotaging the process by which generic drug manufacturers were required to submit an FDA-mandated shared risk management plant for Suboxone tablets. Approval of the shared risk management plan was the only thing at the time preventing at least two generic Suboxone tablet products from receiving final FDA approval.

Reckitt allegedly used baseless tactics to delay FDA approval of generic Suboxone tablets, including filing a sham Citizen Petition with the FDA claiming to have discovered a severe safety issue which required the withdrawal of tablets from the market. Although the FDA denied the petition in February 2013, the petition succeeded in delaying the FDA’s approval of generic Suboxone tablets during its pendency. By the time the petition was denied, Reckitt had successfully converted the vast majority of Suboxone sales from tablet to film. Absent Reckitt’s anticompetitive scheme, generic Suboxone tablets would have entered the market by December 2011, the complaint charges.

Reckitt’s switch from Suboxone tablets to film would have made no economic sense if the scheme did not have the intended effect of substantially impairing generic competition, the city claimed. Reckitt incurred substantial expense to develop and manufacture Suboxone film, switch prescriptions from tablets to film, gain FDA approval for marketing, and pay royalties to a third-party manufacturer that supplies the film technology. Reckitt was willing to sacrifice short-term profits in order to destroy the market for Suboxone tablets, the complaint charges.

The plaintiff asserts claims for unfair and deceptive trade practices, unjust enrichment, and monopolization and attempted monopolization in violation of Section 2 of the Sherman Act and various state laws. The action seeks declaratory and injunctive relief, disgorgement, treble damages, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 2:15-cv-01621-MSG.

Attorneys: John Macoretta (Spector Roseman Kodroff & Willis, P.C.) and Michael M. Buchman (Motley Rice LLC) for City of Providence, Rhode Island.

Companies: Reckitt Benckiser Pharmaceutical, Inc.; Reckitt Benckiser Group, plc; Individior, plc

News: Antitrust PennsylvaniaNews