Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Direct Purchasers Allege Anticompetitive Agreement to Suppress Competition to Niacin Drug, (Jun 7, 2013)

By Tobias J. Gillett, J.D., LL.M.

A class of direct purchasers has filed a complaint in the federal district court in Philadelphia, alleging that pharmaceutical manufacturers Abbott Laboratories, Abbvie, Inc., Teva Pharmaceuticals USA, Inc., Barr Pharmaceuticals, Inc., and Duramed Pharmaceuticals, Inc. committed antitrust violations through an agreement that effectively postponed introduction of a generic version of an extended-release niacin product (Value Drug Co. v. Abbott Laboratories, June 6, 2013).

According to the complaint, Kos Pharmaceuticals, Inc. sold an extended-release niacin product under the brand name Niaspan, and received a number of patents on the specific formulation and method-of-use for the drug. Under the Hatch-Waxman Act, the first filer of an Abbreviated New Drug Application (ANDA) with the FDA would receive a 180-day period during which the FDA would not approve any other ANDAs filed by other generic manufacturers. Following Barr Pharmaceuticals, Inc.’s notification to Kos that it had filed an ANDA for a generic version of Niaspan, Kos sued Barr for patent infringement. The litigation continued for more than two years without a substantive ruling, during which time Barr received tentative approval from the FDA to market its generic Niaspan equivalents.

By the end of 2004, Barr was preparing to launch a generic version of Niaspan “at-risk,” before the patent litigation was resolved. Kos responded by preparing its own authorized generic version and moved for a preliminary injunction against Barr’s launch. However, the parties reached a settlement before the court could rule on the motion.

Under the 2005 settlement, Kos granted a license to Barr for all of the Niaspan patents, and agreed not to launch an authorized generic version of Niaspan during the 180 day exclusivity period Barr would receive as the first filer of an ANDA. In exchange, Barr agreed not to launch a generic version of Niaspan until September 20, 2013, or an earlier period if necessary to preserve Barr’s first-filer eligibility. Kos also agreed to pay Barr a royalty on all sales of Niaspan, and Barr agreed to promote Niaspan to practitioners. Finally, Kos agreed to make a lump-sum payment and additional quarterly payments to Barr in exchange for Barr agreeing to serve as Kos’s back-up supplier.

Abbott Laboratories later acquired Kos, and then spun off its prescription drug business, including Niaspan, to Abbvie, Inc. Meanwhile, Teva Pharmaceuticals USA, Inc. acquired Barr. The acquiring companies continued to perform under the terms of Kos’s agreement with Barr, and Teva succeeded to the 180-day exclusivity period. Abbott also filed a series of patent infringement lawsuits against third-party generic ANDA filers to prevent them from obtaining a final judgment of invalidity, unenforceability, or non-infringement, “which would prematurely trigger the running of Teva’s 180 day exclusivity period, thereby forcing it to enter the market sooner than the terms dictated by the Exclusion Payment Agreement.”

According to the complaint, the pharmaceutical manufacturers’ allegedly anticompetitive conduct prevented the entry of generic versions of Niaspan to the market, causing direct purchasers of the drug to pay artificially inflated prices for it.

The complaint asserts claims for violation of Sections 1 and 2 of the Sherman Act. It seeks a judgment that the defendants violated the Sherman Act, an award of treble damages, an award of attorneys’ fees and costs, a declaration that the Niaspan patents are null and void, a declaration that Teva’s rights under the Hatch-Waxman Act are null and void, and any other proper relief.

The case is No. 2:13-cv-03124-JD.

Attorneys: Howard J. Sedran (Levin, Fishbein, Sedran and Berman) for Value Drug Co.

Companies: Value Drug Co.; Abbott Laboratories; Abbvie, Inc.; Teva Pharmaceuticals USA, Inc.; Barr Pharmaceuticals, Inc.; Duramed Pharmaceuticals, Inc.

News: Antitrust PennsylvaniaNews