Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Drug and grocery retailers allege anticompetitive conspiracy to suppress generic competition for oral contraceptive, (Feb 28, 2014)

By Linda O’Brien, J.D., LL.M.

Pharmaceutical manufacturers engaged in restraint of trade by conspiring to exclude competition from the market for oral contraceptives and improperly maintained their monopoly power in the market for its brand and generic substitutes, through the use of reverse-payment agreements, according to a complaint filed in the federal district court of Providence, Rhode Island (Walgreen Co. v. Warner Chilcott Public Limited Company, February 25, 2014).

Pharmaceutical company Warner Chilcott manufacturers and sells oral contraceptives under the brand name Loestrin 24 Fe. According to the complaint, Warner holds one patent, U.S. Patent No. 5,552,394 (the '394 patent) with claims that allegedly cover Loestrin 24. The '394 patent does not claim any drug compound or drug formulation; rather, the patent covers a method using certain drug compounds and formulations that are not patented. The patent claim is weak and subject to defeat as invalid and unenforceable, the complaint charged. When Watson Pharmaceuticals, Inc. and Lupin Ltd., manufacturers of generic drugs, submitted applications to the U.S. Food and Drug Administration for approval to sell generic versions of Loestrin 24, Warner filed suit asserting patent infringement of the '394 patent.

The complaint states that Warner’s lawsuits were objectively baseless and filed solely as an anticompetitive tactic to delay the entry of generic versions of Loestrin 24 into the market. Warner subsequently entered into reverse-payments agreements and covenants not to sue with the generic drug manufacturers to induce them to withdraw their patent challenges. Warner also began to “product hop” by converting prescriptions for Loestrin 24, which would face generic competition in 2014, to prescriptions for a follow-on brand drug ostensibly protected by the patent. The follow-on drug was Lo-Loestrin Fe and a chewable version of Loestrin 24, called Minastrin 24. Lo-Loestrin Fe and Minastrin 24 provide no medical, convenience, or other benefits to patients compared to Loestrin 24. Warner sought new patents on these minor variations of drug ingredients and methods of use. Warner also maintains a massive sales force that encourages physicians to write prescriptions for the latest patented version of Loestrin, using disclosures of its questionable patents, the complaint states.

The plaintiffs—drug and grocery retailers—operate stores that dispense prescription drugs, including Loestrin 24, to the public. A generic version of Loestrin 24 would have been available to the plaintiffs as early as September 2009, absent the anti-competitive scheme and unlawful agreements by the defendants. Warner, both on its own and acting in concert with the generic drug manufacturers, engaged in an overall scheme to improperly maintain and extend Warner’s monopoly power in the market for Loestrin 24 and its generic substitutes, causing the plaintiffs to pay overcharges for the brand drug.

The plaintiffs assert claims for monopolization, attempt to monopolize, and conspiracy in restraint of trade, in violation of Sections 1 and 2 of the Sherman Act. The action seeks declaratory and injunctive relief, treble damages, costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 1:14-cv-00102-S-PAS.

Attorneys: S. Michael Levin (SMLevinLaw) and Scott E. Perwin (Kenny Nachwalter P.A.) for Walgreen Co., The Kroger Co., Safeway Inc., HEB Grocery Company L.P. and Albertson’s LLC

Companies: Walgreen Co.; The Kroger Co.; Safeway Inc.; HEB Grocery Company L.P.; Albertson’s LLC; Warner Chilcott Public Limited Company; Watson Pharmaceuticals, Inc.; Lupin Ltd.

News: Antitrust RhodeIslandNews