Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Drug store alleges exclusion payment agreement delayed launch of generic Opana ER, (Apr 24, 2015)

By Linda O’Brien, J.D., LL.M.

Brand name pharmaceutical manufacturer Endo Pharmaceuticals and generic drug manufacturer Impax Laboratories entered into an exclusion payment agreement to suppress generic competition for the medication, Opana ER, according to a complaint filed in the federal district court in Chicago (Rite Aid Corporation v. Endo Health Solutions, Inc., April 23, 2015).

Oxymorphone hydrochloride is an opioid agonist and is used to treat pain and as a preoperative medication. It was first synthesized in 1914 and has been marketed and sold in injectable and rectal suppository formulations since 1959. Oxymorphone hydrochloride was also available in tablet form until 1972. Rite Aid Corporation operates nearly 4,600 drug stores through its affiliates nationwide that purchase pharmaceuticals and other goods for resale to the public.

The complaint alleges that Endo, seeking to launch a tablet form of oxymorphone hydrochloride and aware that the 1957 patent on oxymorphone hydrochloride had expired, would be eligible for three years of regulatory exclusivity if Endo submitted new clinical studies in support of its new drug application (NDA). To delay generic competition, Endo entered into a license agreement with Penwest Pharmaceuticals that possessed several patents related to time-release formulations of the drug. In 2006, Endo began selling immediate and extended release forms of oxymorphone hydrochloride under the brand names Opana IR and Opana ER. Based on Endo’s new clinical studies, Endo was awarded three years of regulatory exclusivity by the Food and Drug Administration (FDA) for all strengths of Opana through June 2009, after which Endo’s monopoly would be subject to generic competition.

In November 2007, Impax Laboratories filed an abbreviated new drug application (ANDA) with the FDA for its generic extended release oxymorphone hydrochloride and notified Endo that its generic tablets would not infringe any claim on the Penwest patents. In January 2008, Endo sued Impax for alleged patent infringement and triggered the automatic 30-month stay under the Hatch-Waxman amendments to the Federal Food, Drug, and Cosmetic Act through June 2010, during which time the FDA could not approve Impax’s ANDA, the complaint alleges.

In 2008, Endo was notified that several generic manufacturers—Actavis, Sandoz, Inc., Barr Laboratories, Roxane Laboratories, and Watson Laboratories—submitted ANDAs seeking approval to manufacture and sell generic extended release oxymorphone hydrochloride tablets. Subsequently, Endo filed suit against the manufacturers for alleged infringement of the Penwest patents. Thus, the generic manufacturers were blocked from launching production of generic versions of Opana ER, the complaint states.

According to the lawsuit, after the bench trial in the Endo-Impax litigation began, the parties entered into an exclusion payment agreement in which Impax agreed to delay launching its generic Opana ER for two-and-a-half years in exchange for a cash payment of over $102 million. Endo granted Impax a license and agreed not to sue for infringement of the Penwest patents relating to Opana ER. Endo also agreed to withhold launch of its authorized generic during Impax’s 180 day exclusivity period.

The defendants have no pro-competitive justification for the cash payment, and the payment has no rational connection to any estimated costs of continuing the patent litigation, the plaintiffs claim. Nor was the payment consideration for the fair value of any pro-competitive goods or services provided by Impax to Endo as Impax was not required to perform any service at all. Endo simply paid Impax not to compete. The exclusion payment agreement delayed the sale of generic Opana ER for more than two-and-a-half years, the complaint charges.

The effect of the exclusion payment agreement between Endo and Impax allegedly was to delay entry of generic versions of Opana ER, fix the prices for Opana ER, permit Endo to maintain a monopoly for extended release oxymorphone hydrochloride, and allocate the market for Opana ER and its generic equivalents to Endo through January 2013. But for the exclusion payment agreement between Endo and Impax, Impax would have launched generic version of Opana ER in June 2010 and reduced the price for extended release oxymorphone hydrochloride down to competitive levels.

The complaint charges that generic versions of brand name drugs contain the same active ingredient and are determined by the FDA to be just as safe and effective as their brand name counterparts. The only material difference between the generic and brand name drugs is the price, plaintiffs claimed. Generics are generally at least 25 percent less expensive than their brand name counterparts and the discount increases to 80 percent or more when there are multiple generic competitors on the market for a given brand. As a result, competition from generic drugs is viewed by brand name drug manufacturers as a threat to their profits.

Rite Aid asserts 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. 1:15-cv-03579.

Attorneys: David Lesht (Law Offices of Eugene M. Cummings, P.C.), Barry L. Refsin and Monica L. Rebuck (Hangley Aronchick Segal Publin & Schiller) for Rite Corporation and Rite Aid Headquarters Corp.

Companies: Rite Corporation; Rite Aid Headquarters Corp.; Endo Health Solutions, Inc.; Endo Pharmaceuticals, Inc.; Penwest Pharmaceuticals Co.; Impax Laboratories, Inc.

News: Antitrust IllinoisNews