Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Drug store alleges pay-for-delay payment agreement delayed launch of generic Lamictal, (Nov 13, 2015)

By Linda O’Brien, J.D., LL.M.

Brand name pharmaceutical manufacturer SmithKline Beecham Corporation and generic drug manufacturer Teva Pharmaceutical Industries entered into a “pay-for-delay” agreement to delay generic competition for the medication, Lamictal, according to a complaint filed in the U.S. District Court for New Jersey (Rochester Drug Co-Operative v. SmithKline Beecham Corporation, November 12, 2015).

SmithKline Beecham Corporation, doing business as GlaxoSmithKline (GSK), markets the prescription drug Lamcital that is used to treat epilepsy, bipolar disorder, and other medical conditions. GSK holds U.S. Patent No. 4,602,017 (the ‘017 patent), which covers Lamictal tablets and chewables. Rochester Drug Co-Operative is a wholesale drug cooperative that buys and distributes pharmaceuticals and home health supplies to community retail pharmacies, long term care pharmacies, and home health care stores.

The complaint alleges that, upon receiving FDA approval of its new drug application (NDA) for Lamcital tablets in 1994, GSK was awarded a five-year new chemical entity (NCE) exclusivity, which expired in December 1999. GSK also received approval for a new label indication and was awarded a seven-year orphan drug exclusivity (ODE), which expired in August 2005. The ‘017 patent expired in July 2008 and was the only patent listed for Lamictal tablets in the FDA’s Orange Book.

In April 2002, Teva Pharmaceutical Industries filed an abbreviated new drug application (ANDA), seeking FDA approval to manufacture and sell a generic version of Lamcital tablets. GSK sued Teva for infringement of the ‘017 patent in August 2002 and the filing of the suit triggered an automatic stay of approval of Teva’s ANDA for up to 30 months. Following a bench trial, the court’s ruling invalidated the claim of the ‘017 patent that covered the active ingredient of Lamictal—lamotrigine. The FDA ultimately approved Teva’s ANDA for lamotrigine tablets and chewables in August 2006, the complaint alleges.

According to the complaint, both GSK and Teva recognized the significant impact of the ruling invalidating the claim of the ‘017 patent and how it would dramatically change the competitive landscape. Under the applicable statutory regime, Teva’s 180-day exclusivity period would begin to run from either Teva’s first commercial marketing of the generic prodict or a final court decision holding the ‘017 patent invalid. Thus, GSk had an interest in delaying Teva’s entry as long as possible and continue to earn monopoly profits on Lamictal tablets and chewables. Teva had an interest in delaying the final court decision in order to take advantage of the 180-day exclusivity period for its generics.

In February 2005, GSK and Teva reached a settlement under which Teva could begin to sell generic lamotrigine chewables in June 2005, approximately 37 months prior to the expiration of the ‘017 patent. Additionally, GSK granted Teva a royalty-free, non-transferable license under the ‘017 patent to manufacture and sell generic versions of Lamictal tablets, starting in July 21, 2008, when the ‘017 patent expired. GSK also agreed not to launch an authorized generic until January 2009. Teva received significant considerations in exchange for its agreement to delay entry of its generics, the complaint states.

The complaint also alleges that GSK’s agreement with Teva delayed the launch of less expensive generic versions of Lamictal until at least January 2009. The agreement had the effect of fixing the price at which retailers, such as the plaintiff, would pay for lamotrigine tablets at a higher branded price. But for the defendants’ conduct, competitors would have begun marketing generic versions of Lamictal well before July 2008 and would have been able to market such versions more successfully.

Rochester Drug asserts claims for monopolization and conspiracy to monopolize in violation of Sections 1 and 2 of the Sherman Act. The action seeks declaratory relief, treble damages, costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 2:15-cv-08034.

Attorneys: Peter Pearlman (Cohn Lifland Pearlman Hermann & Knopf LLP), David F. Sorensen (Berger & Montague, P.C.), Peter R. Kohn and Joseph T. Lukens (Faruqi & Faruqi, LLP) for Rochester Drug Co-Operative, Inc.

Companies: Rochester Drug Co-Operative, Inc.; SmithKline Beecham Corporation; Teva Pharmaceutical Industries Ltd.; Teva Pharmaceuticals

News: Antitrust NewJerseyNews