Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Forest charged with conspiracy to delay generic competition for Alzheimer treatment medication, (Aug 20, 2015)

By Linda O’Brien, J.D., LL.M.

Brand drug distributor Forest Laboratories entered into unlawful agreements with generic drug manufacturers to settle patent infringement suits and launched a reformulated branded drug in order to delay entry of a generic version of its brand name drug Namenda in the market, according to a complaint filed in the federal district court in New York City (Sergeants Benevolent Association Health & Welfare Fund v. Actavis, plc, August 19, 2015).

Forest Laboratories, a distributor of branded pharmaceuticals and subsidiary of pharmaceutical manufacturer Actavis, is the exclusive seller of the patented drug Namenda, a therapy approved for the treatment of Alzheimer’s disease. Sergeants Benevolent Association Health & Welfare Fund is a healthcare benefits fund established for the purpose of providing prescription drug benefits to active and retired New York City Police Department sergeants and their dependents.

The complaint states that, in 2000, Forest entered into a license agreement with German drug manufacturer Merz Pharmaceuticals for the exclusive rights to develop a memantine hydrochloride product for the treatment of dementia under Merz’s patent, U.S. Patent no. 5,061,703 (“the ‘703 patent”). Forest submitted a new drug application (NDA) to the Food and Drug Administration (FDA) and brought Namenda immediate release (IR) tablets to market in 2004. Forest also sought an extension of the ‘703 patent, which was granted and extended to the patent’s expiration date to April 2015. The FDA also granted Forest’s request for additional six months of exclusivity for Namenda IR tablets, which further extended the patent’s expiration date to October 2015.

Beginning in October 2007, fourteen generic drug manufacturers filed abbreviated new drug applications (ANDAs) with the FDA, seeking to market generic versions of Namenda IR. In January 2008, Forest filed lawsuits against the generic manufacturers, alleging infringement of the ’703 patent. By filing suit, Forest triggered an automatic 30-month stay continuing through mid-2010 during which time the FDA could not approve any of the generics’ ANDAs for generic equivalents of Namenda IR., the complaint states.

According to the complaint, to induce the generic drug manufacturers to refrain from selling their generic versions of Namenda IR and to maintain its monopoly power, Forest entered into settlements with Cobalt, Teva, Upsher-Smith, Wockhardt, Amneal, Sun, and Dr. Reddy’s, whereby the generic manufacturers agreed to delay competing with Forest until July 2015 in exchange for discontinuing their efforts to challenge the ‘703 patent. The settlement agreements enabled Forest, Merz, and the generic manufacturers to delay entry of less expensive versions of Namenda in the U.S., fix the price of brand Namenda and its generic equivalents, and maintain Forest’s monopoly in the market for memantine hydrochloride products.

With generic entry delayed by the settlement agreements, Forest developed a new follow-on drug with a patent expiration date significantly later than that of Namenda IR—a reformulated Namenda IR as an extended release capsule, Namenda XR. Converting patients to the new drug would benefit Forest because: (1) once a patient switches to the new follow-on drug, it is unlikely that the patient will make a second switch to the generic version of the original product; (2) physicians are unlikely to act on their own to switch a patient to the generic version of the original product; and (3) patients are frequently unaware that comparable, lower cost generic drugs are on the market, the complaint states.

The complaint also alleges that, in February 2014, Forest implemented a plan to withdraw Namenda IR from the market, which was protected by a patent due to expire in July 2015, and to switch patients to a reformulated version—Namenda XR. After doctors refused to switch patients to the reformulated drug, due to a preference not to disrupt Alzheimer’s patients’ routines, Forest attempted to force the switch by restricting the supply of Namenda IR and announced that Namenda IR would be withdrawn from the market.

The New York Attorney General filed an antitrust complaint against Actavis and Forest in September 2014, seeking to prevent them from discontinuing sales of Namenda IR and forcing patients to switch to Namenda XR. The federal district court in New York granted the New York Attorney General’s motion for preliminary injunction, blocking Actavis from discontinuing sales of Namenda IR until 30 days after the generic equivalent will first be available, July 11, 2015. The injunction was affirmed by the Second Circuit in May 2015. While the injunction may blunt the future effects of Forest’s strategy to some extent, the anticompetitive effects of the scheme have been substantially and irreversibly accomplished since any patients converted to Namenda XR is likely to stay converted, the complaint charges.

The plaintiff asserts claims for unjust enrichment, unfair competition, deceptive trade practices, monopolization, and conspiracy to monopolize in violation of 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. 1:15-cv-06549.

Attorneys: Peter Safirstein and Domenico Minerva (Morgan & Morgan) and Marvin A. Miller and Lori A. Fanning (Miller Law LLC) for Sergeants Benevolent Association Health & Welfare Fund.

Companies: Actavis, plc; Forest Laboratories, LLC; Merz Pharmaceuticals GmbH & Co.; KGAA, Amneal Pharmaceuticals, LLC; Teva Pharmaceutical Industries, Ltd.; Barr Pharmaceuticals, Inc.; Cobalt Laboratories, Inc.; Upsher-Smith Laboratories, Inc.; Wockhardt Limited; Sun India Pharmaceuticals Industries, Ltd.; Dr. Reddy’s Laboratories Inc.

News: Antitrust NewYorkNews