Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Health insurer alleges reverse payment agreements between Endo and generic drug manufacturer involving Lidoderm, (May 13, 2014)

By Linda O’Brien, J.D., LL.M.

Brand name pharmaceutical manufacturer, Endo Pharmaceuticals, and generic drug manufacturer, Actavis, Inc., entered into a reverse payment agreement to block generic competition for the medication, Lidoderm, according to a complaint filed in the federal district court of San Francisco (Government Employees Health Association v. Endo Pharmaceuticals, Inc., May 12, 2014).

Endo Pharmaceuticals manufactures and sells Lidoderm (lidocaine), a topical skin anesthetic that is a leading prescription drug used to treat pain associated with post-herpetic neuralgia, commonly referred to after-shingles pain. Government Employees Health Association (GEHA) is a non-profit association that provides health and dental plans to federal employees. GEHA has paid pharmacies to dispense Lidoderm and its generic equivalents to plan participants.

The complaint alleges that Endo has the exclusive license to a patent relating to Lidoderm, U.S. Patent No. 5,827529 (the ‘529 patent), that will expire in October 2015. To protect its monopoly profits and prevent generic competition, Endo filed a citizen petition with the Food and Drug Administration (FDA) regarding whether its proposed approval requirements for generic Lidoderm were sufficient to determine bioequivalence.

After the generic manufacturer, Actavis, filed an application with the FDA to market a generic version of Lidoderm in 2009, Endo filed a patent infringement suit against Actavis. Actavis entered into a reverse payment agreement with Endo in which Actavis agreed to delay the launch of its generic version of Lidoderm. Endo agreed to dismiss the claim and to provide Actavis with millions of dollars in branded Lidoderm until the FDA approved Actavis’ abbreviated new drug application. Endo also agreed to delay marketing its own generic version of Lidoderm and Actavis would pay a royalty to Endo until another generic version of Lidoderm entered the market, the complaint charged.

According to the complaint, the generic drug manufacturer delayed marketing its generic version of Lidoderm until September 2013. But for the agreement, the generic version would have been marketed long before September 2013. Generic drugs are less expensive than the brand name drugs. GEHA and other end payors would switch almost all of their purchases of Lidoderm to lower priced generic versions once the first generic version enters the U.S. market. The defendants’ reverse payment agreement has prevented less expensive, competitively-priced generic versions of Lidoderm from becoming available and caused GEHA and other end payors to pay inflated prices for Lidoderm.

The reverse payment agreement has enabled the defendants to (1) delay the entry of less expensive generic versions of Lidoderm in the U.S.; (2) fix, raise, maintain, or stabilize the price of Lidoderm and its equivalents; and (3) allocate and share the profits from the U.S. market for Lidoderm, GEHA charged. As a result of the illegal agreement, Actavis would have sold a less expensive generic version of Lidoderm after August 2012 but before September 2013, and other generic versions of Lidoderm would have followed into the market.

GEHA asserts claims for conspiracy in restraint of trade, unfair and deceptive practices, unjust enrichment, and violations of state antitrust and consumer protection statutes. The action seeks declaratory relief, damages, costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 3:14-cv-02180-JSC.

Attorneys: Joseph J. Tabacco, Jr. (Berman Devalerio), Barbara Hart (Lowey Dannenberg Cohen & Hart, P.C.), and Mark D. Fisher (Rawlings & Associates PLLC) for Government Employees Health Association

Companies: Endo Pharmaceuticals, Inc.; Teikoku Pharma USA, Inc.; Teikoku Seiyaku Co., Ltd.; Actavis, Inc.; Watson Laboratories, Inc.; Anda, Inc.; Anda Pharmaceutical Industries, Inc.; Valmed Pharmaceuticals, Inc.

News: Antitrust CaliforniaNews