Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Indirect purchasers allege reverse payment agreement excluded competition to stroke medication, (Nov 19, 2013)

By Tobias J. Gillett, J.D., LL.M.

Brand name pharmaceutical manufacturer BoehringerIngelheim prevented the entry of generic competition in the market for its Aggrenox prescription stroke medication through a reverse payment agreement with a generic competitor, according to a complaint filed by a welfare benefit plan yesterday in the federal district court in Bridgeport, Connecticut (A.F. of L. - A.G.C. Buildings Trade Welfare Plan v. Boehringer Ingelheim Pharma GmbH & Co. KG, filed November 18, 2013).

Boehringer Ingelheim Pharma GmbH & Co. KG, Boehringer Ingelheim International GmbH, and BoehringerIngelheim Pharmaceuticals, Inc. manufacture Aggrenox, a brand name prescription stroke medication consisting of 200 mg dipyridamole and 25 mg acetylsalicylic acid. On May 31, 2007, Barr Pharmaceuticals, Inc. sought FDA approval to produce a generic version of Aggrenox.

Boehringer responded by filing a patent infringement lawsuit against Barr, which triggered a stay on FDA approval of the generic drug pursuant to the Drug Price Competition and Patent Term Restoration Act (“Hatch-Waxman Act”) for 30 months or until a final judgment concerning the validity or infringement of the patent, whichever occurred earlier. Barr counterclaimed, seeking declaratory judgments that the patent was invalid, that Barr’s generic product would not infringe the patent, or that the patent was unenforceable for inequitable conduct.

According to the complaint, Boehringer perceived Barr’s challenge to the patent as a threat to its continued monopoly on the stroke medication, and therefore entered into a reverse payment agreement with Barr to resolve the litigation. Barr agreed to abandon its challenge to the patent and not market its generic product before July 1, 2015, less than two years before the patent would expire in January 2017. In return, Boehringer entered into a cross-promotion deal with Barr, under which Barr’s subsidiary, Duramed Pharmaceuticals, Inc., would promote Aggrenox to obstetricians and gynecologists for the seven-year term of the agreement, and in exchange would receive approximately $120 million.

The complaint asserts that the utility of the cross-promotion deal to Boehringer was “highly suspect” because the deal involved promoting the stroke medication to a medical community that was not typical for that kind of drug—women’s health professionals, and the payments under the agreement “did not reflect fair value in relation to the benefits conferred.” The complaint notes an FTC investigation of the alleged reverse payment agreement, leading to a magistrate judge’s holding “that the co-promotion agreement was an integral part of the litigation.” Moreover, Boehringer allegedly admitted that the agreement “was part of the flow of compensation” and “was part of the considerations of the settlement.” Barr later became a wholly-owned subsidiary of Teva Pharmaceuticals USA, Inc., but Teva and Boehringer continued to abide by the terms of the agreement.

A.F. of L.- A.G.C. Buildings Trade Welfare Plan seeks to represent a class of indirect purchasers of Aggrenox and asserts claims against Boehringer, Teva, Barr, and Duramed for violations of Sections 1 and 2 of the Sherman Act; combination and conspiracy in restraint of trade under the laws of 24 states, Puerto Rico, and the District of Columbia; monopolization under the laws of 26 states, Puerto Rico, and the District of Columbia; consumer protection and unfair trade practices under the laws of 27 states and the District of Columbia; and unjust enrichment.

The complaint seeks a judgment that the defendants’ conduct violated the relevant laws; a permanent injunction against further continuance of the unlawful conduct; damages and treble damages; equitable relief in the nature of disgorgement, restitution, and creation of a constructive trust; costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 3:13-cv-01716-SRU.

Attorneys: Ingrid L. Moll (Motley Rice LLC) for A.F. of L. - A.G.C. Buildings Trade Welfare Plan.

Companies: A.F. of L.- A.G.C. Buildings Trade Welfare Plan; Boehringer Ingelheim Pharma GmbH & Co. KG; Teva Pharmaceuticals USA, Inc.; Barr Pharmaceuticals, Inc.; Duramed Pharmaceuticals, Inc.

News: Antitrust ConnecticutNews