Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Pfizer allegedly used sham patent litigation to delay generic versions of Celebrex, (Jul 8, 2014)

By Linda O’Brien, J.D., LL.M.

A brand name drug manufacturer suppressed competition and restrained trade for its brand drug, Celebrex, by procuring a reissue patent by fraud and using sham patent infringement litigation to delay the launch of generic versions of Celebrex in the market, according to a complaint filed in the federal district court of Alexandria (American Sales Company, LLC v. Pfizer, Inc., July 1, 2014).

Pharmaceutical company Pfizer, Inc., and its subsidiaries, G.D. Searle and Pfizer Asia Pacific, manufacture the prescription drug, celecoxib, under the brand name Celebrex. Celebrex is a non-steroid anti-inflammatory drug approved to treat osteoarthritis, rheumatoid arthritis, and similar conditions. The Federal Drug Administration (FDA) approved the marketing of Celebrex in 1998. Shortly after approval, Pfizer obtained and listed in the FDA Orange Book three patents encompassing a number of compounds and the formulation of celecoxib. Pfizer obtained a third patent, U.S. Patent No. 5,760,068 (the ‘068 patent), covering methods using the already patented formulation and compounds of celecoxib. American Sales Company purchases and delivers health and beauty care items, general merchandise, and other products to supermarkets in the U.S.

The complaint alleges that in 2003, generic drug manufacturer, Teva Pharmaceuticals, sought approval to market a generic version of Celebrex and asserted that the ‘068 patent was invalid. Pfizer filed suit for patent infringement, and the ‘068 patent was later ruled invalid by the court. To avoid the consequences of a determination that would subject Celebrex to competition, Pfizer sought to reissue the method of use ‘068 patent. Pfizer submitted false information to the U.S. Patent and Trademark Office (USPTO), claiming it had made an error in filing during the prosecution of the ‘068 patent, the plaintiffs claimed. The misrepresentations allegedly were made with the specific intent of deceiving the USPTO, which ultimately allowed the reissue patent in 2013.

In addition to Teva, four additional generic drug manufacturers sought and obtained tentative approval from the FDA to market generic celecoxib. Pfizer filed suit against the five generic drug manufacturers, alleging that each of their products would infringe on the reissue patent. The litigation was a sham since no reasonable litigant would expect Pfizer to succeed on the merits on any infringement claims as the reissue patent was manifestly invalid, the complaint charged.

According to the complaint, although the reissue patent was ruled invalid in March 2014, Teva and two other generic drug manufacturers entered into settlements with Pfizer that will allow the launch of generic versions of Celebrex in December 2014. Pfizer’s scheme to restrain and monopolize the market by (1) procuring the reissue patent by fraud; (2) filing the sham litigation against the generic drug manufacturers, and (3) using the litigation to delay the entry of generic versions of Celebrex successfully delayed the launch of the generic Celebrex until the end of 2014.

Competition accelerates when generic drug manufacturers enter the market and prices are driven downward. After generic competition begins, the vast majority of sales of a brand drug shift to the generic version. The shift occurs because, although the generic versions are chemically identical to the brand counter parts, they are sold at substantial discounts from the brand drug price.

Pfizer allegedly had monopoly power in the market for celecoxib capsules and maintained the price for Celebrex at supracompetitive levels without losing substantial sales to other products. Pfizer enjoyed high barriers to entry in the relevant market due to legally and illegally created patent protections, and high costs of entry and expansion. But for the anticompetitive conduct, multiple generic drug manufacturers would have entered the market as early as May 2014 when Pfizer’s first two patents expired. Instead, Pfizer maintained its monopoly power through a scheme to exclude competition and caused purchasers to pay more for celecoxib capsules that they otherwise would have absent the illegal conduct, the complaint states.

ASC asserts claims for violations of Section 2 of the Sherman Act. The action seeks declaratory relief, treble damages, costs of suit, attorneys’ fees, and any other just and proper relief.

In two similar actions, employee welfare benefit plans, United Food and Commercial Workers Union and Employers Midwest Health Benefits Fund and AFSCME Health and Welfare Fund, filed complaints in the federal district court in Richmond, alleging that Pfizer unlawfully prolonged patent protection and delayed generic competition in the market for Celebrex by fraudulently obtaining a reissue patent to pursue sham litigation (United Food and Commercial Workers Union and Employers Midwest Health Benefits Fund v. Pfizer, Inc., July 3, 2014, and AFSCME Health and Welfare Fund v. Pfizer, Inc., July 3, 2014).

The cases are Nos. 1:14-cv-00826-AJT-TRJ, 3:14-cv-00481-REP, and 3:14-cv-00482-REP.

Attorneys: William H. Monroe, Jr. (Glasser and Glasser, P.L.C.), Thomas M. Sobol (Hagens Berman Sobol Shapiro LLP), and John D. Radice (Radice Law Firm, P.C.) for American Sales Company, LLC.

Companies: American Sales Company, LLC; Pfizer, Inc.; Pfizer Asia Pacific PTE. Ltd.; G.D. Searle LLC.

News: Antitrust VirginiaNews