Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Reverse payment agreement suppressed generic competition for Lidoderm, CVS alleges, (Jan 25, 2016)

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 pain medication Lidoderm, according to a complaint filed in the federal district court of Oakland, California (CVS Pharmacy, Inc. v. Endo Pharmaceuticals, Inc., January 22, 2016).

Endo Pharmaceuticals markets and sells under the brand name Lidoderm (lidocaine), a topical skin anesthetic that is a prescription drug used to treat pain associated with post-herpetic neuralgia. Teikoku Seiyaku manufactures Lidoderm in Japan for distribution in the United States by Endo. CVS Pharmacy, Inc. operates nearly 9,500 retail drug stores through its affiliates nationwide that purchase pharmaceuticals and other goods for resale to the public.

The complaint alleges that Endo and Teikoku have exclusive licenses to several patents relating to Lidoderm, including U.S. Patent No. 5,827,529 (the ’529 patent) that was to expire in October 2015. As of January 2010, Teikoku listed the patents in the Food and Drug Administration’s (FDA) “Orange Book.”

After the generic manufacturer, Actavis, filed an application with the FDA to market a generic version of Lidoderm in 2009, Endo and Teikoku filed suit against Actavis for infringing the ’529 patent. In May 2012, Actavis entered into an agreement with Endo resolving the patent litigation. Under the agreement Actavis promised to delay the launch of its generic version of Lidoderm until September 2013 in return for Endo providing Actavis with at least $96 million in branded Lidoderm until the FDA approved Actavis’ abbreviated new drug application (ANDA). 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 lawsuit, the agreement ensured that Actavis ’ sales of Lidoderm would not result in price competition and that Actavis would sell Lidoderm at Endo’s same supracompetitive prices. But for the reverse payment agreement, a generic version of Lidoderm would have been marketed long before September 2013. Generic versions of brand name drugs contain the same active ingredient and are as safe and effective. The only material difference is the price. Generic drugs are typically 25 percent less expensive than the brand name drugs.

The reverse payment agreement allegedly has enabled the defendants to (1) delay the entry of less expensive generic versions of Lidoderm in the U.S. for up to 13 months; (2) delay the introduction of an authorized generic lidocaine patch; (3) fix, raise, maintain, or stabilize the price of Lidoderm; (4) maintain a monopoly in the U.S. market for lidocaine patch products; and (5) allocate the U.S. market for and sales of Lidoderm. As a result of the illegal agreement, Actavis would have sold a less expensive generic version of Lidoderm as early as August 2012, the plaintiff charged.

CVS asserts claims for conspiracy in restraint of trade, conspiracy to monopolize, monopolization, and attempt to monopolize, in violation of Sections 1 and 2 of the Sherman Act. The action seeks declaratory and injunctive relief, treble damages, attorney fees, costs of suit, and any other just and proper relief.

The case is No. 3:16-cv-00378.

Attorneys: Anna T. Neill (Kenny Nachwalter, P.A.) and Barry L. Refsin and Monica L. Rebuck (Hangley Aronchick Segal Pudlin & Schiller) for CVS Pharmacy, Inc.

Companies: CVS Pharmacy, Inc.; Endo Pharmaceuticals, Inc.; Teikoku Pharma USA, Inc.; Teikoku Seiyaku Co., Ltd.; Actavis, plc; Watson Laboratories, Inc.

News: Antitrust CaliforniaNews