Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Sham patent litigation allegedly used by brand drug maker Pfizer to delay launch of generic versions of Celebrex, (Sep 29, 2014)

By Linda O’Brien, J.D., LL.M.

A brand name drug manufacturer suppressed competition and restrained trade for it 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, Virginia (International Union of Operating Engineers, Local 138 Welfare Fund v. Pfizer, Inc., September 24, 2014).

International Union of Operating Engineers, Local 138 Welfare Fund (IUOE) is a self-insured health and welfare benefit fund that has purchased prescription drugs for plan members.

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. The compound and composition patents expired in 2013. 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.

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 the determination which would subject Celebrex to competition, Pfizer sought to reissue of 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 misrepresentations were made with the intent of misleading the USPTO, which ultimately allowed the reissue patent in 2013.

In addition to Teva, four other generic drug manufacturers, Mylan, Watson, Lupin, and Apotex, 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, Watson, and Mylan 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) improperly listing the ‘048 patent in the FDA Orange Book; (3) filing the sham litigation against the generic drug manufacturers, and (4) 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.

Generic versions of brand name drugs contain the same active ingredient and are determined by the FDA to be as safe and effective as the brand name drugs. Since generic and brand name drugs are commodities that cannot be differentiated, the primary basis for generic competition is price. Generics typically are at least 25 percent less expensive than their brand name counterparts when there is a single generic competitor and can increase to 80 percent when there are multiple generic competitors in the market for a given brand. The launch of a generic drug usually results in significant cost savings to all drug purchasers.

Pfizer had monopoly power in the market for celecoxib capsules and maintain 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, the complaint states.

The plaintiff asserts claims for monopolization, unjust enrichment, and violations of Sections 1 and 2 of the Sherman Act. The action seeks declaratory and injunctive relief, treble damages, costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 1:14-cv-01264.

Attorneys: Joshua Devore, Hiba Hafiz, J. Douglas Richard, and Sharon Robertson (Cohen Milstein Sellers & Toll PLLC) and Frank R. Schirripa (Hach Rose Schirripa & Cheverie, LLP) for International Union of Operating Engineers, Local 138 Welfare Fund.

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

News: Antitrust VirginiaNews