Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Suit alleges exclusion payment agreement delayed launch of generic medication, (Sep 24, 2014)

By Linda O’Brien, J.D., LL.M.

Brand name pharmaceutical manufacturer Endo Pharmaceuticals and generic drug manufacturer Impax Laboratories entered into an exclusion payment agreement to block generic competition for the medication, Opana ER, according to a complaint filed in the federal district court of Chicago (Meijer, Inc. v. Endo Health Solutions, Inc., September 19, 2014).

Oxymorphone hydrochloride is an opioid agonist used to treat pain and as a preoperative medication. Endo has marketed and sold oxymorphone hydrochloride in injectable and rectal suppository formulations since 1959. Meijer is a regional supermarket chain that purchases pharmaceutical products for resale to the public.

The complaint alleges that Endo, seeking to launch a tablet form of oxymorphone hydrochloride and aware that the patent on oxymorphone hydrochloride had expired, entered into a license agreement with Penwest Pharmaceuticals, which possessed several patents related to time release formulations of the drug. In 2006, Endo began selling immediate and extended release forms of oxymorphone hydrochloride under the brand names Opana IR and Opana ER. Based on Endo’s new clinical studies, Endo was awarded three years of regulatory exclusivity by the Food and Drug Administration (FDA) for all strengths of Opana through June 2009, after which Endo’s monopoly would be subject to generic competition.

In November 2007, Impax Laboratories filed an abbreviated new drug application (ANDA) with the FDA for its generic extended release oxymorphone hydrochloride and notified Endo that its generic tablets would not infringe any claim on the Penwest patents. In January 2008, Endo sued Impax for alleged patent infringement and triggered the automatic 30-month stay under the Federal Food, Drug, and Cosmetic Act through June 2010, during which time the FDA could not approve Impax’s ANDA, the complaint alleged.

In 2008, Endo was notified that several generic manufacturers—Actavis, Sandoz, Inc., Barr Laboratories, Roxane Laboratories, and Watson Laboratories—submitted ANDAs seeking approval to manufacture and sell generic extended release oxymorphone hydrochloride tablets. Subsequently, Endo filed suit against the manufacturers for alleged infringement of the Penwest patents. Thus, the generic manufacturers were blocked from launching production of generic versions of Opana ER.

According to the complaint, after the trial in the Endo-Impax litigation commenced, the parties entered into an exclusion payment agreement in which Impax agreed to delay launching its generic Opana ER for two and a half years in exchange for a cash payment of over $102 million. Endo granted Impax a license and agreed not to sue for infringement of the Penwest patents relating to Opana ER. The agreement for Impax to delay market entry in exchange for Endo’s reciprocal to forego the launch of an authorized generic is a per se illegal market allocation. The defendants have no pro-competitive justification for the cash payment, and the payment has no rational connection to any estimated costs of continuing the patent litigation. Nor was the payment consideration for the fair value of any pro-competitive goods or services provided by Impax to Endo.

The exclusion payment agreement enabled Endo and Impax to delay entry of less expensive versions of Opana ER, fix the prices for Opana ER and its generic equivalents, permitted Endo to maintain a monopoly in the U.S. market for Opana ER and its generic equivalents, and allocated the market for Opana ER and its generic equivalents through January 2013. But for the exclusion payment agreement between Endo and Impax, generic competition for Opana ER would have begun in June 2010 and reduced the price for extended release oxymorphone hydrochloride down to competitive levels.

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

The case is No. 1:14-cv-07320.

Attorneys: Joseph M. Vanek (Vanek, Vickers & Masini PC) and Robert N. Kaplan (Kaplan Fox & Kilsheimer LLP) for Meijer, Inc. and Meijer Distribution, Inc.

Companies: CVS Pharmacy, Inc.; AstraZeneca AB; Ranbaxy Pharmaceuticals, Inc.; Teva Pharmaceutical Industries, Ltd.; Dr. Reddy’s Laboratories Ltd.

News: Antitrust MassachusettsNews