Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Teva urges Third Circuit to affirm Lamictal dismissal, (Oct 30, 2014)

By Greg Hammond, J.D.

Teva Pharmaceutical Industries, Ltd. and Teva Pharmaceuticals USA, Inc. have sent a letter to the U.S. Court of Appeals in Philadelphia, requesting that the court affirm the dismissal of In re Lamictal Direct Purchaser Antitrust Litigation. The companies cite In re Effexor XR Antitrust Litig., 2014 WL 4988410 (D.N.J. Oct. 6, 2014) and In re Lipitor Antitrust Litig., 2014 WL 4543502 (D.N.J. Sept. 12, 2014), which support the dismissal of antitrust challenges to settlements that do not include cash payments (In re Lamictal Direct Purchaser Antitrust Litigation, Case No. 14-1243).

In Lamictal, private plaintiffs alleged that the branded drug firm GlaxoSmithKline (GSK) paid Teva to delay its generic entry in exchange for GSK’s promise not to compete with authorized generic versions of the drug Lamictal. In January 2014, the federal district court in Newark, New Jersey granted Teva’s motion to dismiss, finding that agreements between branded and generic drug makers that include the branded firm’s commitment not to introduce an “authorized generic” cannot violate antitrust laws under FTC v. Actavis, Inc., 133 S. Ct. 2224 (2013) (2013-1 Trade Cases ¶78,419) because they do not involve the payment of money. Specifically, the court distinguished the Actavis ruling on the grounds that the branded-drug company in that case had compensated the generic firm in cash to induce it not to enter the market for a defined period, but in Lamictal, the branded company had extended compensation in the form of a valuable agreement not to compete.

The FTC filed an amicus brief with the U.S. Court of Appeals in Philadelphia in April 2014, arguing that the dismissal of Lamictal was erroneous and should be reversed. In its brief, the FTC argued that the no-authorized generic commitment in Lamictal raised the same antitrust concerns that the Supreme Court identified in Actavis. Further, it noted that if the Court of Appeals does not reverse the district court’s decision, its narrow reading of Actavis would encourage parties to structure potentially anticompetitive reverse-payment settlements simply by avoiding the use of cash.

In its letter to the Court of Appeals, Teva noted that both Effexor and Lipitor reinforce that Actavis “did not disturb the longstanding legality of patent litigation settlements, but held that only settlements with a large, unexplained ‘reverse payment’ from the patent holder to the patent challenger are subject to antitrust scrutiny.” In addition, “[t]hese cases also recognize the narrow meaning of ‘payment,’ limiting it to cash or—at most—consideration whose value has been reliably and concretely estimated.” Teva therefore requested that the Court of Appeals affirm the lower court’s dismissal of the antitrust suit.

Companies: King Drug Company of Florence Inc.; Louisiana Wholesale Drug Company Inc.; SmithKline Beecham Corp.; Teva Pharmaceutical Industries Ltd.; Teva Pharmaceuticals

News: Antitrust