Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Warner Chilcott allegedly used product hopping, exclusion payment pacts to delay competition for Asacol, (Apr 27, 2016)

By Linda O’Brien, J.D., LL.M.

Pharmaceutical manufacturer Warner Chilcott restrained generic competition for its brand drug Asacol by reformulating the drug to prevent generic versions from being substitutable for the brand drug and by entering into an exclusive payment agreement with a generic drug manufacturer to delay entry of generic versions into the U.S. market, according to a complaint filed in the federal district court in New York City (Meijer, Inc. v. Allergan, plc, April 26, 2016).

In 2009, pharmaceutical company Warner Chilcott Ltd., a subsidiary of Allergan, plc, acquired the rights to Asacol (400 mg), a delayed release mesalamine formulation used to treat ulcerative colitis. By 2012, sales of Asacol (400 mg) in the United States were more than $570 million. Meijer is a regional supermarket chain that purchases pharmaceutical products for resale to the public.

The two patents covering Asacol expired in July 2013. According to the complaint, brand manufacturers can impair generic competition by preventing the generic from being AB rated to the brand drug—a requirement of the Food and Drug Administration (FDA) that is designed to ensure the generic’s therapeutic equivalence to the brand product. This is known as product hopping. Shortly after its 2009 acquisition, Warner Chilcott reformulated Asacol (400 mg) into two products—Asacol HD (800 mg) and Delzicol—with the purpose and effect to preventing a generic version of Asacol (400 mg) from being a substitute for the reformulated products. The reformulations—changing the dosage strength and dosage form from a tablet to a capsule—had no safety, efficacy, or other benefit for patients, the complaint alleges.

The complaint further alleges that, after the FDA approved the reformulated versions, Warner Chilcott engaged in a strategy to switch patients from Asacol (400 mg) to one of the new products. Although Asacol (400 mg) and Asacol HD were not approved by the FDA to treat the same conditions, Warner Chilcott unlawfully marketed Asacol HD to treat mildly active ulcerative colitis and maintenance of remission therapy, which made up the bulk of Asacol (400 mg) prescriptions, the complaint claimed. In addition, Warner Chilcott allegedly bribed physicians to switch patients from Asacol (400 mg) to Asacol HD. In April 2016, Warner-Chilcott pleaded guilty to felony healthcare fraud charges filed by Department of Justice for paying kickbacks to prescribers of Asacol (400 mg) to Asacol HD between October 2009 and September 2013.

Another way brand manufacturers delay competition is to enter into exclusion payment agreements, under which generic drug manufacturers are paid to delay entering the market, the complaint claims. In 2011, generic drug manufacturer Zydus Pharmaceuticals filed the first application seeking FDA approval for generic Asacol HD. Warner-Chilcott filed a patent infringement suit in order to prevent Zydus from entering the market. Subsequently, Warner-Chilcott and Zydus entered into an exclusion payment agreement in which Zydus agreed to delay marketing its generic version of Asacol HD until at least November 2015.

Generic versions of brand drugs contain the same active ingredient and are determined by the FDA to be just as safe and effective as the brand drugs. The material difference between generic drugs and brand drugs are their price, the complaint stated. Generic drugs are usually at least 10 percent less expensive than their brand counterparts when there is a single generic drug competitor. This discount allegedly increases to 80 percent or more when there are multiple generic drug competitors in the market for a given brand name drug. The launch of a generic drug usually brings significant cost savings for all drug purchasers.

Warner-Chilcott’s anticompetitive scheme has delayed the sale of generic Asacol products in the United States and unlawfully enabled Warner-Chilcott to sell its branded Asacol and Delzicol products at artificially inflated prices, the complaint charged.

Meijer asserts claims for restraint of trade, monopolization, and attempted monopolization 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. 1:16-cv-03092.

Attorneys: Barry S. Taus, Brett Cebulash, and Miles Greaves (Taus, Cebulash & Landau, LLP); Steve D. Shadowen, D. Sean Nation, and Matthew C. Weiner (Hilliard & Shadowen LLP); Joseph M. Vanek, David P. Germaine, and John P. Bjork (Vanek, Vickers & Masini, P.C.); and Paul E. Slater and Matthew T. Slater (Sperling & Slater, P.C.) for Meijer, Inc.

Companies: Meijer, Inc.; Allergan, plc; Warner Chilcott Limited; Zydus Pharmaceuticals USA, Inc.; Cadila Healthcare Limited

News: Antitrust NewYorkNews