Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Welfare benefit fund alleges anticompetitive conspiracy to suppress generic competition for diabetes drug, (Apr 9, 2014)

By Linda O’Brien, J.D., LL.M.

A welfare benefit fund has filed a complaint in the federal district court of New York City on behalf of itself and other end-payor purchasers of Actos, the brand name prescription for blood sugar control in diabetics, alleging that its manufacturer and several generic drug manufacturers engaged in restraint of trade by conspiring to exclude competition from the market for Actos, including the use of exclusion payment agreements (Plumbers & Pipefitters Local 178 Health & Welfare Trust Fund v. Takeda Pharmaceutical Company, April 4, 2014).

Takeda Pharmaceutical Company manufactures and sells a treatment to improve blood sugar control in Type 2 diabetics under the brand name “Actos.” According to the complaint, Takeda holds two patents, U.S. Patent No. 5,965,584 (the '584 patent) and U.S. Patent No. 6,329,404 (the '404 patent), with claims that allegedly cover Actos. The patents plainly do not claim the Actos drug product, since they claim drug products consisting of a different organic compound and an insulin secretion enhancer. Takeda’s false listing of the patents allowed the first generic drug manufacturer to submit an application to the U.S. Food and Drug Administration (FDA) for approval to sell a generic version of Actos. Asserting patent infringement, Takeda responded by filing suit against every manufacturer that sought FDA approval to sell generic versions of Actos.

The complaint states that Takeda’s lawsuits were objectively baseless and filed solely as an anticompetitive tactic to delay the entry of generic versions of Actos into the market. Generic competition for Actos was likely to begin after the substance patent for Actos, U.S. Patent No. 4,687,777 (the '777 patent) expired in January 2011. Since there was substantial risk that its infringement claims would not prevail in litigation, Takeda entered into exclusive payment agreements with the generic drug manufacturers. In exchange for the withdrawal of their challenges and delay entry of generic versions of Actos into the market, the generic drug manufacturers received a share of the supracompetitive profits made possible in the absence of generic competition.

Takeda, acting in concert with the generic drug manufacturers, engaged in a unlawful scheme to (1) delay the entry of less expensive generic versions of Actos in the United States; (2) fix the price of Actos and its generic equivalents; (3) permit Takeda to maintain a monopoly for Actos and its generic equivalents; and (4) allocate 100 percent of the United States market for Actos and its generic equivalent, the complaint alleges.

Plumbers & Pipefitters Local 178 Health & Welfare Trust Fund provides health and welfare benefits to its participants and their dependents. The fund purchased and provided reimbursement for Actos at supracompetitive prices. A generic version of Actos would have been available to the plaintiff as early as January 2011, absent the anti-competitive scheme and unlawful agreements by the defendants.

The plaintiff asserts claims for monopolization, conspiracy in restraint of trade, unjust enrichment, and violations of Sections 1 and 2 of the Sherman Act. The action seeks declaratory and injunctive relief, treble damages, and any other just and proper relief.

The case is No. 1:14-cv-02378-UA.

Attorneys: Brian P. Murray (Glancy Binkow & Goldberg LLP) and Brent W. Landau (Hausfeld LLP) for Plumbers & Pipefitters Local 178 Health & Welfare Trust Fund

Companies: Plumbers & Pipefitters Local 178 Health & Welfare Trust Fund; Takeda Pharmaceutical Company; Mylan Pharmaceuticals, Inc.; Actavis PLC; Watson Laboratories, Inc.; Ranbaxy Pharmaceuticals, Inc.; Teva Pharmaceutical USA, Inc.

News: Antitrust NewYorkNews