Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Welfare benefit fund alleges that exclusion payment agreement delayed launch of generic Opana ER, (Oct 8, 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 in Chicago (International Union of Operating Engineers, Local 138 Welfare Fund v. Endo Health Solutions Inc., October 3, 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. International Union of Operating Engineers (IUOE) is a self-insured health and welfare fund that provides medical care and benefits, including prescription drug benefits, to its members.

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 and to refrain from challenging the validity of the Penwest patents 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 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 allegedly enabled Endo and Impax to delay entry of less expensive versions of Opana ER and to 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 unlawfully enabled Endo to sell branded Opana ER at artificially inflated supracompetitive prices.

IUOE asserts claims for restraint of trade, monopolization, attempted monopolization, unjust enrichment, and violation of Sections 1 and 2 of the Sherman Act. The action seeks declaratory and injunctive relief, damages, disgorgement, restitution, costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 1:14-cv-07742.

Attorneys: Carol V. Gilden and J. Douglas Richard (Cohen Milstein Sellers & Toll, PLLC) and Frank R. Schirripa and Gregory S. Hach (Hach Rose Schirripa & Cheverie, LLP) for International Union of Operating Engineers, Local 138 Welfare Fund.

Companies: Endo Health Solutions Inc.; Endo Pharmaceuticals Inc.; Penwest Pharmaceuticals Co.; Impax Laboratories Inc.

News: Antitrust IllinoisNews