IP Law Daily, PATENT—D. Kan.: Teva denied interlocutory certification in patent lawsuit settlements swap case, (Nov 8, 2024)

By Kenneth H. Ryesky, M.B.A., J.D.

Individuals and health insurers alleged elevated costs incurred from "Trade-For-Delay" of settlements over generic versions of EpiPen® and Nuvigil® drugs.

The federal district court in Kansas City, Kansas has declined to certify, for interlocutory appeal to the Tenth Circuit, questions regarding statute of limitations tolling and a question of whether an exchange of otherwise legal lawsuit settlements can serve as a basis for an antitrust claim. Some individuals and entities had filed a putative class action antitrust lawsuit against drug manufacturer Teva. The district court denied some of Teva's dismissal motions. The appeals court could not exercise jurisdiction to hear the interlocutory appeal in the case unless it was to answer a certified question of law. Teva propounded three questions for certification. The district court found that the questions did not qualify for certification under the criteria of the certified question statute, and denied Teva's motion for interlocutory appeal certification (Burge v. Teva Pharmaceuticals Industries, Ltd., No. 2:22-cv-02501-DDC-TJJ (D. Kan. Nov. 6, 2024)).

Teva Pharmaceutical Industries Ltd. owns the patents to Nuvigil®, a drug generically known as armodafinil, that promotes wakefulness and is indicated for treating patients who have various sleep disorders. Mylan N.V., (Mylan) a pharmaceutical company that has since been absorbed into an entity known as Viatris Inc., was licensed by Pfizer, Inc. (Pfizer) to manufacture and distribute the EpiPen® brand of epinephrine auto-injectors used by people prone to anaphylactic reactions.

Mylan endeavored to bring generic armodafinil to market, and was sued by Teva for patent infringement. Teva had sought to purvey its own generic epinephrine auto-injector, and was sued by Pfizer and Mylan over it. The Teva-Mylan lawsuits were settled through a set of agreements whereby (1) Teva paid Mylan to delay its marketing of generic armodafinil, thereby extending Teva's Nuvigil® monopoly; and (2) Teva agreed to refrain from purveying generic epinephrine auto-injectors, thereby extending Mylan's EpiPen® monopoly.

Some individuals, entities, and governmental units filed a putative class action lawsuit against Teva and related entities, alleging that the combined EpiPen® and Nuvigil® lawsuit settlements violated the antitrust laws and the RICO statutes. The many of the claims were dismissed, but dismissal was denied for the Sherman Act claims and some state law claims in a district court ruling on March 26, 2024.

Interlocutory appeals. Teva and its related entities sought to appeal the district court's March 26, 2024 denials of its dismissal motions to the Tenth Circuit. Generally, the federal circuit courts' appellate jurisdiction over district court rulings is limited to final district court decisions. The March 26, 2024 ruling was not a final decision, so Teva attempted to gain access the Tenth Circuit through the certified question exception to the general final decisions rule [28 U.S.C § 1292(b)]. Teva accordingly moved for interlocutory question certification.

Statute of limitations-tolling. The court denied certification of two questions regarding tolls to the statute of limitations. Here, some of Teva's dismissal motions denied by the court hinged upon whether the complaint was timely because the statute of limitations had been tolled. The district court had found that the plaintiffs had pleaded the requisite exercise of diligence to invoke the equitable tolling and fraudulent concealment doctrines to extend the statute of limitations. Teva sought to have the circuit court answer the question of whether the publication of a court decision in the EpiPen® litigation "sufficed to put plaintiffs on notice of their cause of action as a matter of law." The court declined to certify this question because it was fact-dependent and not "a pure question of law," and because there was no substantial disagreement as to what the law was.

Merely because relevant information is in the public domain does not necessarily impose inquiry notice upon members of the public. The case relied upon by Teva involved a claim under the Securities Act, a situation where investors are expected to research the issuers of the securities in which they invest, while individuals and entities who are not in the pharmaceutical industry cannot be expected to research the past and current litigation into which individual pharmaceutical companies become entangled.

The plaintiffs had pleaded fraudulent concealment as one basis to toll the statute of limitations; such fraudulent concealment alleged in Teva's separate announcements of the EpiPen® and Nuvigil® litigation settlements, and characterizing those settlements as unrelated in reports to the DOJ. This, the court found, plausibly pleaded the requisite affirmative act for fraudulent concealment. The court therefore declined to certify to the Tenth Circuit the question of whether the absence of any concealment statement from the public or the parties themselves precludes an active concealment pleading.

Antitrust-lawsuit settlement exchanges. The court declined to certify the question of whether an antitrust claim can be based upon the exchange of lawful litigation settlements. Here, Teva had relied upon the Supreme Court ruling in the Actavis case [FTC v. Actavis, Inc., 570 U.S. 136 (2013)], which allows "the generic manufacturer to enter the patentee's market prior to the patent's expiration, without the patentee paying the challenger to stay out prior to that point." The instant case differs factually from the Actavis ruling in that Actavis "assumes that early entry is the whole settlement" and "doesn't contemplate a side deal where the challenger is willing to accept a later generic entry to prolong its monopoly power over a separate drug and distinct product market."

The Case is No. 2:22-cv-02501-DDC-TJJ.

Judge: Crabtree, D.

Attorneys: Alison Elizabeth Chase (Keller Rohrback, LLP) for Dena Burge. Brent N. Coverdale (Scharnhorst Ast Kennard Griffin PC) for Teva Pharmaceuticals Industries, Ltd.

Companies: Teva Pharmaceuticals Industries, Ltd.

Cases: Patent KansasNews