Insights

On July 3, 2019, in United States ex rel. Johnson v. Raytheon Co., the U.S. District Court for the Northern District of Texas granted the government’s motion to dismiss a qui tam suit over the objections of the relator. The Johnson case is just the latest example of the Department of Justice (DOJ) using its authority under Section 3730(c)(2)(A) of the False Claims Act to seek dismissal of meritless qui tam suits, consistent with a January 2018 DOJ Memorandum emphasizing the importance of that authority (the “Granston memo”).

On Monday, DOJ moved to dismiss ten kickback-related FCA complaints against thirty-eight major pharmaceuticals companies and commercial-outsourcing vendors. The number of motions is striking in itself, because DOJ has rarely used that authority in the past, moving to dismiss approximately thirty FCA cases from 1986 to 2011. Monday’s filings reinforce a trend of increased dismissals since the Granston Memo. And they follow on the heels of a high-profile announcement that DOJ is prepared to seek dismissal in Gilead Sciences, Inc. v. United States ex rel. Campie, on which we reported here. The motions demonstrate that the Granston Memo has teeth and suggest a narrower interpretation of the Anti-Kickback Statute that may offer some relief to the pharmaceutical industry, which has long been a primary target of FCA enforcement.

Last Tuesday, the Federal Circuit unanimously held that all biosimilar companies – even companies that participate in the so called “patent dance” – must notify brand-name rivals of their intent to sell a biosimilar drug 180 days before marketing the drug. The case, Amgen Inc., v. Apotex Inc. could have major implications for the timing of when biosimilar companies launch their drugs.

Today, the Federal Trade Commission sued Endo, Impax, Watson, and others for "anticompetitive reverse-payment agreements orchestrated by Endo to prevent lower-cost generic competition to its two most important branded prescription drug products," Opana ER, an opioid drug, and Lidoderm, a lidocaine patch. These two drugs represented approximately 64 percent of Endo's total annual revenues. According to the FTC, this is the first time the agency has brought a case "challenging an agreement not to market an authorized generic – often called a 'no-AG commitment' – as a form of reverse payment."

In a closely watched "reverse payment patent settlements" case, In re: Loestrin 24 Fe Antitrust Litigation, the U.S. Court of Appeals for the First Circuit has joined the Third Circuit and several district courts in holding that the U.S. Supreme Court's decision in FTC v. Actavis, 133 S. Ct. 2223 (2013) applies to non-monetary settlements. The First Circuit reversed the district court's dismissal and held that Actavis applies to non-cash payments as well as cash payments.

On Thursday, Sandoz launched the first U.S. biosimilar after the Federal Circuit's Amgen v. Sandoz decision on Wednesday to deny Amgen's request to extend the injunction that had prevented the launch. The injunction barring launch was set to expire and Amgen moved to extend the stay while the full Federal Circuit considers Amgen's petition for en banc review of its July 21 ruling that would allow the launch. The motion was denied without comment, in a 2-1 split decision. See Order.

On July 21, the Federal Circuit issued a landmark ruling in Amgen, Inc. v. Sandoz, Inc. on the first biosimilar product approved by the U.S. Food and Drug Administration (FDA) to enter the market. The three-judge panel granted a partial victory to Sandoz in its fight with Amgen by holding that Sandoz did not violate the Biologics Price Competition and Innovation Act (BPCIA) by not disclosing its abbreviated biologics license application (aBLA) and the manufacturing information by the statutory deadline. The court also held that a biosimilar applicant is required to give the reference sponsor 180-day notice of the first commercial marketing of the biosimilar only after the biosimilar is approved by the FDA. This will not affect Sandoz, who already received FDA approval to market its Zarxio (Novartis' generic version of Amgen's cancer drug Neupogen®). But pegging the notice provision to FDA approval, rather than submission, essentially extends the exclusivity for brand-name biologics by six months. While describing the BPCIA as "a riddle wrapped in a mystery inside an enigma," the Federal Circuit panel itself was fractured and the decision held something for both sides. The decision in Amgen, Inc. v. Sandoz, Inc., was the Court's attempt to "unravel the riddle, solve the mystery, and comprehend the enigma." 

On June, 26, 2015, the U.S. Court of Appeals for the Third Circuit held that non-cash "payments" made by a patentee drug manufacturer to a prospective generic drug manufacturer in exchange for delayed entry of a generic drug is an actionable "reverse payment" and may be subject to antitrust scrutiny under the Supreme Court's decision in FTC v. Actavis, 133 S. Ct. 2223 (2013). King Drug Company of Florence, Inc. v. Smithkline Beecham Corp., et al., Case No. 14-1243 (Smithkline). 

The FTC announced on May 28, 2014 that, just days before trial, it had settled its long-running antitrust lawsuit against Cephalon, Inc. and its parent company Teva Pharmaceutical Industries, Ltd. In the suit, the agency alleged that Cephalon unlawfully protected its monopoly for the sleep-disorder drug Provigil through a set of so-called "reverse payment patent settlements" with potential generic entrants. According to the FTC, the payments were in the form of commercial contracts that were favorable to the generic companies and executed as part of the settlement agreements.    

On May 7, 2015, the California Supreme Court's ruling in In re Cipro made clear that so called "pay-for-delay" settlement agreements are subject to challenge under California state antitrust law. In re Cipro Cases I & II, No. S198616, 2015 WL 2125291 (Cal. May 7, 2015) (Cipro). The decision, the first for the California Supreme Court, represents the latest in a line of cases in various federal and state courts throughout the country that have sought to understand and apply the framework set forth by the U.S. Supreme Court in F.T.C. v. Actavis, Inc., 133 S. Ct. 2223 (2013) (Actavis). The ruling aligned California's position on these "reverse" settlement agreements between pharmaceutical companies with that of federal antitrust laws as set forth by the Supreme Court Actavis decision in 2013. 

Just when the first biosimilar was poised to hit the lucrative U.S. market, the Federal Circuit put the brakes on ZARXIO®, Sandoz's biosimilar based on Amgen Inc.'s blockbuster Neupogen®. On Tuesday, the Federal Circuit temporarily blocked Sandoz, Inc. from selling ZARXIO®, saying the product can't be sold until the court resolves a dispute over information-sharing requirements of the Affordable Care Act's biosimilars pathway.

On Thursday, March 19, 2015, a district court ruling paved the way for the first biosimilar product approved by the U.S. Food and Drug Administration (FDA) to enter the market. Judge Seeborg in the Northern District of California granted a victory to Sandoz in its fight with Amgen, Inc. over Zarxio, Novartis AG's generic version of Amgen Inc.'s cancer drug Neupogen® (the "reference product") by denying Amgen's request for a preliminary injunction. In the order, the court sided with Sandoz on its interpretation of the portion of the Biologics Price Competition and Innovation Act (BPCIA) governing the disclosure requirements imposed on biosimilar manufacturers prior to sale of a biosimilar product. The court also rejected Amgen's interpretation of the statute that would have required Sandoz to wait 180 days from approval of the biosimilar product before going to market. Amgen (the "reference product sponsor") has said that it will appeal the ruling.

Zarxio, Novartis AG's version of Amgen Inc.'s cancer drug Neupogen®, recently won approval from the U.S. Food and Drug Administration (FDA), marking the first time that the FDA has approved a biosimilar for sale in the United States. 

On January 24, 2014, a New Jersey federal judge dismissed an antitrust class action against GlaxoSmithKline LLC and Teva Pharmaceutical Industries Ltd., reasoning that the recent Supreme Court decision in FTC v. Actavis, which changed the antitrust standards for certain deals between pharmaceutical manufacturers, did not apply because the settlement did not contain a cash payment from the brand-name drug maker to a generic competitor— a so-called "reverse payment." Indeed, the New Jersey Court held that "Actavis applies only to 'reverse payments' of money." 

In what may be the largest false advertising jury verdict ever, last week a Texas federal jury awarded Retractable Technologies Inc. $113.5 million in false advertising damages against longtime rival Becton Dickinson & Co. Contrary to many media reports, the jury did not award any antitrust damages. Instead, the jury awarded $113,508,014 in "Deception Damages" and found in favor of plaintiff on all of its false advertising claims under the Lanham Act. So how did the plaintiffs lose on their main antitrust claims and still win over $100 million? Here's the real story about what advertising claims were found to be false leading to a massive verdict.

What's next for pharmaceutical companies now that the Supreme Court in Federal Trade Commission v. Actavis Inc. has held that "reverse payment" settlement arrangements in the pharmaceutical industry—that is, a payment from the brand patent owner  to the generic infringer—can sometimes violate the antitrust law? The Supreme Court heard the case after a circuit split where the Second and Eleventh Circuits held that reverse payment settlements are lawful as long as they do not exceed the scope of the underlying patent, contrasting with the Third Circuit, which has rejected the "scope of the patent" test in favor of a structured "rule of reason" analysis.  In so doing, the Court set forth a new, four part test for reverse payment settlement agreements that essentially provides a roadmap for antitrust challenges to such agreements. As a result, the way forward for using reverse payments in settling brand versus generic patent litigation is far from clear.

This week Virginia became the first state in the nation to enact a law that limits the substitution of biosimilar drugs. On March 26, 2013, Virginia's Governor signed into law (SB 1285/HB 1422), codified as §54.1-3408.04, entitled Dispensing of interchangeable biosimilars permitted. By its terms, the law forbids pharmacists from dispensing a biosimilar substitution to a brand-name biologic drug if the prescribing physician specifies the prescription must be dispensed as written or if a patient wants the branded drug. Other extra administrative requirements for dispensing a biosimilar require pharmacists to inform patients before dispensing a biosimilar and require them to note the product name and manufacturer on the prescription label and dispensing record. Pharmacists also must give patients cost information on the branded and biosimilar products under the law, which as enacted will automatically expire in July, 2015. 

On June 15th, 2012, the U.S. House Committee on Oversight and Government Reform, led by Chairman Darrel Issa, released a sharply worded staff report entitled "FDA's Contribution to the Drug Shortage Crisis." The report's harsh criticism of FDA, which comes on the heels of an Executive Order, Government Accounting Office report, FDA draft Guidance, and proposed legislation that all address the growing problem of drug shortages, underscores that this topic will continue to be a political hot potato for the foreseeable future.

In a highly-anticipated opinion delivered June 8, 2012, the Texas Supreme Court has for the first time recognized the so-called "learned intermediary" doctrine as a defense to pharmaceutical product liability claims, overturning a $3.8 million dollar plaintiff's verdict in the process. Texas is the second largest state in the nation in terms of population. It was the largest state whose highest court had yet to rule on the learned intermediary doctrine in the prescription drugs context. Only 15 other state courts have yet to embrace this doctrine for prescription drugs. 

Lost in much of the political fanfare surrounding healthcare reform is that, for the first time, a regulatory pathway for the approval of biosimilar medicines was created when President Obama signed healthcare reform legislation into law. While the European Union has had a regulatory pathway for biosimilars since 2006, the United States, which is by far the world's largest potential market for biosimilars, has not--until now.