Friday, September 11, 2009

Claims that Company Schemed to Monopolize Market for Drug Proceed

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Pfizer Inc. and its subsidiary Warner-Lambert Company LLC have failed to convince the federal district court in Newark, New Jersey, to dismiss claims that the drug maker engaged in an "overall scheme" to monopolize the market for gabapentin anhydrous products by forestalling, if not completely preventing, generic competition for Warner-Lambert's anti-epilepsy drug Neurontin.

In two separate decisions, the court denied motions to dismiss claims filed by direct purchasers, including wholesale drug distributor Louisiana Wholesale Drug Company, and antitrust counterclaims filed in a patent infringement action against generic competitor Purepac Pharmaceutical Company.

Overall Scheme

Both sets of plaintiffs sufficiently alleged that Warner-Lambert engaged in monopolization and attempted monopolization in violation of Section 2 of the Sherman Act, according to the court. They alleged an "overall scheme to forestall, preclude, and delay generic competition" for Neurontin.

As part of the scheme, Warner-Lambert allegedly manipulated the prosecution of a patent to delay its issuance, improperly listed patents in the Food and Drug Administration (FDA) Orange Book to obtain additional stays of approval for generic applicants, filed objectively baseless patent infringement actions, and engaged in the fraudulent promotion of the drug for off-label uses.

Antitrust violations were not asserted on the basis of any of those activities independently. Rather, an overall pattern of alleged abuse of the regulatory process was targeted.

Antitrust Injury

Both the direct purchasers and the generic competitor sufficiently alleged antitrust injury, a threshold requirement for antitrust standing, the court held. Moreover, the alleged injuries flowed from the drug company's purported violations of Sec. 2 of the Sherman Act.

Warner-Lambert contended that there was no causal link between some of the challenged conduct—such as the allegedly sham patent litigation and fraudulent promotion of the drug for off-label uses—and the direct purchasers' alleged injury.

It suggested that allegations concerning the patent litigation could not support antitrust claims because generic competition was impossible regardless of the 30-month stay imposed by the patent actions and that the inability of generic manufacturers to obtain even tentative FDA approval until after the stays associated with the patent suits expired was an independent barrier to generic entry.

Further, Warner-Lambert contended that the direct purchasers' alleged injury was not connected to any off-label marketing of Neurontin. However, at the motion to dismiss stage, the direct purchasers sufficiently alleged that they suffered an antitrust injury in the form of overcharges on their purchases of gabapentin anhydrous and that such injuries flowed from the allegedly unlawful conduct, according to the court.

The generic competitor's standing to assert counterclaims could be supported by Warner-Lambert's alleged manipulation of the regulatory advantages afforded by its patents for Neurontin to prevent generic entry into the Neurontin marketplace, the court decided. Moreover, it had already been determined that the generic drug company had sufficiently alleged a causal connection between the challenged conduct and the injury imposed.

Noerr-Pennington Doctrine

In addition, the antitrust claims were not dismissed on the ground that Warner-Lambert's conduct in prosecuting a patent and its efforts to enforce patents against generic manufacturers through infringement actions were immune from antitrust liability under the Noerr-Pennington doctrine, which shields government petitioning activity from antitrust attack.

The generic competitor alleged that the branded drug company manipulated the prosecution of a patent, not to promptly obtain government action in its favor but rather to delay its issuance, forestall generic competition for Neurontin, and improperly preserve its patent monopoly.

The branded drug company allegedly withheld prior art, abandoned a patent application that had already been approved approximately one month before the patent was scheduled to issue, and filed unnecessary continuation applications. Abuse of the Patent Office's administrative and regulatory process itself was not entitled to immunity, the court explained.

The direct purchasers also adequately alleged facts which, if proven, would show that Warner-Lambert engaged in unlawful manipulation of the patent approval process for one of the patents.

Although Warner-Lambert's aggressive practice of filing patent infringement cases against generic drug companies was presumptively immune from antitrust scrutiny under the Noerr-Pennington doctrine, a determination could not be made on a motion to dismiss. Judgment on the issue could be resolved later in the proceedings, the court explained.

The two decisions are In re Neurontin Antitrust Litigation, 2009-2 Trade Cases ¶76,723, and In re Gabapentin Patent Litigation, DC N.J., 2009-2 Trade Cases ¶76,724.

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