Antitrust

• Author: Kenneth L. Dorsney
• Pages: 377-403

377

chapter 16

Antitrust

I. Overview of Antitrust Issues

The structure of the pharmaceutical industry almost invariably leads to

antitrust issues. Patent protection is strong. The patentee, prior to generic

entry, arguably has a monopoly at least as to that pharmaceutical product,

but possibly not as to a therapeutic category. The patent-based monopoly

can lead to large profits—sometimes more than a billion per year for

blockbuster drugs. When a generic product is introduced to the market,

the substitution for the patentee product is rapid, often above 90 percent

in the six months, and virtually guaranteed, given healthcare and insur-

ance policies.

Antitrust issues in Abbreviated New Drug Application (ANDA) cases

arise in the same two main ways as they did when the first edition of

this treatise was published: (1) settlements between the patentee and the

generic that are accused of being anticompetitive; and (2) accusations that

the patentee engaged in some form of anticompetitive behavior to keep

the generic out of the market, such as sham patent litigation or patent

litigation based on a fraudulently acquired patent. However, the Supreme

Court’s 2014 decision in FTC v. Actavis1 drastically altered the landscape,

because it turned a minority rule—allowing antitrust suits when parties

settle ANDA patent litigation—into the law of the land. Before Actavis,

only the Third U.S. Circuit Court of Appeals had allowed antitrust suits

following a settlement of patent litigation under the existing ANDA

regime, and the Sixth Circuit had allowed for the possibility of antitrust

claims under the old ANDA regime, in which a settlement could preclude

Asim M. Bhansali, Benedict Y. Hur, and Sharif E. Jacob, Keker & Van Nest LLP.

1. 570 U.S. ___, 133 S. Ct. 2223 (2014).

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generic entry altogether.2 Every other circuit court had held that no anti-

trust claim could arise from brand-generic patent litigation settlements.3

This chapter contains an overview of the legal theories in ANDA

antitrust cases (section1), and continues with a discussion of the Federal

Trade Commission (FTC) cases and private antitrust cases brought on

behalf of direct and indirect purchasers (section2); and concludes with a

discussion of remedies in these cases (section3).

II. Legal Theories in ANDA Antitrust Cases

Although the two primary theories underlying ANDA antitrust cases—

“pay for delay” conspiracy and unilateral exclusionary conduct—remain

the same, Actavis engendered a likely shift in focus from one kind of case

to the other. Before Actavis, the near absolute bar on claims arising from

an allegedly collusive settlement of brand-generic patent litigation meant

that most plaintiffs would focus their efforts on establishing a violation

based on the brand company’s unilateral conduct. But unilateral conduct

claims set a high bar, because plaintiffs either had to show that that brand

company brought sham litigation, or had to rely on novel product-hopping

theories. After Actavis, the availability of antitrust claims arising out of

brand-generic settlements is likely to shift plaintiffs’ focus away from the

more burdensome unilateral conduct claims to conspiracy claims arising

out of settlements.

From a statutory perspective, ANDA antitrust claims typically arise

from one of three sources. Unilateral conduct claims will rely on monopoli-

zation under federal law—section 2 of the Sherman Antitrust Act.4 Pay-for-

delay cases may assert both monopolization offenses under section 2 of the

Sherman Act—against the brand—and conspiracy offenses under section

1 of the Sherman Act5—against both the brand and the generic. (A pay-

for-delay agreement, also known as a reverse-payment settlement, is an

agreement between the patentee and the generic to settle patent litigation

in which the brand manufacturer, which brought the litigation, makes a

payment to the generic manufacturer in exchange for its agreement not to

bring its product to market for a period of time.) Finally, ANDA antitrust

2. In re K-Dur Antitrust Litig., 686 F.3d 197, 218 (Fed. Cir. 2012); In re Cardizem CD

Antitrust Litig., 332 F.3d 896, 900–01 (6th Cir. 2003).

3. In re Ciprofloxacin Hydrochloride Antitrust Litig., 544 F.3d 1323, 1332–37 (Fed. Cir.

2008); In re Tamoxifen Citrate Antitrust Litig., 466 F.3d 187, 212–13 (2d Cir. 2006); Valley

Drug Co. v. Geneva Pharms., 344 F.3d 1294, 1304 (11th Cir. 2003).

4. 15 U.S.C. § 2.

5. 15 U.S.C. § 1.

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