Fed. Trade Comm'n v. Abbvie Inc.

329 F.Supp.3d 98

FEDERAL TRADE COMMISSION

v.ABBVIE INC., et al.

CIVIL ACTION NO. 14-5151

United States District Court, E.D. Pennsylvania.

Filed June 29, 2018

Markus Meier, Patricia M. McDermott, Garth Huston, Hannah Lamb, Heather M. Johnson, James H. Weingarten, Jordy J. Hur, Kara L. Monahan, Lauren K. Peay, Matthew B. Weprin, Peter J. Taylor, Rebecca L. Egeland, Thomas D. Mays, Federal Trade Commission, Daniel S. Bradley, Washington, DC, for Federal Trade Commission.

Adam R. Lawton, Jeffrey I. Weinberger, Randall G. Sommer, Stuart N. Senator, Markus Brazill, Munger Tolles & Olson LLP, Los Angeles, CA, Paul H. Saint-Antoine, John S. Yi, Drinker Biddle & Reath LLP, Philadelphia, PA, Christopher T. Holding, Goodwin Procter LLP, Boston, MA, Elaine J. Goldenberg, Munger Tolles & Olson LLP, Gregory E. Neppl, Liane M. Peterson, Melinda F. Levitt, Foley & Lardner LLP, Washington, DC, for Abbvie Inc., et al.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Harvey Bartle III, District JudgeThe Federal Trade Commission ("FTC") has sued defendants AbbVie Inc., Abbott Laboratories, and Unimed Pharmaceuticals LLC (collectively, "AbbVie"), as well as Besins Healthcare, Inc. ("Besins"), for violation of section 5(a) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 45(a), which prohibits "[u]nfair methods of competition in or affecting commerce."

AbbVie and Besins together own U.S. Patent No. 6,503,894 ("'894 patent") for a brand-name testosterone replacement drug, AndroGel 1%. In Count I of the complaint, the FTC alleges that AbbVie and Besins maintained an illegal monopoly through the filing of sham patent infringement lawsuits against two potential competitors, Teva Pharmaceuticals USA, Inc. ("Teva") and Perrigo Company ("Perrigo"), to delay entry into the market of their generic versions of AndroGel.¹

To prevail in this antitrust litigation, the FTC must prove that defendants possessed monopoly power in the relevant market and that defendants willfully acquired or maintained that power. See Mylan Pharm. Inc. v. Warner Chilcott Pub. Ltd., 838 F.3d 421, 433 (3d Cir. 2016). Here, the FTC asserts that defendants maintained their AndroGel monopoly through the filing of sham litigation against Teva and Perrigo. To prove its case, the FTC must establish: (1) the lawsuits filed by defendants against Teva and Perrigo were objectively baseless; (2) defendants subjectively intended to file such lawsuits; and (3) that defendants possessed monopoly power in the relevant market. See Prof'l Real Estate Inv'rs, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60-61, 113 S.Ct. 1920, 123 L.Ed.2d 611 (1993) (" PRE"); In re Wellbutrin XL Antitrust Litig., 868 F.3d 132, 148-49 (3d Cir. 2017).

On September 15, 2017, this court ruled that defendants' infringement lawsuits against Teva and Perrigo were objectively baseless and entered summary judgment in favor of the FTC on this issue. See FTC v. AbbVie Inc., No. 14-5151, 2017 WL 4098688, at *11 (E.D. Pa. Sept. 15, 2017) (Doc. # 300). Thereafter the court held an approximately three-week nonjury trial on the issues of subjective intent and monopoly power. The court now makes the following findings of fact and conclusions of law.

I

To understand the claim presented in this action, we first set forth the regulatory scheme that governs the testing and approval of new drugs in the United States. That framework is governed by the Federal Food, Drug, and Cosmetic Act ("FDCA"), 21 U.S.C. §§ 301 et seq., as amended by the Drug Price Competition and Patent Term Restoration Act of 1984, which is commonly known as the Hatch-Waxman Act, 21 U.S.C. § 355 and 35 U.S.C. § 271. See Pub. L. No. 98-417, 98 Stat. 1585.

A drug manufacturer seeking to market a new drug must obtain approval from the U.S. Food and Drug Administration ("FDA"). See 21 U.S.C. § 355(a). There are three pathways established by the FDCA and Hatch-Waxman: (1) a section 505(b)(1) New Drug Application ("NDA"); (2) a section 505(b)(2) NDA; and (3) a section 505(j) Abbreviated New Drug Application ("ANDA").

An NDA is a full-length application containing information on the drug's safety and efficacy, an explanation of the drug's ingredients, a description of the methods used in the manufacture and packaging of the drug, samples of the proposed labeling, and samples of the drug itself. See id. § 355(b)(1). The NDA must also contain a list of any patents covering the drug. Id.

Once the FDA has approved a new brand-name drug, an applicant with a generic version of that drug can obtain approval through the use of abbreviated procedures. See 21 U.S.C. § 355(j). Most commonly, the applicant will file a section 505(j) ANDA stating, among other things, that the generic has the same active ingredients and is biologically and pharmacologically equivalent to the brand-name drug. Id. § 355(j)(2)(A). The applicant may then rely on the safety and efficacy data contained in the NDA for the brand-name drug. Id.

In the alternative, the applicant with a generic drug may file a section 505(b)(2) NDA, which is a hybrid between an ANDA and a full NDA. A section 505(b)(2) NDA is used for generics that have slight modifications from the brand-name drug. See 21 C.F.R. § 314.54. The applicant must submit additional data to the FDA demonstrating that any differences between the brand-name drug and the generic will not affect safety and efficacy but can otherwise avoid the other studies necessary for a full NDA application. Id.; see also Ethypharm S.A. France v. Abbott Labs., 707 F.3d 223, 227 (3d Cir. 2013). Because the Hatch-Waxman Act allows the applicant to "piggy-back" on the efforts for the approval of the brand-name drug, its provisions "speed the introduction of low-cost generic drugs to market" and thereby promote drug competition. FTC v. Actavis, Inc., 570 U.S. 136, 142, 133 S.Ct. 2223, 186 L.Ed.2d 343 (2013) (quoting Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, 566 U.S. 399, 405, 132 S.Ct. 1670, 182 L.Ed.2d 678 (2012) (alteration omitted) ).

Once the FDA approves a generic drug, the applicant may request from the FDA a therapeutic equivalence ("TE") rating. A TE rating is a code that reflects the FDA's determination regarding whether a generic product is pharmaceutically and biologically equivalent to the reference-listed brand-name drug. Products that are determined to be therapeutically equivalent are assigned an "A" or "AB" rating. Generic products for which therapeutic equivalence cannot be determined are assigned a "B" or "BX" rating.² An "A" or "AB" rating is extremely desirable. Every state in the United States has generic substitution laws. See Mylan Pharm. Inc., 838 F.3d at 428. These laws "either permit or require pharmacists to dispense a therapeutically equivalent, lower-cost generic drug in place of a brand drug absent express direction from the prescribing physician that the prescription must be dispensed as written." Id. (internal quotation marks and citations omitted).

The Hatch-Waxman Act also provides specialized procedures for parties to resolve intellectual property disputes. In submitting an ANDA or section 505(b)(2) NDA, an applicant must certify that any patent currently in force for the referenced brand-name drug "is invalid or will not be infringed by the manufacture, use, or sale" of the proposed generic. 21 U.S.C. § 355(j)(2)(A)(vii). This certification is commonly referred to as a paragraph IV notice. Actavis, 570 U.S. at 143, 133 S.Ct. 2223.

The paragraph IV notice "automatically counts as patent infringement" and thus often leads to an infringement suit by the patentee. Id. (citing 35 U.S.C. § 271(e)(2)(A) ). Upon receiving the paragraph IV notice, the patentee has 45 days to determine whether to file suit for infringement. 21 U.S.C. § 355(j)(5)(B)(iii). The notice often includes an offer of confidential access whereby outside counsel for the patentee may review the application submitted to the FDA by the generic applicant to facilitate a determination regarding infringement litigation. If the patentee files an infringement suit against a generic entity within this 45-day period, the FDA is required to withhold approval of the generic drug for 30 months from receipt of the paragraph IV notice or until the infringement action is resolved in the district court, whichever occurs first. Id.

II

AndroGel is a brand-name transdermal testosterone gel product approved by the FDA for the treatment of hypogonadism, a clinical syndrome that results from failure of a man's body to produce adequate amounts of testosterone. It is estimated that this condition affects 2-6% of the adult male population in the United States. Hypogonadism is a lifelong condition which causes decreases in energy and libido, erectile dysfunction, and changes in body composition including decreased bone density. Patients with hypogonadism are typically treated with testosterone replacement therapy ("TRT") whereby exogenous testosterone is administered.

The first TRTs approved by the FDA were injectables in which testosterone is dissolved in a liquid and then injected into a muscle of the body. Injectable testosterones were introduced in the 1950s and have been available in generic form for decades. They are administered every one to three weeks. While many patients receive injections at their doctors' office, some patients opt to self-administer injections at home or visit clinics specializing in TRT commonly known as "Low-T" centers. Because they are available in generic form, injectables generally require a five to ten dollar patient copay on most insurance plans and thus are the least expensive treatment method for hypogonadism.

Testosterone injections typically require two needles: a withdrawal needle and an injection needle. The withdrawal needle is typically a 20-gauge wide bore and 1-inch long needle required to withdraw the testosterone from the glass vial. After withdrawal, the patient must switch to a 21- or 22-gauge narrow bore and 1.5-inch long needle to...