In re Asacol Antitrust Litig.

233 F.Supp.3d 247

IN RE ASACOL ANTITRUST LITIGATION

Civil Action No. 15–cv–12730–DJC

United States District Court, D. Massachusetts.

Signed February 10, 2017

MEMORANDUM AND ORDER

CASPER, United States District Judge

I. Introduction

Ahold USA, Inc. ("Ahold"), Meijer, Inc. and Meijer Distribution, Inc. (collectively, "Meijer"), Rochester Drug Co–Operative, Inc. ("RDC") and Value Drug Company ("Value Drug") (collectively, the "Direct Purchasers") bring this antitrust class action on behalf of themselves and all others similarly situated against Defendants Warner Chilcott Limited, Warner Chilcott (US) LLC, Warner Chilcott Sales (US) and Warner Chilcott Co., LLC (collectively, "Warner Chilcott"), Allergan plc, Allergan, Inc., Allergan USA, Inc. and Allergan Sales, LLC (collectively, "Allergan"). Plaintiffs allege that these entities engaged in an anticompetitive scheme that included product hopping that constituted monopolization in violation of Section 2 of the Sherman Act (Count I), attempted monopolization in violation of Section 2 of the Sherman Act (Count II) and product hop monopolization in violation of Section 2 of the Sherman Act (Count III). Warner Chilcott (US) LLC, Warner Chilcott Sales (US), LLC, Warner Chilcott Co., LLC, Allergan USA, Inc. and Allergan Sales, LLC (collectively, the "Defendants") move to dismiss (1) the reverse payment allegations in Counts I and II with respect to the patent settlement agreement between Warner Chilcott and Zydus Pharmaceuticals ("Zydus") and (2) the product hopping claims in Counts I, II and III with respect to the introduction of Asacol HD.¹ D. 171. The Court GRANTS in part and DENIES in part the Defendants' motion to dismiss.

II. Standard of Review

The Court will grant a Rule 12(b)(6) motion to dismiss if the complaint fails to plead sufficient facts to "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). To determine whether the complaint has done so, the Court must conduct a two-step, context-specific inquiry. García–Catalán v. United States , 734 F.3d 100, 103 (1st Cir. 2013). It must first distinguish the factual allegations from the conclusory legal allegations, accepting only the factual allegations as true for purposes of the motion to dismiss. Id. (citing Morales–Cruz v. Univ. of P.R. , 676 F.3d 220, 224 (1st Cir. 2012) ). Second, the Court must decide whether the factual allegations "plausibly narrate a claim for relief." Schatz v. Republican State Leadership Comm. , 669 F.3d 50, 55 (1st Cir. 2012) (citing Ocasio–Hernández v. Fortuño–Burset , 640 F.3d 1, 7, 11–13 (1st Cir. 2011) ). "In determining whether a [pleading] crosses the plausibility threshold, ‘the reviewing court [must] draw on its judicial experience and common sense.’ " García–Catalán , 734 F.3d at 103 (second alteration in original) (quoting Ashcroft v. Iqbal , 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ). "[N]o single allegation need [establish] ... some necessary element [of the cause of action], provided that, in sum, the allegations ... make the claim as a whole at least plausible." Garayalde–Rijos v. Municipality of Carolina , 747 F.3d 15, 24 (1st Cir. 2014) (alterations in original) (quoting Ocasio–Hernández , 640 F.3d at 14–15 ).

"In antitrust cases, ‘dismissals prior to giving the plaintiff ample opportunity for discovery should be granted very sparingly.’ " Meijer, Inc. v. Ranbaxy Inc. , No. 15–cv–11828–NMG, 2016 WL 4697331, at *8 (D. Mass. Sept. 7, 2016) (quoting Hosp. Bldg. Co. v. Trustees of Rex Hosp. , 425 U.S. 738, 746, 96 S.Ct. 1848, 48 L.Ed.2d 338 (1976) ).

III. The Hatch–Waxman Regulatory Background

In 1984, Congress enacted the Drug Price Competition and Patent Term Restoration Act of 1984—commonly referred to as the Hatch–Waxman Act—to promote the availability of lower price generic alternatives. In re Loestrin 24 Fe Antitrust Litig. , 814 F.3d 538, 542 (1st Cir. 2016). There are four key features of the Hatch–Waxman regulatory framework. FTC v. Actavis , –––U.S. ––––, 133 S.Ct. 2223, 2227–29, 186 L.Ed.2d 343 (2013) ; Loestrin , 814 F.3d at 542–43. First, a brand–name drug manufacturer must submit a New Drug Application ("NDA") to the Food and Drug Administration ("FDA") to undergo an approval process prior to marketing a new prescription drug. Loestrin , 814 F.3d at 542–43 (citing 21 U.S.C. § 355(b)(1) ; Actavis , 133 S.Ct. at 2228 ). Second, the Act "promotes the availability of cheaper generic alternatives by allowing generic drug manufacturers to bypass certain aspects of the NDA process." Id. at 543. Instead, the generic manufacturer files an Abbreviated New Drug Application ("ANDA") that "must show that the generic drug contains the same active ingredients, route of administration, dosage form, and strength as the brand-name drug, as well as demonstrate that the generic and brand-name drugs are bioequivalent." In re Nexium (Esomeprazole) Antitrust Litig. , 968 F.Supp.2d 367, 378 (D. Mass. 2013) (citing 21 U.S.C. § 355(j)(2)(A)(ii)–(iv) ).

Third, the Act provides that the generic manufacturer must certify that it will not infringe on any of the brand name drug manufacturer's patents, which the generic manufacturer makes via one of four different certifications. Loestrin , 814 F.3d at 543 (citing 21 U.S.C. § 355(b)(1) ; Actavis , 133 S.Ct. at 2228 ). One way that a generic manufacturer can do so is via the "Paragraph IV route" in which the generic manufacturer can certify that any of the listed patents relevant to the brand-name drug are either invalid or will not be infringed upon by the generic manufacturer. Id. (citing Actavis , 133 S.Ct. at 2228 ) Fourth, and finally, the Hatch–Waxman Act encourages first-to-file ANDA generic manufacturers when they utilize the Paragraph IV route by providing that generic manufacturer with a 180-day period of exclusivity during which time no other generic manufacturers can compete with the brand-name drug. Id. (citations omitted).

During this period, "the FDA is disallowed from approving ANDAs from competing generic manufacturers for the same drug." Nexium , 968 F.Supp.2d at 379. Certainly, "the generic manufacturer may still face competition from a generic version of the drug produced by the brand manufacturer," otherwise known as an authorized generic ("AG"), both during and after the exclusivity period. Loestrin , 814 F.3d at 543. That is, because the brand-name manufacturer has already obtained FDA approval to sell the brand-name drug, they are also free to market their brand-name drug under a generic label before, during and after the 180-day exclusivity period. Nexium , 968 F.Supp.2d at 379 (citing Sanofi–Aventis v. Apotex Inc. , 659 F.3d 1171, 1175 (Fed. Cir. 2011) ).

IV. Factual Background

Unless otherwise noted, the following factual summary is based upon the factual allegations in the amended complaint, D. 129, and are accepted as true for the consideration of the Defendants' motion to dismiss.

A. Asacol, Asacol HD and Delzicol

Ulcerative colitis is a chronic inflammatory bowel disorder which can increase the risk of colorectal cancer if gone untreated. D. 129 ¶ 136. The disorder generally manifests in two cyclical phases which requires two modes of treatment: one treatment for currently active ulcerative flares and one for maintenance of remission treatment (treatment to prevent such flares from returning). Id. ¶¶ 137–38. The most common treatment for the disorder is a class of drugs containing the active ingredient mesalamine. Id. ¶ 139. Asacol and later developed Asacol HD and Delzicol are all mesalamine-based drugs that help to treat ulcerative colitis. Id. ¶¶ 142–43, 151–52, 179–80.

Under the Federal Food, Drug and Cosmetic Act ("FDCA"), a manufacturer of a new drug must obtain approval from the FDA to sell the drug in the United States. Id. ¶ 57. The manufacturer does so by submitting an NDA to the FDA, demonstrating that the drug is safe and effective and identifying any patents claimed to cover the new drug. Id. ¶¶ 57–58. When the FDA approves a new drug, it approves the drug for specific indications, meaning it approves the drug for treating particular ailments or symptoms. Id. ¶ 59. Within thirty days of FDA approval, the drug manufacturer may list any patents that cover the drug in the FDA's "Orange Book," which includes all FDA–approved prescription drugs, their approved generic equivalents and any patents that purportedly protect each drug. Id. ¶¶ 60, 117.

In January 1992, the FDA approved Asacol, a delayed-release oral tablet containing 400 mg of mesalamine to treat mild to moderately active ulcerative colitis. Id. ¶¶ 142–43. In August 1997, five years later, the FDA additionally approved Asacol for the maintenance of the remission of ulcerative colitis. Id. ¶ 142. The Orange Book lists both U.S. Patent Nos. 5,541,170 (the " '170 patent") and 5,541,171 (the " '171 patent") as covering Asacol, but neither patent claimed the active ingredient mesalamine. Id. ¶¶ 144–45. By 2004, Asacol became one of the top 100 best-selling pharmaceuticals in the United States that year, with approximately $322 million in sales. Id. ¶ 148.

In May 2008, the FDA approved Asacol HD, an 800 mg, long-acting mesalamine tablet, to treat moderately active ulcerative colitis. Id. ¶¶ 151–52. Asacol HD was approved to treat moderately active ulcerative colitis, but was distinct from Asacol in that it was not additionally approved to treat mildly active ulcerative colitis or the maintenance of remission of ulcerative colitis. Id. ¶¶ 152. The Orange Book lists two patents for Asacol HD, U.S. Patent Nos. 6,893,662 and 8,580,302, which are set to expire on November 15, 2021. Id. ¶ 153.

In February 2013, the FDA approved Delzicol, a delayed-release oral tablet containing 400 mg of mesalamine. Id. ¶¶ 180–81. The Orange Book lists U.S. Patent No. 6,649,180 (the " '180 patent") for Delzicol, which expires on April 13, 2020. Id. ¶ 268.

B. Anticompetitive...