In re Bystolic Antitrust Litigation

583 F.Supp.3d 455

IN RE BYSTOLIC ANTITRUST LITIGATION

This Document Relates to: All Direct Purchaser Actions All End-Payor Actions

20-cv-5735 (LJL)

CVS Action (No. 20-cv-10087)

Walgreen Action (No. 20-cv-9793)

United States District Court, S.D. New York.

Signed February 2, 2022

OPINION AND ORDER

LEWIS J. LIMAN, United States District Judge:

This civil antitrust action alleges an illegal scheme to delay competition from generic versions of Bystolic (nebivolol hydrochloride), a prescription medication approved by the U.S. Food and Drug Administration to treat high blood pressure.

Plaintiffs are: a putative class of direct purchasers of Bystolic and generic versions of Bystolic ("Direct Purchaser Plaintiffs");¹ a putative class of indirect purchasers, including consumers, health insurers, and welfare plans, of Bystolic and generic versions of Bystolic ("End-Payor Plaintiffs");² and several retail chains that bring individual lawsuits as assignees of direct purchasers ("Retailer Plaintiffs")³ (collectively, "Plaintiffs"). Defendants are the manufacturers and marketers of Bystolic (collectively referred to as "Forest")⁴ and their generic-drug competitors ("Generic Defendants")⁵ (collectively, "Defendants"). Generic Defendants include Hetero, Torrent, Alkem, Indchemie, Glenmark, Amerigen, and Watson.

Plaintiffs allege that Forest agreed to pay Generic Defendants to drop their challenges to a Bystolic patent and to delay launching less expensive, competing generic versions of Bystolic for years. Direct Purchaser Plaintiffs bring a class action complaint ("Direct Purchaser Plaintiffs’ Complaint" or "DPP Complaint") and Retailer Plaintiffs bring complaints ("Retailer Plaintiffs’ Complaints") against Defendants, seeking damages under federal antitrust law. Second Consolidated and Amended Class Action Complaint, Dkt. No. 250 ("DPP Compl."); Second Amended Complaint, CVS Action , 20-cv-10087 (S.D.N.Y.), ECF No. 35; Second Amended Complaint, Walgreen Action , 20-cv-9793 (S.D.N.Y.), ECF No. 34. End-Payor Plaintiffs bring a class action complaint ("End-Payor Plaintiffs’ Complaint" or "EPP Complaint") against Defendants under state antitrust and consumer-protection laws and for injunctive relief under federal antitrust law. End-Payor Plaintiffs’ Consolidated Amended Class Action Complaint, Dkt. No. 251 ("EPP Compl.").

Pending before the Court are four related motions to dismiss. All Defendants move to dismiss Direct Purchaser and Retailer Plaintiffs’ Complaints for failure to state a claim, Dkt. No. 267, and move to dismiss End-Payor Plaintiffs’ Complaint for failure to state a claim, Dkt. No. 271, pursuant to Federal Rule of Civil Procedure 12(b)(6). Defendant Teva Israel also moves pursuant to Federal Rule of Civil Procedure 12(b)(2) to dismiss the claims against it for lack of personal jurisdiction. Dkt. No. 260. And a group of twenty-eight Defendants not at home in New York ("Nonresident Defendants")⁶ move pursuant to Federal Rule of Civil Procedure 12(b)(2) to dismiss for lack of personal jurisdiction the End-Payor Complaint's ninety-nine non-New York, state-law claims. Dkt. No. 265.

BACKGROUND

On each of the four motions to dismiss, the Court accepts as true the allegations of the relevant complaints, and the documents incorporated by reference.⁷

I. Overview of the Alleged Scheme

From October 2012 through November 2013, Forest allegedly entered into a series of reverse-payment deals (also known as "pay for delay" deals) with Generic Defendants under which each Generic Defendant (1) agreed not to compete with Forest or enter the market with its generic version of Bystolic prior to September 17, 2021 (three months before patent expiration), unless another Generic Defendant entered that market earlier; and in exchange (2) received "side-deals" and cash payments from Forest. DPP Compl. ¶ 3.

Earlier, Forest had sued each Generic Defendant for patent infringement. Id. ¶ 4. Although Generic Defendants would have allegedly succeeded in the patent litigation, as Forest's claim was weak, and they would have been ready to launch their generic versions of Bystolic well before September 17, 2021, Generic Defendants agreed to side deals with Forest to end the patent fight. Id. ¶¶ 5–7. Each Generic Defendant agreed to stay off the market until September 17, 2021 in exchange for a share of Forest's monopoly profits in the form of reverse payments. Id. ¶¶ 6–7. In other words, but for these payments, Generic Defendants would have launched their generic products earlier and Plaintiffs would have paid substantially less for nebivolol hydrochloride, i.e., Bystolic. Id. ¶ 26. As a result, the entry of less expensive, generic versions of Bystolic was delayed, the price of nebivolol hydrochloride was fixed at the price of Bystolic, and 100% of the United States market for nebivolol hydrochloride was allocated to Forest until September 17, 2021. Id. ¶ 28.

These allegations are discussed in greater detail next.

II. Relevant Regulatory Framework for Generic Drugs

Under the Federal Food, Drug, and Cosmetic Act ("FDCA"), manufacturers of a new drug must obtain approval from the U.S. Food and Drug Administration ("FDA") by filing a New Drug Application ("NDA"). 21 U.S.C. §§ 301 – 392 ; DPP Compl. ¶ 93. Among the information contained in an NDA is information on applicable patents. Id. § 355(a), (b); DPP Compl. ¶ 93. When the FDA approves a drug manufacturer's NDA, the manufacturer may list certain patents in the "Approved Drug Products with Therapeutic Equivalence Evaluations" (known as the "Orange Book"). DPP Compl. ¶ 94. The listed patents are those that could reasonably be asserted against a generic manufacturer of the branded drug before the patents expire. Id.

Manufacturers of generic versions of a branded drug may receive FDA approval through a different pathway. The Hatch-Waxman Amendments, enacted in 1984, simplified the regulatory hurdles for prospective generic manufacturers by eliminating the need to file lengthy and costly NDAs. See Drug Price Competition and Patent Term Restoration Act, Pub. L. No. 98-417, 98 Stat. 1585 (1984) ; DPP Compl. ¶ 96. Instead, a generic manufacturer may file an Abbreviated New Drug Application ("ANDA"). DPP Compl. ¶ 96. While an ANDA must show that the generic drug is therapeutically equivalent to the brand drug, it can rely on the scientific findings of safety and effectiveness included in the brand manufacturer's original NDA. Id. Generic drugs that are therapeutically equivalent to and are of the same dosage strength and form as their approved branded counterpart are assigned an "AB" rating by the FDA. Id.

For the FDA to approve an ANDA, a generic manufacturer must certify that the generic drug will not infringe any patents listed in the Orange Book. Id. ¶ 100. One of the four possible certifications is "that the patent for the brand drug is invalid or will not be infringed by the generic manufacturer's proposed product" (a "Paragraph IV certification"). Id. ; 21 U.S.C. § 355(j)(2)(A)(vii). If a generic manufacturer files a Paragraph IV certification, it must notify the brand manufacturer, and the brand manufacturer can delay FDA approval of the ANDA by suing the generic manufacturer for patent infringement. DPP Compl. ¶ 101. If the brand manufacturer sues for patent infringement within forty-five days of receiving notice of the Paragraph IV certification, the FDA will not grant final approval of the ANDA until the earlier of (a) thirty months after the receipt of the Paragraph IV notice; or (b) a court decision that the patent is invalid or not infringed by the generic manufacturer's ANDA. 21 U.S.C. § 355(j)(5)(B)(iii) ; DPP Compl. ¶ 101. Thus, simply by filing suit, the brand manufacturer can forestall entry of the competitor drug for a period of time not to exceed thirty months.

To incentivize the manufacturing of generics, the Hatch-Waxman Amendments grants a 180-day exclusivity period to the first generic manufacturer that files a substantially complete ANDA with a Paragraph IV certification. DPP Compl. ¶ 103; 21 U.S.C. § 355(j)(5)(B)(iv), (D). During this exclusivity period, the FDA may not grant final approval to any other generic manufacturer's ANDA for the same brand drug. Id. Where multiple generic companies are the first to file substantially complete ANDAs with Paragraph IV certifications, they may be eligible to share the 180-day exclusivity period. Id. ¶ 106; 21 U.S.C. § 355(j)(5)(B)(iv).

III. Implications of Competition from Generics and a Brand Manufacturer's Incentives to Delay Generic Entry

On average, generic versions of brand drugs are 50% to 80% less expensive than brand drugs when there are multiple generic competitors on the market for a given brand drug. DPP Compl. ¶ 107. Every state has adopted laws that either require or permit pharmacies to automatically substitute less-expensive AB-rated generic equivalents for brand prescriptions (unless the prescribing physician has affirmatively requested the brand). Id. ¶ 108. Once a generic equivalent enters the market, the generic quickly captures sales of the brand drug, often capturing 80% or more of the brand's sales within the first six months. Id. Once multiple generic competitors enter, the competitive process accelerates, and multiple generic sellers typically compete vigorously with one another for sales by driving prices down. Id. ¶ 109.

Generic competition enables purchasers of the drug to purchase substantially cheaper generics instead of the more expensive brand drug and to benefit from when the brand company lowers prices to compete with generics. Id. ¶ 110. Accordingly, when generic entry is delayed, purchasers are harmed by having to pay more than they otherwise would have to pay. Id. ¶ 111.

Competition from generic drugs is viewed by brand-drug companies as a grave financial threat. Id. ¶ 109. When exclusivity is lost and generic entry occurs, the brand manufacturer can expect a significant drop in profits. Id. ¶ 112. Brand...