In re Lamictal Indirect Purchaser & Antitrust Consumer Litig.

172 F.Supp.3d 724

In re: Lamictal Indirect Purchaser and Antitrust Consumer Litigation.

This Document Relates To: All Indirect Purchaser Actions.

Civ. No. 12-5120 (WHW)(CLW)

United States District Court, D. New Jersey.

Signed March 22, 2016

OPINION

Walls, Senior District Judge

This putative class action concerns the legality of a settlement between two pharmaceutical companies. Plaintiffs are indirect purchasers of the drug lamotrigine, known by its brand name Lamictal, which was the subject of patent litigation between the Defendant pharmaceutical companies. Plaintiffs allege that the terms of the litigation settlement and the resulting sales of branded and generic versions of Lamictal violated federal and state antitrust and consumer protection laws. Defendants move to dismiss on various grounds, including that Plaintiffs' state law claims are time-barred, Plaintiffs fail to adequately plead several causes of action, and Plaintiffs' federal claims fail to allege a justiciable case or controversy. Decided without oral argument under Federal Rule of Civil Procedure 78(b), Defendants' joint motion is granted in part and denied in part.

FACTUAL AND PROCEDURAL BACKGROUND

This case arises out of the same set of circumstances as another case pending before this Court, In re: Lamictal Direct Purchaser Antitrust Litig. , Civ. No. 12–995 (D.N.J.2012) (the “Direct Purchaser Class Action”), referenced by Plaintiffs in the amended complaint. Amended Complaint, ECF No. 38 at 1. The Court takes the following allegations from the amended complaint as true.

Defendant GlaxoSmithKline (“GSK”), a pharmaceutical company, manufactures and sells Lamictal Tablets and Lamictal Chewables, which treat epilepsy and bipolar disorder. ECF No. 38 ¶¶ 1-2. From March 2007 to March 2008, GSK's domestic sales of Lamictal Tablets exceeded $2 billion. Id. ¶ 2. During the same period, the lower-dosage Lamictal Chewables had domestic sales of about $50 million. Id. GSK held a patent, U.S. Patent No. 4,602,017 (the “017 patent”), for the active ingredient in Lamictal products, lamotrigine, that gave GSK the exclusive right to sell Lamictal Tablets and Chewables until the patent expired on July 22, 2008. Id. ¶¶ 3, 59.

Defendant Teva Pharmaceutical Industries Ltd. and Teva Pharmaceuticals USA, Inc. (collectively, “Teva”) is a pharmaceutical company that wanted to market a generic version of Lamictal and filed applications with U.S. Food and Drug Administration (“FDA”) seeking to do so. Id. ¶ 3. GSK sued Teva in 2002 for patent infringement under Hatch-Waxman Act procedures, Pub. L. No. 98–417, 98 Stat. 1585 (1984).Id. ¶¶ 4, 46-49, 65.

I. The Hatch-Waxman Act Procedures

The FDA must approve any new drug a manufacturer seeks to introduce onto the market. 21 U.S.C. § 355(a). To apply for approval, the manufacturer files a New Drug Application (“NDA”) containing detailed information about the drug, its chemical composition, reports about its safety and effectiveness as shown through extensive clinical trials, and descriptions of its production and packaging processes. Id. § 355(b)(1). The application must also identify any patent associated with the drug and its expiration date. Id. If the FDA approves the drug, it publishes the drug and patent information in a book called “Approved Drug Products with Therapeutic Equivalence and Evaluations,” commonly referred to as the “Orange Book.” Id. § 355(j)(7)(A).

Generic drugs are therapeutically and pharmaceutically equivalent to corresponding brand name drugs and sold at lower prices. Congress passed the Hatch-Waxman Act in 1984 to encourage the entry of generics onto the market. A generic manufacturer may file an Abbreviated New Drug Application (“ANDA”), which does not need to contain the same level of detail as is required for an NDA. 21 U.S.C. § 355(j). The ANDA must make one of four certifications:

(1) that no patent information for the brand name drug has been filed;

(2) that the patent for the brand name drug has expired;

(3) that the patent will expire on a specifically identified date;

(4) that the “patent is invalid or will not be infringed by the manufacture, use, or sale of the new drug for which the application is submitted. ”

21 U.S.C. § 355(j)(2)(A)(vii) (emphasis added).

Filing a certification under paragraph IV frequently leads to litigation because it constitutes a technical act of patent infringement. 35 U.S.C. § 271(e)(2)(A). If the applicant makes a certification under paragraph IV, the patent holder must be notified. 21 U.S.C. § 355(j)(2)(B). The patent holder then has 45 days to file an infringement lawsuit against the ANDA applicant. Id. § 355(j)(5)(B)(iii). When a suit is filed, the FDA stays the ANDA approval process until either (1) 30 months have run, or (2) the court decides that the patent is invalid or not infringed, whichever is earlier. Id.; ECF No. 38 ¶ 49.

Generic manufacturers are incentivized to be the first to file a paragraph IV certification because the first ANDA applicant to do so is granted a 180-day “exclusivity period.” During that time, the FDA will not grant final approval to any other ANDA for the same generic drug. 21 U.S.C. § 355(j)(5)(B)(iv) ; ECF No. 38 ¶ 50. For the first filer, the potential reward is half-a-year's period when it is the only generic drug company on the market competing with the brand name drug company. This 180-day exclusivity period is triggered by either the generic manufacturer's entry into the market with the drug or a court's final decision that the patent subject to the paragraph IV certification is invalid or not infringed.

21 U.S.C. § 355(j)(5)(B)(iv)(I) ; 21 C.F.R. § 314,107(c)(1); ECF No. 38 ¶ 50.

Another concept relevant to this case is pediatric exclusivity. Only a small fraction of drugs are tested on pediatric patients. To address this problem, the FDA will request that a drug company seeking to market drugs for pediatric use conduct pediatric trials. 21 U.S.C. § 355a.¹ If the company successfully completes the trials and the FDA accepts the results, then the FDA will award the company six months of additional market exclusivity (the “Pediatric Exclusivity”). In practical terms, this means that after a drug company's patent expires, the FDA will delay approval of generic ANDAs for another six months, essentially protecting the market from the entry of generics. Id. § 355a(c)(2).

II. GSK's Patent Litigation with Teva

Teva filed ANDAs with the FDA in 2002 seeking approval to manufacture and sell generic versions of lamotrigine tablets and chewables. ECF No. 38 ¶ 61. Teva was the first to file “substantially complete” ANDAs containing paragraph IV certifications that the '017 patent was invalid, unenforceable, and/or not infringed by Teva's proposed generic products, id. ¶ 62, giving Teva the potential right to a 180-day exclusivity period for sales of generic lamotrigine tablets and chewables. Id. ¶ 63. Teva gave notice to GSK of the paragraph IV certifications, and within 45 days GSK filed suit in the U.S. District Court for the District of New Jersey alleging that Teva's two ANDAs infringed the '017 patent. Id. ¶ 65. The FDA then automatically stayed the processing of Teva's ANDAs for 30 months. Id.

After discovery, the patent litigation culminated in a bench trial in January 2005. Id. ¶ 66. On the final day of trial, the Hon. John W. Bissell ruled from the bench that claim I of the '017 patent was invalid and indicated that a ruling on the validity of the three remaining claims would be issued. Id. ¶¶ 4, 67; In re Lamictal Direct Purchaser Litig. , 2012 WL 6725580, at *2 (D.N.J. Dec. 6, 2012) (Walls, J.). Claim I involved the chemical compound 3,5-diamino-6-(2,3-diocholorphenyl)-l, 2,4-triazine. This is lamotrigine, the active ingredient in Lamictal products. Id.

III. The Settlement

Following Judge Bissell's bench ruling, GSK and Teva quickly reached a settlement, formalized in a Settlement Agreement between GSK and Teva USA and a License and Supply Agreement between GSK and Teva Ltd. (collectively, “the settlement”) signed on February 16, 2005. ECF No. 38 ¶ 75. The key terms were:

1) Teva was permitted to begin selling a limited number of generic lamotrigine chewables by June 1, 2005. Id. ¶ 76. This was approximately 37 months before the expiration of the '017 patent, and also before the FDA approved Teva's ANDA for lamotrigine tablets. Id. ¶ 64, 76, 77. GSK supplied the chewables to Teva, and Teva began selling them on May 25, 2005. Id.

2) Teva was permitted to begin selling generic lamotrigine tablets on July 21, 2008, the expiration date of the '017 patent. Id. ¶ 77.

3) GSK granted Teva an exclusive waiver of any Pediatric Exclusivity that might be granted to GSK, allowing Teva to begin selling generic lamotrigine tablets on July 21, 2008 even if GSK eventually received the additional six-month period of exclusivity. Id.4) GSK further agreed not to launch its own authorized generic versions of Lamictal products until January 2009 by giving Teva an exclusive license until that time. Id. ¶ 81.

On April 4, 2005, the parties filed a Stipulation and Order of Dismissal seeking the dismissal of all claims and counterclaims in the patent infringement lawsuit. Id. ¶ 87. The court also entered an order withdrawing the bench ruling that invalidated claim I of the '017 patent. Id.

In 2007, GSK received a six-month Pediatric Exclusivity. This did not extend the expiration date of the '017 patent, but it did prevent any ANDA applicant from receiving final regulatory approval for a generic lamotrigine tablet, without invalidating or demonstrating that it did not infringe the '017 patent, until January 22, 2009. Id. ¶ 60.

The FDA approved Teva's ANDAs for lamotrigine chewables and tablets on June 21 and August 30, 2006, respectively. Id. ¶ 64. This approval date was significant because Teva complied with the terms of the settlement: (1) Teva had already been selling GSK-supplied lamotrigine chewables since May of 2005, id. ¶¶ 76. 78; and (2) Teva waited nearly...