In re Tamoxifen Citrate Antitrust Lit.

Page 370

429 F.3d 370

In Re: TAMOXIFEN CITRATE ANTITRUST LITIGATION Joblove, Allied Servs., Div Welfare Fund, Bennish, Koonan, Great Lakes Health Plan Inc., Lacava, Donega, Smith, Lovinger, Woollacott, Whiteside, Platt, Underwood, Teamsters Local 237, Lynch, Callaway, Maloney, Mechanical Contract, Ibew-Neca Local 505 Health & Welfare Plan, A.F. of L.-A.G.C. Building Trades Welfare Fund, Sheet Metal Workers Local 441 Health & Welfare Plan, Local 1199 Nat'l Benefit Fund for Health & Human Services, New York Statewide Senior Action Council, Marks, Blonstein, Plaintiffs-Appellants, v. Barr Labs. Inc., Astrazeneca Pharmaceuticals LP, Zeneca Inc., Astrazeneca PLC, Defendants-Appellees.

Docket No. 03-7641.

United States Court of Appeals, Second Circuit.

Argued: July 12, 2004.

Decided: November 2, 2005.

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J. Douglas Richards, Milberg Weiss Bershad Hynes & Lerach LLP (Michael M. Buchman, Milberg Weiss Bershad & Schulman LLP, New York, NY; Patrick E. Cafferty, Miller Faucher and Cafferty LLP, Ann Arbor, MI; Bernard Persky, Barbara J. Hart, Hollis L. Salzman, Goodkind Labaton Rudoff & Sucharow LLP, New York, NY; Robert S. Schachter, Joseph Lipofsky, Joseph S. Tusa, Zwerling, Schachter & Zwerling, LLP, New York, NY; Robert G. Eisler, Lieff, Cabraser, Heimann & Bernstein, LLP, New York, NY; of counsel), New York, NY, for Plaintiffs-Appellants.

Joel M. Cohen, Davis Polk & Wardwell (Diem-Suong T. Nguyen, Douglas K. Yatter, Wendy L. Silver, Davis Polk & Wardwell, New York, NY; George C. Lombardi, Christine J. Siwik, Maureen L. Rurka, Winston & Strawn LLP, Chicago, IL; of counsel), New York, NY, for Defendants-Appellees.

Bruce E. Gerstein, Garwin Bronzaft Gerstein & Fisher LLP (Barry S. Taus, Jan Bartelli, Garwin Bronzaft Gerstein & Fisher LLP; Steve D. Shadowen, Monica L. Rebuck, Hangley Aronchick Segal & Pudlin, Harrisburg, PA; of counsel), New York, NY, for Amicus Curiae Louisiana Wholesale Drug Company, Inc., CVS Meridian Inc., and Rite Aid Corporation.

Before: POOLER, SACK, and RAGGI, Circuit Judges. POOLER, Circuit Judge, dissents in a separate opinion

SACK, Circuit Judge.

This appeal, arising out of circumstances surrounding a lawsuit in which a drug manufacturer alleged that its patent for the drug tamoxifen citrate ("tamoxifen") was about to be infringed, and the suit's subsequent settlement, requires us to address issues at the intersection of intellectual property law and antitrust law. Although the particular factual circumstances of this case are unlikely to recur, the issues presented have been much litigated and appear to retain their vitality.

The plaintiffs appeal from a judgment of the United States District Court for the Eastern District of New York (I. Leo Glasser, Judge) dismissing their complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). The plaintiffs claim that the defendants conspired, under an agreement settling a patent infringement lawsuit among the defendants in 1993 while an appeal in that lawsuit was pending, to monopolize the market for tamoxifen — the most widely prescribed drug for the treatment of breast cancer — by suppressing competition from generic versions of the drug. The settlement agreement included, among other things, a so-called "reverse payment" of $21 million from the defendant patent-holders Zeneca, Inc., AstraZeneca Pharmaceuticals LP, and AstraZeneca PLC (collectively "Zeneca") to the defendant generic manufacturer Barr Laboratories, Inc. ("Barr"), and a license from Zeneca to Barr allowing Barr to sell an unbranded version of Zeneca-manufactured tamoxifen. The settlement agreement was contingent on obtaining a vacatur of the judgment of the district court that had heard the infringement action holding the patent to be invalid.

The district court in the instant case concluded that the settlement did not restrain trade in violation of the antitrust laws, and that the plaintiffs suffered no antitrust injury from that settlement. Because we conclude that we have jurisdiction to hear the appeal and that the behavior of the defendants alleged in the complaint would not violate antitrust law, we affirm the judgment of the district court.

REGULATORY BACKGROUND

Before setting forth the salient facts of this case and addressing the merits of the plaintiffs' appeal, it may be helpful to outline the relevant regulatory background.¹

The Federal Food, Drug, and Cosmetic Act, ch. 675, 52 Stat. 1040 (1938) (codified at scattered sections of title 21 of the United States Code), prohibits the introduction or delivery for introduction into interstate commerce of "any new drug, unless an approval of an application filed pursuant to subsection (b) or (j) of [21 U.S.C. § 355] is effective with respect to such drug." 21 U.S.C. § 355(a). Subsection (b) describes the process of filing a New Drug Application ("NDA") with the United States Food and Drug Administration ("FDA"), which is typically a costly and time-consuming procedure in which the applicant attempts to establish the safety and effectiveness of the drug. Id. § 355(b). In 1984, in order to accelerate the approval process for low-cost generic versions of established drugs, Congress enacted the Drug Price Competition and Patent Term Restoration Act of 1984 (the "Hatch-Waxman Act"), Pub.L. No. 98-417, 98 Stat. 1585 (codified at scattered sections of titles 21 and 35 of the United States Code). Among other things, the Act added subsection (j) to section 355. Hatch-Waxman Act § 101. Subsection (j) provides for an Abbreviated New Drug Application ("ANDA") to the FDA for the bioequivalent form of a drug already approved for safety and effectiveness. 21 U.S.C. § 355(j)(1), (j)(2)(A), (j)(7)(A). Subsection (j)(7)(A) further provides that the Secretary of the FDA will create and maintain a list of such approved drugs. Id. § 355(j)(7)(A). This list, Approved Drug Products with Therapeutic Equivalence Evaluations, is commonly known as the "Orange Book."² See id.; http://www.fda.gov/cder/orange/default.htm.

An ANDA filer must certify, with respect to each patent that claims the listed drug for the bioequivalent of which the ANDA filer is seeking approval,³ either that no patent was filed for the listed drug (a "paragraph I" certification), that the patent has expired (a "paragraph II" certification), that the patent will expire on a specified date and the ANDA filer will not market the drug until that date (a "paragraph III" certification), or that the patent is invalid or would not be infringed by the manufacture, use, or sale of the new drug (a "paragraph IV" certification). 21 U.S.C. § 355(j)(2)(A)(vii).

An ANDA filer that elects a paragraph IV certification must notify each affected patent owner of the certification. Id. § 355(j)(2)(B)(i). The patent owner then has forty-five days after the date it receives such notice to bring suit against the ANDA filer for patent infringement. Id. § 355(j)(5)(B)(iii). If no patent owner brings such a lawsuit during this period, the FDA may immediately approve the ANDA. Id. If, however, the patent owner brings suit during this period, the FDA's final approval of the ANDA is stayed for thirty months after the date the patent owner received the requisite notice or until a district court⁴ returns a decision as to the validity of the patent or its infringement if it does so before the thirty-month period expires. Id.

Any approval letter sent by the FDA before the expiration of the prescribed stay and before a court ruling of patent invalidity or non-infringement is tentative. See 21 C.F.R. § 314.105(d). If before the thirty months expire a court rules that the patent is either invalid or not infringed, the tentative approval of the ANDA is made effective as of the date of judgment. 21 U.S.C. § 355(j)(5)(B)(iii)(I). If after thirty months there has been no ruling on patent validity or infringement and the stay expires, the ANDA filer can distribute and market the drug but, depending on the court's later patent ruling, an ANDA filer that chooses to follow this course may thereafter become liable for infringement damages if infringement is found. See In re Ciprofloxacin Hydrochloride Antitrust Litig., 166 F.Supp.2d 740, 744 (E.D.N.Y.2001) ("Cipro I").

As an incentive for generic manufacturers to choose the paragraph IV certification route and, in the course of pursuing such applications, to challenge weak patents, the Hatch-Waxman Act offers the first ANDA filer with a paragraph IV certification, under certain conditions, the opportunity to market its generic drug exclusively for 180 days. To this end, the FDA may not approve the ANDA of a subsequent filer until 180 days after the earlier of the date (1) the first ANDA filer commercially markets the generic drug or (2) a court of competent jurisdiction concludes that the patent in question is invalid or not infringed.⁵ 21 U.S.C. § 355(j)(5)(B)(iv)(I)-(II).

Until 1998 (and, therefore, at the time of the settlement that is the subject of this appeal), the 180-day exclusivity period was available to the first ANDA filer to elect a paragraph IV certification, but only if the ANDA filer successfully defended against a lawsuit for infringement of the relevant patent. See 21 C.F.R. § 314.107(c)(1) (1995). This so-called "successful defense" requirement was challenged in 1997 in two separate lawsuits. In each, the circuit court rejected the requirement as inconsistent with the Hatch-Waxman Act. See Mova Pharm. Corp. v. Shalala, 140 F.3d 1060, 1076 (D.C.Cir.1998); Granutec, Inc. v. Shalala, 139 F.3d 889, 1998 WL 153410, at *7 (4th Cir. Apr.3, 1998), 1998 U.S.App. LEXIS 6685, at *19-*21 (unpublished opinion).

In June 1998, in response to these decisions, the FDA published a "Guidance for Industry." See Ctr. for Drug Evaluation & Research, Food & Drug Admin., U.S. Dep't of Health and Human Servs., Guidance for Industry: 180-Day Generic Drug Exclusivity Under the Hatch-Waxman Amendments to the...