The Kroger Co.

701 F.Supp.2d 938

The KROGER CO., et al., Plaintiffs,

v.SANOFI-AVENTIS, et al., Defendants.

In re Plavix Direct Purchaser Antitrust Litigation.

This Document Relates to All Actions.

CVS Pharmacy, Inc., et al., Plaintiffs,

v.Sanofi-Aventis, et al., Defendants.

Nos. 1:06-CV-163, 1:06-CV-202, 1:06-CV-427.

United States District Court,

S.D. Ohio,

Western Division.

March 26, 2010.

COPYRIGHT MATERIAL OMITTED

Gregory Alan Harrison, Dinsmore & Shohl, Jean M. Geoppinger, Waite Schneider Bayless & Chesley Co LPA, William Henry Blessing, Cincinnati, OH, Richard Alan Arnold, Scott E. Perwin, Kenny Nachwalter PA, Miami, FL, for Plaintiffs.

Gregory Alan Harrison, Dinsmore & Shohl, Joseph P. Thomas, Jeffrey Francis Peck, Ulmer & Berne, Cincinnati, OH, Richard J. Stark, David Greenwald, Evan R. Chesler, Cravath, Swaine & Moore LLP, New York City, NY, Alan R. Dial, Kevin R. Sullivan, Peter M. Todaro, King & Spalding LLP, Washington, DC, for Defendants.

OPINION AND ORDER

MICHAEL H. WATSON, District Judge.

I. INTRODUCTION

This matter arises from actions against Defendant pharmaceutical manufacturers, Sanofi Aventis and Sanofi-Synthelabo, Inc. (“Sanofi Aventis”) and Bristol-Myers Squibb Company and Bristol-Myers Squibb Sanofi Pharmaceuticals Holding Partnership (“BMS”) (collectively “Sanofi”) and Apotex Corporation (“Apotex”) (collectively “Defendants”). These cases involve Plavix, a pioneer clopidogrel bisulfate drug used to treat patients at risk for heart attacks and strokes. Sanofi manufacturers Plavix. Apotex was the first generic applicant to seek Federal Drug Administration (“FDA”) approval to market a generic version of Plavix in the United States.

Plaintiffs have brought antitrust claims for alleged violations under §§ 1 and 2 ¹ of the Sherman Act, 15 U.S.C. §§ 1 and 2. Plaintiffs claim that they have suffered antitrust injuries as a result of Defendants' alleged illegal agreements. Plaintiffs assert the alleged illegal agreements prevented Defendants from entering into a legal competitive agreement which would have permitted the generic version of Plavix to enter the market at an earlier date thus allowing Plaintiffs to purchase the drug for a lower price.

The Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1337(a). Venue is proper in this Court pursuant to 15 U.S.C. § 22 because each Defendant transacts business here.

Defendants Sanofi and Apotex have moved the Court to dismiss Plaintiffs' claims, pursuant to Fed.R.Civ.P. 12(b)(6). Plaintiffs have responded to the motions, and Defendants have replied. For the reasons that appear below, the Court GRANTS Defendants' motions to dismiss (Case No. 1:06-CV-163 Docs. 67 & 68; Case No. 1:06-CV-202 Docs. 97 & 98; Case No. 1:06-CV-427 Docs. 60 & 61).

II. BACKGROUND

A. The Parties

1. Defendants

(a) The Sanofi Defendants

Defendant Sanofi-Aventis is a French corporation engaging in the development manufacture, and sales of brand-name pharmaceutical drugs throughout the United States. Defendant Sanofi-Synthelabo is a Delaware corporation and an affiliate of Sanofi-Aventis. Defendant Sanofi-Synthelabo is the holder of the U.S. patent 4,847,265 (“the '265 patent”) for Plavix, the pharmaceutical drug at issue in this litigation.

Defendant Bristol-Myers Squibb is a Delaware corporation engaging in the development, manufacturing, and selling of brand-name pharmaceutical drugs throughout the United States. Defendant Bristol-Myers Squibb Sanofi Pharmaceuticals Holding Partnership is a partnership registered in the state of Delaware. Under this business arrangement with Sanofi-Aventis, Bristol-Myers Squibb and Bristol-Myers Squibb Sanofi Pharmaceuticals Holding Partnership engage in the marketing and selling of Plavix throughout the United States.

(b) The Apotex Defendant

Defendant Apotex is a Delaware corporation and is a wholly-owned subsidiary of Apotex, Inc., Canada's largest generic drug manufacturer. Apotex was the first generic applicant to seek FDA approval to sell generic Plavix.

2. Plaintiffs

(a) Direct Purchasers

The Direct Purchasers consist of the Kroger Plaintiffs,² The Direct Purchaser Class Plaintiffs,³ and the CVS Plaintiffs.⁴ The Direct Purchasers purchase pharmaceutical products for distribution and sale throughout several states. The Direct Purchasers own and operate retail stores with pharmacies throughout several states ⁵ and these pharmacies dispense pharmaceutical drugs, including Plavix, to the public.⁶

(b) Indirect Purchasers

The Indirect Purchasers ⁷ consist of end-payors who seek to represent in this class action “[a]ll persons and entities throughout the United States and its territories who purchased Plavix for themselves, their families, or their members, employees, insureds, participants, or beneficiaries” during the relevant time period. End-Payor Pls.' First Am. Consol. Class Action Compl. ¶ 148 (Case No. 1:06-cv-226, Doc 81). The Indirect Purchasers consist of individual consumers, health and benefit funds, and private insurance companies that are third-party payors. Such third-party payors pay some or all of the cost of prescription drugs, specifically Plavix, purchased for consumption by themselves, their families, or their members, employees, insureds, participants, or beneficiaries.

B. Regulatory System Governing the Drug Approval Process

Before a drug can be sold in the United States, the FDA must approve the drug. 21 U.S.C. § 355(a). A pioneer drug manufacturer files a new drug application (“NDA”) with the FDA as part of the process of proving the drug is safe and effective, and to obtain premarket approval. The NDA must reference those patents that claim the new drug and for which a claim of patent infringement could reasonably be asserted against an unauthorized manufacturer or seller. After the FDA approves the NDA, the NDA and its related patents are listed in the Approved Drug Products With Therapeutic Equivalence Evaluations publication, also known as the “Orange Book.”

The Hatch-Waxman Act of 1984 (“Hatch-Waxman Act”) regulates the approval of generic pharmaceutical drugs through an expedited FDA approval process. 21 U.S.C. § 355. This expedited process allows generic versions of brand-name drugs previously approved by the FDA to reach market more quickly by allowing the generic manufacturer to forego clinical trials in reliance on the test results of the brand name manufacturer.

A generic drug company files an Abbreviated New Drug Application (“ANDA”) if it seeks to utilize the expedited approval process. The ANDA Application must include a statement certifying that the generic drug will not infringe on the brand name manufacturer's drug.⁸ See 21 U.S.C. § 355(j)(2)(A)(vii)(I-IV). A Paragraph IV certification triggers a 45-day time frame in which the NDA holder can file an action against the generic manufacturer for infringement of the patent which is the subject of the certification. 21 U.S.C. § 355(j)(5)(B)(iii). Pursuant to statute, upon filing such a suit, the FDA's approval of the ANDA is automatically stayed for up to 30 months, until the expiration of the pioneer patent, or until judicial resolution of the patent litigation. 21 U.S.C. § 355(j)(5)(B)(iii)(I-III).

The FDA grants the first generic manufacturer to file a Paragraph IV certification with an ANDA for a specific drug an 180-day exclusivity period to sell its version of the generic drug without other generic competitors entering the market. The 180-day exclusivity period begins to run from (1) the day the court determines the pioneer drug's patent is invalid, or (2) the day the initial holder of the ANDA application first markets the generic. 21 U.S.C. § 355(j)(5)(B)(iv)(I), (II). During the 180-day exclusivity period other generic manufacturers are prevented from receiving ANDA approval.

Much controversy surrounds the potential for companies to collude to subvert the Hatch-Waxman Act during this 180-day exclusivity period. If a brand name manufacturer pays a generic manufacturer to stay off the market, the 180-day period is not triggered and thus the time never begins to run. Therefore, neither the generic manufacturer paid by the patent holder nor other generic manufacturers waiting in line for the 180-day period to run can enter the market. Such so-called “reverse payment” agreements have been heavily scrutinized for being anti-competitive. Furthermore, when settlement agreements end the patent litigation initiated by the filing of the ANDA with Paragraph IV certification, the patent's validity is never litigated. See, e.g., Alan Devlin Exclusionary Strategies in the Hatch-Waxman Context, 2007 Mich. St. L.Rev. 631 (2007); James C. Burling Hatch-Waxman Settlements: The Battle for a Benchmark, 20-SPG Antitrust 41 (2006); Herbert Hovenkamp, Mark Janis & Mark A. Lemley Anticompetitive Settlement of Intellectual Property Disputes, 87 Minn. L.Rev. 1719 (2003).

C. Sanofi's Patents and Product

Sanofi is the patent assignee of several patents, including: U.S. patent 4,529,596 issued July 16, 1985, and U.S. patent 4,847,265 (“the '265 patent”) issued July 11, 1989, and Canadian patent 1,194,875 issued on or about October 15, 1985. Sanofi submitted the NDA for Plavix on April 28, 1997, and it was approved by the FDA on November 17,1997. Plavix is listed in the Orange Book as covered by the '265 patent, U.S. Patent 5,576,328 (“the ' 328 patent”), U.S. Patent 6,429,210 (“the '210 patent”), and U.S. Patent 6,504,030 (“the '030 patent”). Sanofi and BMS under a business partnership jointly market the pharmaceutical drug Plavix in the United States.

Plaintiffs' complaints allege the '265 patent is invalid because of misrepresentations and omissions made to the Patent and Trademark Office (“PTO”) as part of the patent application, resulting in inequitable conduct by Sanofi, thereby rendering the '265 patent unenforceable. The Court takes judicial notice of United States District Judge Sidney Stein's decision Sanofi-Synthelabo v. Apotex Inc., 492 F.Supp.2d 353, 397 (S.D...