By Nicole D. Prysby, J.D.
Plaintiffs failed to demonstrate that the pharmaceutical manufacturer acted anticompetitively when it created a "patent thicket" and entered into unlawful market division agreements with biosimilar manufacturers.
The manufacturer of Humira® acted aggressively but not anticompetitively when it obtained multiple patents related to the drug and pursued and settled patent infringement litigation against biosimilar manufacturers, held the federal district court in Chicago. Therefore, monopolization, pay-for-delay, market allocation, and related state law claims brought by indirect purchasers of Humira failed. The plaintiffs claimed that Humira’s manufacturer, AbbVie Inc., prevented other manufacturers from launching generic versions of Humira by creating a "patent thicket" and then entered into unlawful market division agreements with biosimilar manufacturers which permitted competition in Europe, but which delayed biosimilars in the U.S. market. Monopolization claims failed because the plaintiffs did not demonstrate that AbbVie’s serial use of legal process was objectively baseless. Pay-for-delay and market allocation theories of liability failed, because the global patent settlements between AbbVie and the other manufacturers were not unlawful reverse-payments. The plaintiffs also failed to adequately plead antitrust injury; their allegations about what might have happened in the underlying infringement litigation were too speculative (In re Humira [Adalimumab] Antitrust Litigation, June 8, 2020, Shah, M.).
Indirect purchasers of Humira® (a biologic injectable therapy indicated to treat a variety of chronic conditions, including rheumatoid arthritis) alleged that its manufacturer, AbbVie, prevented other manufacturers from launching generic versions of Humira by creating a "patent thicket." The primary patent for Humira expired in 2016 and the complaint alleged that AbbVie applied for a number of patents since the drug was developed—collecting dozens and dozens of patents, many of which were overlapping and non-inventive—as a means to block competition in the U.S. market. AbbVie sought patents on not only the many uses of Humira but also the process for manufacturing it and the ingredients and formulations that AbbVie anticipated its competition might seek to employ.
To carry out its patent thicket scheme, AbbVie allegedly pursued "infringement" litigation against biosimilar manufacturers. Several competitors previously sued by AbbVie over adalimumab biosimilars opted to settle patent claims. The complaint alleged that AbbVie then entered into unlawful market division agreements with those biosimilar manufacturers (who were also named as defendants), which permitted competition in Europe, but which delayed biosimilars in the U.S. market until at least January 2023.
The complaint alleged a Sherman Act § 1 claim, a Sherman Act § 2 claim, and state law claims. AbbVie motioned to dismiss all claims.
Sherman Act claims. The plaintiffs’ Section 2 monopolization claims were based on a theory that AbbVie abused its monopoly over the U.S. market for adalimumab when it gummed up progress toward lower prices by obtaining and asserting swaths of invalid, unenforceable, or noninfringed patents without regard to the patents’ merits. Their theory depended on another old premise: that petitioning the government (during patent prosecutions, the FDA approval process, and in the courts) can violate the antitrust laws if, in reality, that petitioning is nothing more than a sham meant to inhibit competition. But the plaintiffs failed to demonstrate that AbbVie’s serial use of legal process was objectively baseless, the court held. They described flaws in the patents and assertions of them, but not objectively baseless conduct.
For example, more than half of AbbVie’s patent applications resulted in patents, which compelled the court to conclude, as a matter of law, that more than half of AbbVie’s patent applications were not objectively baseless. It was plausible that at least some of the assertions AbbVie made during the patent litigation were objectively baseless. But each of the lawsuits was settled on terms that foreclosed a finding of objective baselessness—when a lawsuit terminates in a settlement that provides substantial value to an antitrust defendant accused of initiating that lawsuit as a sham, that lawsuit is objectively reasonable.
The plaintiffs alleged that AbbVie, Amgen, Samsung Bioepis, and Sandoz violated Section 1 when they entered into settlement agreements that required the latter three defendants to temporarily give up their efforts to introduce biosimilars in the U.S. market in return for near-immediate permission to launch their biosimilars in Europe. But their pay-for-delay and market allocation theories of liability failed, because the global patent settlements between AbbVie and the other manufacturers were not unlawful reverse-payments. They provided one early entry date for the European market and a different early entry date for the U.S. market—both permissible. The effect of the payment was to increase, not restrain competition by bringing competitors into the market when patents otherwise prohibited the competition. And, the court stated, there was also a broader reason to uphold these agreements under antitrust review: encouraging patent litigants to settle worldwide patent disputes.
Other issues. The court found that the plaintiffs failed to adequately plead antitrust injury. They alleged that they suffered monopoly prices, but failed to demonstrate that the defendants’ conduct was the cause-in-fact of those monopoly prices. Their allegations about what might have happened in the underlying infringement litigation were too speculative. It only takes one valid, infringed patent to render all the rest—whether invalid, infringed, or not—irrelevant for purposes of cause-in-fact analysis. The complaint called many of AbbVie’s patents "weak," but did not identify which patent at issue in the litigation was going to be declared invalid or establish how prices would have fallen if the biosimilars had stuck it out in the global patent fight against AbbVie.
The plaintiffs also alleged that if AbbVie had asserted only those patents that were valid and infringed (i.e., fewer patents), the biosimilars’ bargaining position would have been stronger and the biosimilar manufacturers would have been able to negotiate earlier entry dates. But given that AbbVie’s patents survived multiple challenges, and that all it would have taken was one valid and infringed patent to preclude market entry until that patent’s expiration, it was not plausible that these agreements prevented an even earlier entry date in the U.S. market for a biosimilar, the court reasoned.
The court dismissed the state law claims for the same reasons as the federal claims. Although some of the state law claims were brought pursuant to state prohibitions against unfairness or unconscionability and not state antitrust laws, the complaint sounded in antitrust.
This case is No. 1:19-cv-01873.
Attorneys: Adam J. Pessin (Fine, Kaplan And Black, RPC) for UFCW Local 1500 Welfare Fund. David S. Scalia (Dugan Law Firm, APLC) for Louisiana Health Service & Indemnity Co. d/b/a Blue Cross Blue Shield of Louisiana. James F. Hurst (Kirkland And Ellis LLP) for Abbvie Inc. and AbbVie Biotechnology Ltd. Bruce Roger Braun (Sidley Austin LLP) for Amgen Inc. Brent M. Byars (Cravath, Swaine & Moore LLP) for Mylan Inc.
Companies: Louisiana Health Service & Indemnity Co. d/b/a Blue Cross Blue Shield of Louisiana; Abbvie Inc.; AbbVie Biotechnology Ltd.; Amgen Inc.; Mylan Inc.
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