Antitrust Law Daily Monopolization counterclaims in methylene blue drug case go forward
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Thursday, June 13, 2019

Monopolization counterclaims in methylene blue drug case go forward

By Nicole D. Prysby, J.D.

Drug maker allegedly solicited the USP to revise the monograph for an active pharmaceutical ingredient while failing to disclose its patent rights on the manufacturing process required to produce that form of the ingredient.

A manufacturer of methylene blue sufficiently alleged monopolization in a counterclaim against a rival manufacturer that solicited the United States Pharmacopeia (USP) to revise the official monograph for the active pharmaceutical ingredient while failing to disclose its patent rights on the manufacturing process necessary to produce that form of methylene blue, held the federal district court in Central Islip, New York. Because the rival did not disclose to the USP that it held the patent rights with respect to the manufacturing process necessary to produce the drug in the form incorporated in the revised standard, and USP would not have revised its official monograph but for the alleged conduct, the counterclaims contained sufficient factual allegations to state a plausible claim that the rival engaged in anticompetitive conduct under the Sherman Act. The manufacturer established antitrust injury through allegations that the rivals’ alleged anticompetitive conduct effectively prevents or delays any other drug manufacturer’s entry or re-entry into the market because they cannot market any product having methylene blue in accordance with USP’s revised monograph without producing the drug in accordance with the rival’s patented manufacturing processes. Therefore, the counterclaims survive a motion to dismiss (Provepharm inc v. Akorn Inc., June 11 2019, Feuerstein, S.).

Background. Provepharm, Inc., and Akorn, Inc., manufacture methylene blue, a drug used to treat methemoglobinemia and other (off-label) conditions. Until 2016, all companies that manufactured and sold methylene blue in the United States did so under a "grandfather" status, which exempts pre-existing drugs meeting certain criteria from the requirements of having an approved New Drug Application (NDA). Akorn sold its methylene blue products in the United States under this "grandfather" status for decades. Provepharm, whose parent companies are based in France, developed and patented a process to manufacture a purer form of methylene blue, which would comply with European standards. Provepharm ultimately obtained FDA approval for its drug product, ProvayBlue®, on April 8, 2016. According to Akorn, while Provepharm was obtaining approval from the Food and Drug Administration for ProvayBlue®, it was also soliciting the USP to revise the official monograph for the active pharmaceutical ingredient (API) classified as methylene blue in order to foreclose any others from pursuing NDAs for the use of methylene blue for other indications.

Akorn alleged that Provepharm violated clear USP rules when it concealed the fact that it owned patents for the manufacturing process necessary to produce methylene blue in the form that it urged USP to adopt as the standard for methylene blue. On July 29, 2016, USP posted revisions for the methylene blue monographs, which required Provepharm’s proposed specifications and assay testing method, and later adopted the revised monographs, as a result of which no other drug manufacturer can file an NDA having methylene blue API without producing the API in accordance with manufacturing processes allegedly covered by Provepharm’s patents. Akorn alleged that it was forced to exit the market for its methylene blue in October of 2016, as its product no longer conformed with the revised USP monograph, leaving Provepharm as the sole source of methylene blue in the United States and thus holding a monopoly in the relevant market for an eight-month period until June 2017, when the FDA permitted Akorn to temporarily manufacture methylene blue using the expired USP standard.

Provepharm sued Akorn, alleging that Akorn falsely advertised its methylene blue product. Akorn asserted two counterclaims against Provepharm, seeking damages and injunctive relief for Provepharm’s alleged monopolization and attempted monopolization of the methylene blue market in the United States in violation of Section 2 of the Sherman Act. Provepharm moved to dismiss the counterclaims.

Anticompetitive conduct. The court found sufficient evidence that Provepharm possesses monopoly power, or at least did so for the eight month period from when the USP revised the monographs until the FDA requested that Akorn temporarily re-enter the market to manufacture and sell methylene blue products qualified against the expired original standard. There was also sufficient evidence that Provepharm willingly sought that monopoly, by combining its alleged improvement of its methylene blue product, for which it sought and obtained FDA approval, with its allegedly anticompetitive conduct, i.e., its solicitation of the USP to revise the official monograph for methylene blue to include the pentahydrate form of the drug, while failing to disclose its patent rights on the manufacturing process necessary to produce that form of methylene blue, in order to significantly heighten barriers to entry and substantially foreclose competition in the methylene blue market.

Provepharm’s substantial share in the relevant market following the USP’s revision of the methylene blue monograph, even following Akorn’s limited re-entry into the market at the request of the FDA; the weakness of its competition; and the barriers to entry or re-entry into the market imposed by the revisions to the USP monograph, demonstrate a dangerous probability that Provepharm will attain monopoly power in the methylene blue market in the United States. Provepharm pointed to a statement in its 150-page submission to the USP, which it argued conclusively established that it "actively disclosed" its patent rights to the USP during the revision process. But the court found that at best, the cited statement could affect the weight and credibility of the counterclaims, and Akorn had presented sufficient evidence to go forward.

The court rejected Provepharm’s argument that Akorn needed to demonstrate there was an alternative standard that did not incorporate Provepharm’s intellectual property rights. There was no indication that the USP would have revised the existing monograph for methylene blue but for Provepharm’s request. Since there was an existing official monograph for methylene blue in the USP-NF, it may reasonably be inferred that had Provepharm disclosed its patent rights to USP, USP would not have revised the methylene blue monograph at all, much less as requested by Provepharm. Therefore, even if Akorn needed to demonstrate an alternative standard, it did so.

Antitrust injury. Akorn also established antitrust injury, according to the court. Provepharm’s alleged anticompetitive conduct effectively prevents or delays any other drug manufacturer’s entry or re-entry into the market because they cannot seek an NDA to market any product having methylene blue API in accordance with USP’s revised monograph without producing the API in accordance with Provepharm’s patented manufacturing processes (and thus, without infringing upon Provepharm’s patent rights). Provepharm’s alleged conduct harms competition in general, rather than only one competitor. Akorn’s allegations that Provepharm’s purportedly deceptive conduct during the standards-setting process before the USP led to the revision of the official methylene blue monograph and the subsequent exclusion of Akorn from the relevant market were sufficient to state a plausible claim that Provepharm’s conduct before the USP was a material cause of the antitrust injury.

The case is No. 2:17-cv-07087-SJF-AKT.

Attorneys: Felice B. Galant (Norton Rose Fulbright US LLP) for Provepharm, Inc. Robert Laurent Joyce (Littleton Joyce Ughetta Park & Kelly LLP) for Akorn, Inc.

Companies: Provepharm, Inc.; Akorn, Inc.

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