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Plaintiffs Targeting Biologic-Biosimilars Settlements with Pay-for-Delay Antitrust Claims

Posted  April 18, 2019
By James J. Kovacs

Antitrust principles that can invalidate certain pay-for-delay settlements will be expanding into the new frontier of biologic and biosimilar drugs if plaintiffs in several new suits are successful.

Recently-filed antitrust lawsuits against AbbVie, manufacturer of a leading biologic drug, Humira, and numerous biosimilar manufacturers are alleging that settlements between the AbbVie and various biosimilar competitors should be scrutinized under the principles of the Supreme Court’s Actavis decision.  If the Northern District of Illinois agrees with the various allegations made by plaintiff classes, Actavis’s “large and unjustified” settlement payment standard could be expanded beyond the generic drug space into ever-growing field of biologics and biosimilars.  These issues are discussed in greater depth in Biologic Manufacturers Should Expect Antitrust Scrutiny.

Brief Background on Generic Drug Competition and Actavis

The Hatch-Waxman Act of 1984 created various new procedural mechanisms to improve competitive entry of generic drugs into the United States.  In particular, under the law, a generic manufacturer may challenge the validity of the relevant patent of  a brand-name drug, commonly referred to as paragraph IV certification.  See 21 U.S.C. §355(j)(2)(A)(vii)(IV).  The patent holder has the right to challenge the paragraph IV certification, and upon challenge, the FDA must withhold approval of the generic challenger for 30 months.  In the ensuing patent litigations, the parties argue over the validity of the patent holder’s patent and the potential infringement by the generic challenger.

Like most litigation, these cases often ended up settling; however, antitrust enforcers, including the Federal Trade Commission, and private plaintiffs, have challenged certain settlements as anticompetitive.  Referred to as pay-for-delay or reverse payment settlements, these cases involve a patent holder’s payment (not always money) to the generic manufacturer in return for delayed competitive entry of the generic drug.  As a result of the reverse payment settlement, the brand-name manufacturer retains the ability to reap monopoly profits.  In the 2013 Actavis decision, the Supreme Court determined that such pay-for-delay settlements should be assessed under a rule of reason analysis.  The Supreme Court found that such settlements could be anticompetitive if the payment was “large and unjustified.”

Biosimilar Entry and Settlements

Biologics are complex mixtures that are either extracted or synthesized from a biological source.   Much like a generic drug, the biosimilar is a drug which “has no clinically meaningful differences” from its biologic counterpart.  In 2010, Congress passed the Biologics Price Competition and Innovation Act (“BPCIA”) to foster competition.  Under the BPCIA, a biosimilar manufacturer may file an Abbreviated Biologic License Application (“ABLA”) with the Food and Drug Administration to gain entry to the market; however, unlike the Hatch-Waxman Act, there is no similar paragraph IV provision to allow the biosimilar to challenge the validity of the biologic patent.

AbbVie’s biologic Humira, an immunosuppressive drug used to treat a variety of conditions, including arthritis, plaque psoriasis, and Crohn’s disease, was approved by the FDA in 2002, with its original patent to set to expire in 2016.  Since filing its initial patent, AbbVie has filed and received over 100 additional patents on Humira that are set to expire between 2022 and 2034.  Starting in 2015, a year before expiration of the original Humira patent, various manufacturers filed ABLAs to begin manufacturing biosimilars of Humira.  In response to the ABLAs, AbbVie filed patent lawsuits against the biosimilar manufacturers.  Outside of one lawsuit, each of the patent suits settled, granting the biosimilar manufacturer immediate access to sell its biosimilar product in Europe, but agreeing to delay biosimilar entry into the United States until various dates in 2023.

In March 2019, several classes of plaintiffs filed antitrust lawsuits against AbbVie alleging monopolization claims through a so-called “patent thicket” for AbbVie’s use of over 100 patents to protect Humira, and conspiracy claims based on agreements to end patent disputes between AbbVie and the various biosimilar manufacturers.  For its conspiracy claims, the plaintiffs allege that the settlement agreements are, as articulated in Actavis, are “large and unjustified.”  In fact, the UFCW Local 1500 Welfare Fund complaint alleges that the defendants’ conduct, allowing competition in Europe in exchange for Humira’s exclusivity in America, is a per se unlawful market division.

Conclusion

The AbbVie biologic settlements cases the interesting question of whether Actavis’s principles can be applied outside the scope of the Hatch-Waxman Act.  Finding in the plaintiffs’ favor on the conspiracy claim could greatly expand the scope of Actavis and provide a legal framework for future claims against biologic and biosimilar settlements.  In any event, as pay-for-delay settlements of generic pharmaceutical decline, the enforcers and plaintiffs are likely to show keen interest in potentially anticompetitive conduct in the biologic space.

Edited by Gary J. Malone

Tagged in: Antitrust Litigation,

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