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Court Rejects Organ Transplant Drug Maker’s Challenge To Monopolization Claims

Posted  February 24, 2012

Judge Ryan Zobel of the U.S. District Court for the District of Massachusetts has denied the motion to dismiss filed in the consolidated class action of In re Prograf Antitrust Litigation by the defendant, organ transplant drug manufacturer Astellas Pharma US, Inc.

Plaintiffs are direct purchasers of Prograf – a brand-name immunosuppressant drug that fights organ rejection following heart, kidney and liver transplants – who allege that its manufacturer, Astellas, violated the antitrust laws by filing a citizen petition with the Food and Drug Administration (“FDA”) that was designed to stave off competition and prolong the drug’s monopoly.  The court’s denial of Astellas’ motion to dismiss means that the direct purchasers’ monopolization claims under Section 2 of the Sherman Antitrust Act will proceed

The plaintiffs claim that Astellas recognized that generic manufacturers would seek FDA approval to sell competing drugs and that Astellas’ citizen petition was “objectively baseless,” and used “to stall the approval of generic manufacturers’ Abreviated (sic) New Drug Applications.”

In addition to filing a citizen petition with the FDA, Astellas unsuccessfully moved in the District Court for the District of Columbia in August 2009 for a temporary restraining order and preliminary injunction to prevent the FDA from approving generic competing drugs.  Astellas’ motion for injunctive relief was denied by Judge Urbina on August 12, 2009.  Astellas voluntarily dismissed that matter in November 2009.

Plaintiffs allege that Astellas’ administrative and legal actions “unlawfully continued a monopoly in the market … for up to two years, selling well over a billion dollars of Prograf during that time.”

Astellas moved to dismiss the class action complaint, arguing primarily that the citizen petition was protected by the Noerr-Pennington doctrine granting immunity to legitimate petitioning activity.  The plaintiffs argued that Noerr-Pennington immunity is inapplicable since the petition “was an objectively baseless ‘sham.’”

Judge Zobel relied on Professional Real Estate Investors v. Columbia Pictures Industries, 508 U.S. 49, 61 (1993), for its two-pronged test to determine whether a plaintiff survives a motion to dismiss on Noerr-Pennington grounds by availing itself of the “sham” exception: whether “(1) defendant’s petitioning activity was ‘objectively baseless’ in the sense that no reasonable petitioner before the agency ‘could realistically expect success on the merits;’ and [whether] (2) … the baseless petitioning ‘concealed an attempt to interfere directly with the business relationship of a competitor through the use of the governmental process … as an anti-competitive weapon.’”

With respect to the first prong, the judge held that the class plaintiffs properly alleged that the petitioning activity was objectively baseless since, among other things, plaintiffs alleged that (1) “the FDA found no merit to defendant’s petition,” and (2) “the materials provided by defendant failed to support its requested relief and, in particular, … the studies cited contained severe flaws in their methodology and design and reliance thereon was wholly unreasonable.”  The judge likewise found the second prong satisfied because, among other reasons, plaintiffs alleged that “Prograf sales were $929 million for 2009, giving Astellas an incredibly strong financial incentive to extend its position as the sole … provider” and “Astellas’ citizen petition had the actual effect of delaying generic entry.”

Tagged in: Antitrust Litigation, Monopolization,