On Feb. 8, 2017, the Second Circuit Court of Appeals ruled that a class of Actos purchasers plausibly alleged that drug company, Takeda, delayed market entry by Teva with respect to their generic version of Actos and allowed the Plaintiffs’ case to proceed on limited grounds.
A group of employee health funds and purchasers of diabetes drug Actos filed a class action case against Takeda for allegedly delaying generic competition for the drug Actos. Takeda supposedly lied to the U.S. Food and Drug Administration (FDA) about its patents to improperly extend its market exclusivity for Actos.
The case concerns three Takeda patents for Actos that were set to expire in January 2011, and two follow-up patents that were to expire in June 2016. The Plaintiffs alleged that Takeda falsely stated to the FDA that the two follow-up patents covered Actos ingredients, rather than methods of using the drug. That misrepresentation triggered a six-month exclusivity period for three generic drug companies that were the first to seek approval from the FDA to make generic versions of Actos, as well as a waiting period for six other generic drug companies that also wanted to produce generic versions of the drug. The Plaintiffs alleged that Takeda’s misrepresentations to the FDA prevented competitors from timely marketing a generic version of Actos.
Specifically, the Plaintiffs claim that Takeda’s false patent descriptions channeled its competitors into a generic drug approval process that granted the first-filing applicants a 180-day exclusivity period, which in turn acted as a 180- day “bottleneck” to all later-filing applicants. Of the 10 generic applicants, nine took that route. Teva, on the other hand, sought approval through another regulatory mechanism, but was thwarted when the FDA announced that all generic manufacturers would be required to take the “bottlenecked” route, which was expressly based upon Takeda’s misrepresentation to the FDA regarding its patents.
After the generic drug companies filed their applications with the FDA to manufacture their own generic versions of Actos, Takeda sued the generics companies for patent infringement. The Plaintiffs alleged that Takeda’s settlement with the generic manufacturers resulted in a delayed market entry until August 2012 for the three first-filers and Teva and until February 2013 for the remaining six generics companies. The Plaintiffs ultimately alleged that they were wrongfully obliged to pay monopoly prices for Actos from January 2011, when Takeda’s patent on the active ingredient in Actos expired, to at least February 2013, when the mass of generic market entry occurred.
At the lower court level, U.S. District Judge Ronnie Abrams dismissed the Plaintiffs’ antitrust claims for failing to plausibly allege that Takeda’s false patent descriptions caused any delay in generic market entry. The district court reasoned that the Plaintiffs failed to identify a viable regulatory route for generic drug approval that would have avoided the 180-day bottleneck, and that even if they had, they failed to plausibly allege how the generic manufacturers would have avoided Takeda’s infringement lawsuits, all of which were voluntarily settled. The Court ruled that it was incumbent upon the Plaintiffs to allege that the generic companies knew of Takeda’s supposedly false patent descriptions to the FDA when they filed applications to manufacture their own versions of the drug but they failed to do so. The Plaintiffs then appealed the ruling to the Second Circuit, which vacated a portion of the District Court’s decision and revived the Plaintiffs’ case.
The Second Circuit agreed with Judge Abrams only with respect to the generic companies other than Teva. The Second Circuit held that with respect to Teva, because the Plaintiffs’ theory does not require any knowledge on Teva’s part of the false patent descriptions, the Plaintiffs plausibly alleged that Takeda delayed Teva’s market entry. Unlike Teva, the court held that the other generic drug companies would have to be aware of Takeda’s allegedly false patent descriptions when they filed their applications for the Plaintiffs to have a viable case. The Second Circuit held that Teva, however, did not need to have knowledge of the deceptions because its bid to market generic Actos was thwarted by the FDA based on Takeda’s patent descriptions.
The Second Circuit’s ruling that the class action Plaintiffs may pursue allegations that Takeda delayed Teva’s market entry due to its misrepresentations to the FDA is a positive ruling for class Plaintiffs.
Beasley Allen has handled a large number of cases involving fraud, deceit, and anticompetitive conduct within the pharmaceutical industry. If any of our readers are aware of these type of anticompetitive acts, contact Ali Hawthorne, a lawyer in our firm’s Consumer Fraud & Commercial Litigation Section, at 800-898-2034 or by email at Alison.Hawthorne@beasleyallen.com.
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