Antitrust Law Must Play Traditional “Magna Carta of Free Enterprise” Role, Say Generic Defendants in Lawsuit Over Restricted Distribution and Biostudy Product Availability

March 6, 2013

By Kurt R. Karst –      

Earlier ths week, Apotex Corp., Roxane Laboratories, Inc., and Actavis Elizabeth LLC  (collectively “Counterclaim Plaintiffs”) filed their opposition to Actelion Pharmaceuticals Ltd.’s and Actelion Clinical Research, Inc.’s (collectively “Actelion’s”) Motion for Judgment on the Pleadings and to Dismiss Counterclaims in a lawsuit filed last September in the U.S. District Court for the District of New Jersey seeking declaratory relief that Actelion is under no affirmative duty or obligation to supply prospective ANDA applicants with its brand-name drug products TRACLEER (bosentan) Tablets and ZAVESCA (miglustat) Capsules for purposes of bioequivalence testing and ANDA submission.  As we previously reported (here, here, and here), the case is the first preemptive lawsuit filed by a brand-name company whose drug products are covered by restricted distribution programs – either a Risk Evaluation and Mitigation Strategies program with Elements To Assure Safe Use created by the 2007 FDA Amendments Act, such as TRACLEER, or a restricted distribution program adopted and implemented by the brand-name manufacturer, such as ZAVESCA.  The Counterclaim Plaintiffs have alleged that Actelion abused its monopoly power in violation of Sections 1 and 2 of the Sherman Act and the New Jersey Antitrust Act.

Actelion maintains that it is the company’s “right to choose with whom it does business,” and that this “fundamental right” dooms the Counterclaim Plaintiffs’ antitrust counterclaims and clearly support Actelion’s request for declaratory relief.  Moreover, says Actelion, citing Verizon Communications, Inc. v. Law Offices a/Curtis V. Trinko, LLP, 540 U.S. 398 (2004) for purposes of Sherman Act Section 2, any exceptions to the rule that a unilateral refusal to deal by an alleged monopolist does not give rise to antitrust liability (i.e., where a refusal to do business is contrary to a prior course of dealing, or where a refusal relates to an “essential facility”) do not apply in this case. And, says Actelion, there are alternatives to the ANDA approval route that companies can use, such as the submission of a “full” 505(b)(1) NDA or a 505(b)(2) NDA.

As an initial matter, Counterclaim Plaintiffs allege in their 70-page opposition memorandum that Actelion’s reliance on Trinko to support its case is misplaced.

Actelion’s entire argument rests on its belief that Trinko immunizes a firm from antitrust scrutiny for refusing to deal with its would-be competitors.  Although this interpretation of Trinko is incorrect, Actelion’s argument fails in any event because its refusal to sell Counterclaim Plaintiffs drug samples is merely one component of the larger exclusionary scheme challenged here. . . . [Actelion’s] conduct goes far beyond a typical “refusal to deal” and falls well within the classic definition of unlawful monopolization. . . .  The problem with Actelion’s heavy reliance on Trinko is that it at best only addresses Actelion’s liability for refusing to sell drug samples directly to Counterclaim Plaintiffs.  The Third Circuit [in LePage’s, Inc. v. 3M, 324 F.3d 141 (3d Cir. 2003)], however, has held that the proper inquiry is whether the defendant’s alleged actions “considered together” evidence an overall anticompetitive scheme. (Internal citations omitted)

Applying this Third Circuit standard, say Counterclaim Plaintiffs, the court must deny Actelion’s motion. 

Counterclaim Plaintiffs go on to argue that even if this were a pure “refusal to deal” case, Trinko does not create a bright-line rule to justify Actelion’s requested relief.  For starters, say Counterclaim Plaintiffs, “unlike Trinko, where there was already a scheme of regulation in place to safeguard the public interest . . . no such regulatory scheme exists to serve as ‘an effective steward of the antitrust function’ here.” (Internal citation omitted)  Moreover, both of the Trinko exceptions (i.e., prior course of dealing and essential facilities) are available and applicable here, argue Counterclaim Plaintiffs.

As to Actelion’s argument that, for purposes of applicability of the essential facilities exception, companies can avail themselves of an alternative to the ANDA approval route and seek FDA approval of an NDA, Counterclaim Plaintiffs say that argument is nonsensical.  First, insofar as it means companies submit “full” 505(b)(1) NDAs, the argument undermines the Hatch-Waxman Amendments.  Second, insofar as it means companies submit 505(b)(2) applications for a generic version of the drugs, “Actelion’s claim . . . is simply wrong,” because that route is not available for duplicates of approved brand-name drugs.  Moreover, it bears noting that a 505(b)(2) application for an alternative version of a brand-name drug may require the sponsor to obtain sample of the drug for purposes of conducting bridging studies.