American Sales Co. v. Warner Chilcott Co.
2016 U.S. App. LEXIS 3049
1st Cir.2016Background
- Consolidated pharmaceutical antitrust actions transferred to the District of Rhode Island; Warner Chilcott owns the '394 patent covering Loestrin 24 and submitted an NDA approved in 2005-2006; '394 patent listed in Orange Book for Loestrin 24; Watson and Warner settled in 2009 with Watson delaying entry of its generic in exchange for various benefits; Lupin announced a generic and settled in 2010-2011 with delayed entry and side terms; Direct Purchaser Plaintiffs (DPPs) and End Payor Plaintiffs (EPPs) allege Sherman Act §1 violations and unlawful restraints due to these settlements; district court dismissed, holding Actavis limited to cash reverse payments, and granted judgment against the DPPs with others stayed; court of appeals vacated and remanded to consider non-cash reverse payments under Actavis; issue of how Actavis applies to non-cash terms remains for district court to address.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Actavis encompasses non-cash reverse payments | DPPs/EPPs argue non-cash terms can be reverse payments under Actavis | Warner/Watson contend Actavis applies only to cash payments | Remanded to consider non-cash payments under Actavis |
| Whether the settlement provisions (no-AG, acceleration, side deals) plausibly constitute reverse payments | Allege large, unjustified transfers via settlement terms | Argue insufficient pleadings under Twombly/Iqbal for non-cash terms | Remanded for district court to evaluate plausibility under rule of reason |
| Standard of review and pleading sufficiency for §1 claims after Actavis | Pleadings should be evaluated for plausibility; need not prove precise values | Dismissal appropriate without precise valuations | Affirming need to remand; standard remains de novo for dismissal but with required plausible facts |
Key Cases Cited
- Actavis, LLC v. Warner Chilcott Co., LLC, 570 U.S. 133 (Supreme Court 2013) (reverse payments subject to antitrust scrutiny under rule of reason)
- Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, 132 S. Ct. 1670 (Supreme Court 2012) (patent listings and regulatory framework under Hatch-Waxman)
- Stop & Shop Supermarket Co. v. Blue Cross & Blue Shield of Rhode Island, 373 F.3d 57 (1st Cir. 2004) (standard of the rule of reason in antitrust claims)
- King Drug Co. of Florence, Inc. v. Smithkline Beecham Corp., 791 F.3d 388 (3d Cir. 2015) (Actavis not limited to cash reverse payments; no-AG agreements subject to scrutiny)