In re Asacol Antitrust Litigation
233 F. Supp. 3d 247
D. Mass.2017Background
- Warner Chilcott marketed Asacol (400 mg), introduced Asacol HD (800 mg) in 2008, later launched Delzicol (400 mg, different inactive ingredients and a cellulose capsule) in 2013 and withdrew Asacol in April 2013. Asacol had significant sales and listed patents expiring in 2013.
- Plaintiffs (direct purchasers) allege an overarching anticompetitive scheme: product hopping (hard switch to Delzicol and marketing-driven switch to Asacol HD) and a reverse-payment settlement with Zydus that delayed generic entry.
- Warner Chilcott and Zydus settled in December 2013: Zydus abandoned its patent challenge in exchange for a choice between two commercial paths; Zydus ultimately received a highly lucrative no-authorized-generic option under which Warner Chilcott would receive a large royalty (allegedly leaving Zydus ~$101 million in profits).
- Plaintiffs allege the settlement functioned as a large, non‑monetary reverse payment that induced Zydus to delay FDA approval or forgo pursuing its own ANDA, and that Warner Chilcott’s withdrawal of Asacol plus Delzicol’s capsule design blocked AB substitution by generics.
- Procedural: defendants moved to dismiss (partial) — attacking reverse‑payment allegations as to the Zydus settlement and product‑hop allegations as to Asacol HD. The court granted in part and denied in part.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Zydus settlement constituted a large, unjustified reverse payment | Settlement gave Zydus a profitable no‑AG deal (transferring value and inducing delay), so it is a reverse payment under Actavis | No cognizable reverse payment because Warner Chilcott did not make an out‑of‑pocket sacrifice; Warner retained large share of profits | Court: Plaintiffs pleaded a sufficiently large and unjustified reverse payment for pleading purposes (denied dismissal on this ground) |
| Standing to assert a standalone reverse‑payment antitrust claim | Settlement caused delayed generic entry and overcharges to direct purchasers | Settlement did not cause the gating problem — FDA approval (or lack thereof) was the limiting factor, so plaintiffs lack Article III antitrust injury | Court: Plaintiffs lack standing to bring a separate reverse‑payment claim (dismissed that standalone theory), but the settlement allegations may remain as background for an overall scheme in Counts I and II |
| Product‑hop claim based on Asacol → Asacol HD (Count III) — hard vs soft switch | Marketing and off‑label promotion of Asacol HD were part of an exclusionary scheme and coerced switching | Asacol and Asacol HD were sold concurrently for years (no withdrawal), so introduction/marketing alone is lawful; no hard switch occurred | Court: As to Asacol HD, Count III product‑hop claim dismissed — marketing/soft switch insufficient without withdrawal or coercive conduct that eliminated choice |
| Product‑hop claim based on Delzicol withdrawal of Asacol and capsule change | Withdrawal of Asacol and Delzicol’s capsule were designed to prevent generic substitution and to effect a hard switch, excluding rivals | Defendants disputed anticompetitive intent/necessity and proffered safety/legitimate justifications | Court: Product‑hop allegations as to Delzicol and the hard switch survive; motion denied as to those claims |
Key Cases Cited
- FTC v. Actavis, 570 U.S. 136 (2013) (reverse‑payment settlements can violate antitrust law; size and justification of payment are central)
- In re Loestrin 24 Fe Antitrust Litig., 814 F.3d 538 (1st Cir. 2016) (non‑cash settlement terms can constitute reverse payments; value matters at pleading stage)
- New York v. Actavis PLC (Namenda), 787 F.3d 638 (2d Cir. 2015) (distinguishes hard vs soft product switches; hard switches that remove choice may be anticompetitive)
- King Drug Co. of Florence, Inc. v. Smithkline Beecham Corp., 791 F.3d 388 (3d Cir. 2015) (no‑AG commitments and profit‑sharing can be economically equivalent to reverse payments)
- Mylan Pharm. Inc. v. Warner Chilcott Pub. Ltd. Co. (Doryx), 838 F.3d 421 (3d Cir. 2016) (product‑hop analysis; market structure and coercion factors inform liability)
- Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263 (2d Cir. 1979) (product redesign/withdrawal alone not necessarily anticompetitive; coercion of consumers distinguishes unlawful conduct)