In re Lamictal Direct Purchaser Antitrust Litigation
18 F. Supp. 3d 560
D.N.J.2014Background
- GSK sold Lamictal (tablets and chewables); lamotrigine covered by U.S. Patent No. 4,602,017, which expired in July 2008; GSK obtained six-month pediatric exclusivity extending protection to Jan. 2009.
- Teva filed ANDAs as first filer (entitling it to 180‑day exclusivity) and sued/licensed settlement with GSK: allowed Teva early entry for chewables (June 2005) and tablets (March/July 2008 depending on pediatric exclusivity).
- Settlement included a No‑AG Agreement: GSK agreed not to launch an authorized generic during Teva’s 180‑day first‑filer exclusivity.
- Plaintiffs (direct purchasers) alleged the settlement was an unlawful reverse‑payment antitrust conspiracy; District Court previously dismissed for failure to state a claim because the settlement involved no cash payment.
- After the Supreme Court decided FTC v. Actavis, the Third Circuit remanded for reconsideration; the District Court reassessed whether Actavis altered the dismissal.
- The court concluded Actavis triggers antitrust scrutiny only for settlements containing large, unjustified reverse payments of money and that this non‑monetary settlement would survive rule‑of‑reason review; it affirmed dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Actavis requires reopening dismissal here | Actavis changes standards so all anticompetitive patent settlements (including non‑monetary) warrant scrutiny; No‑AG is a ‘payment’ | Actavis targets reverse payments of money; prior dismissal for lack of monetary payment remains valid | Actavis does not change outcome; remand review confirmed dismissal |
| Whether Actavis applies only to settlements with “reverse payments” | Actavis’s tenor sweeps broadly to all anticompetitive settlement terms | Actavis’s text focuses on reverse‑payment settlements specifically | Court: Actavis scrutiny is limited to settlements that contain reverse payments |
| Whether a “reverse payment” includes non‑monetary consideration (e.g., No‑AG) | A transfer of non‑monetary value (No‑AG) is a payment and triggers Actavis | Payment means money in Actavis context; non‑monetary settlement terms (early entry, No‑AG) are permissible settlement forms | Court: Actavis contemplates monetary reverse payments; non‑monetary No‑AG alone does not trigger Actavis scrutiny |
| If scrutinized under rule of reason, whether this settlement is unlawful | Settlement confers significant value to Teva and restricts competition during first‑filer exclusivity | Early entry + limited No‑AG for a short term is procompetitive or at least justified; limited anticompetitive risk | Court applied Actavis factors and found minimal anticompetitive potential; settlement would likely survive rule of reason |
Key Cases Cited
- FTC v. Actavis, 570 U.S. 136 (2013) (Supreme Court adopts rule‑of‑reason scrutiny for large unjustified reverse‑payment patent settlements)
- In re K‑Dur Antitrust Litigation, 686 F.3d 197 (3d Cir. 2012) (describes “quick look” standard and reverse‑payment prima facie evidence of unlawfulness)
- United States v. Brown Univ., 5 F.3d 658 (3d Cir. 1993) (framework for traditional rule‑of‑reason analysis)
- Rolo v. City Investing Co. Liquidating Trust, 155 F.3d 644 (3d Cir. 1998) (mandate on remand: court should consider intervening authority and place parties where error occurred)