In Re Lipitor Antitrust Litigation
868 F.3d 231
| 3rd Cir. | 2017Background
- These consolidated appeals involve alleged anticompetitive patent-related conduct in two drug cases: Lipitor (Pfizer v. Ranbaxy) and Effexor XR (Wyeth v. Teva). Plaintiffs are classes of direct purchasers and end-payors (and some retailers/third-party payors).
- Plaintiffs allege defendants obtained and enforced weak or fraudulently procured patents, listed them in the FDA Orange Book, filed sham petitions/litigation, and entered into reverse-payment (pay-for-delay) settlements that delayed generic entry.
- Key Lipitor facts: Pfizer obtained a follow-on ’995 patent for atorvastatin calcium; Ranbaxy was the first ANDA filer; Pfizer sued, then settled globally with Ranbaxy in 2008, Ranbaxy delayed U.S. entry until Nov. 30, 2011; plaintiffs allege Pfizer released valuable Accupril claims (worth hundreds of millions) as part of the deal.
- Key Effexor facts: Teva was first ANDA filer; after Markman ruling the parties settled (2005) with Wyeth promising not to launch an authorized generic (no-AG) and Teva agreeing to delayed entry and to pay royalties; plaintiffs allege the no-AG was a large reverse payment (~$500M+ value).
- District courts dismissed (Lipitor: entire complaints; Effexor: Section 1 Actavis claims dismissed) largely on grounds that plaintiffs failed to plausibly plead that the settlements involved a "large and unjustified" reverse payment and that other allegations (Walker Process fraud, sham litigation/petitions) were implausible or barred.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the settlement agreements plausibly allege an Actavis reverse-payment (large + unjustified transfer) | Plaintiffs say Pfizer/Ranbaxy (Lipitor) and Wyeth/Teva (Effexor) made large transfers of value (release of Accupril claim; Wyeth no-AG worth >$500M) intended to induce delayed generic entry | Defendants argue plaintiffs failed to plead reliable, quantitative valuations or rebut procompetitive/legitimate justifications; FTC/agency silence and court approval immunize settlements | Reversed. Court holds plaintiffs plausibly alleged large and unjustified reverse payments under Actavis; detailed economic valuation not required at pleading stage; defendants bear burden to justify payments in merits-stage rule-of-reason analysis |
| Whether a no-AG (promise not to launch an authorized generic) can constitute a reverse payment | Plaintiffs: no-AG is a transfer of value enabling supracompetitive pricing and can be a reverse payment | Defendants: no-AG is a commonplace, legitimate settlement term or too speculative since patentee might not have launched an AG | Held: No-AG can be a reverse payment; if it plausibly conveys substantial value and lacks convincing justification, it survives dismissal (King Drug endorsed this) |
| Whether Walker Process (fraudulent procurement/enforcement of patent) and related claims (false Orange Book listing, sham petitions, sham litigation) were plausibly alleged (Lipitor) | Plaintiffs pled intentional misrepresentations/omissions to the PTO re: ’995 patent, selective data submission, withheld contradictory data, and that the patent would not have issued but for fraud; also alleged sham citizen petition and sham suit | Defendants relied on prior related litigation outcomes, PTO reissuance, and administrative/foreign rulings to show allegations implausible or precluded | Held: Reversed. Court holds those allegations are plausibly pleaded; prior rulings and PTO reissue do not preclude or render allegations implausible at pleading stage, and Noerr-Pennington immunity does not shield sham petitions or sham suits |
| Whether administrative submission and FTC non-action, or court entry of consent decree, bar antitrust claims or confer Noerr-Pennington immunity | Plaintiffs: agency non-action and court-approval do not preclude later antitrust challenges; sham petition/consent- decree may be unprotected | Defendants: submission to FTC (and FTC silence) and court adoption of settlement eliminate anticompetitive intent or immunize conduct via Noerr-Pennington | Held: Reversed. FTC reservation of rights and statutory savings clause mean non-action does not preclude antitrust suit; Noerr-Pennington does not protect sham petitions or private settlements merely submitted for court approval; consent decrees resemble private contracts and do not automatically immunize defendants |
Key Cases Cited
- F.T.C. v. Actavis, 133 S. Ct. 2223 (2013) (reverse-payment settlements may violate antitrust law when large and unjustified)
- King Drug Co. of Florence v. SmithKline Beecham Corp., 791 F.3d 388 (3d Cir. 2015) (no-AG agreements can be reverse payments; plaintiff plausibly alleged large/unjustified transfer)
- Walker Process Equip. v. Food Mach. & Chem. Corp., 382 U.S. 172 (1965) (fraudulent procurement/enforcement of a patent can give rise to antitrust liability)
- Bell Atlantic v. Twombly, 550 U.S. 544 (2007) (pleading requires plausibility, not detailed proof)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard clarified; inferences must be drawn in plaintiff’s favor at motion-to-dismiss stage)
- Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011) (reissuance of a patent does not preclude later finding of inequitable conduct)