Life Sciences & Antitrust: Cases to Watch in 2018
By Chad J. Peterman & Carl J. Minniti
The intersection of complex drug competition frameworks and the antitrust laws continues to grow. With increased collaboration between the Food and Drug Administration and the Federal Trade Commission on the horizon, acts taken in the life sciences industry may be under greater scrutiny.
Antitrust Meets the Biosimilars Market
In the first antitrust case between a biologic sponsor and biosimilar maker, Pfizer filed suit in the U.S. District Court for the Eastern District of Pennsylvania on September 20, 2017 alleging that Johnson & Johnson (“J&J”)—sponsor of the blockbuster biologic Remicade® (infliximab)—engaged in a plan to keep Pfizer’s biosimilar version of the product off the market.
In a motion to dismiss filed on November 28, 2017, however, J&J argues the complaint fails because, inter alia, Pfizer has alleged no facts showing it has attempted to compete for insurance company reimbursements through multi-product bundling incentives or by offering net prices for Inflectra® that are lower than Remicade®. J&J further argues that any delay in market uptake for Inflectra® is not due to anticompetitive acts, but rather, market forces that cut against immediate adoption for a biosimilar to Remicade®, such as competition in approved indications, lack of interchangeable designation, and the possibility that physicians are not as familiar with biosimilars. In response, Pfizer argues it need not allege an inability to employ its own bundles and that it has sufficiently alleged a multifaceted scheme by J&J to foreclose Inflectra® biosimilar competition through exclusive dealings.
While the Supreme Court and Federal Circuit have interpreted various provisions of the BPCIA, courts have yet to grapple with the economic nuances in the nascent biosimilars market. As this case develops, the court is likely to address how the intricacies of biosimilar competition impact the application of the antitrust laws.
FTC Scrutinizes Citizen Petition Process
In a case that Acting Chairwoman Maureen Ohlhausen has long been interested to pursue,
Given the ever changing regulatory system and ongoing changes at the FDA under Commissioner Scott Gottlieb’s leadership, life sciences companies with expertise on specific matters may wish to petition the agency. Moving into 2018 and beyond, the ViroPharma case is likely to illustrate whether certain petitioning strategies will fall outside the scope of traditional Noerr-Pennington protections and illuminate the extent to which current FTC leadership will pursue FDA-related issues.
Settlements, States, and the Eleventh Amendment
In In re Flonase Antitrust Litigation, the U.S. Court of Appeals for the Third Circuit ruled the Eleventh Amendment shielded Louisiana from GlaxoSmithKline’s efforts to enforce a prior settlement with a class of private indirect purchasers to which Louisiana did not opt out.
On December 22, 2017, the Third Circuit declined GSK’s motion, reasoning that by attempting to enjoin Louisiana from pursuing a claim in its own state court, this qualified as a suit seeking an equitable remedy against a state, thereby implicating Louisiana’s sovereign immunity protections under the Eleventh Amendment. Moreover, although Louisiana was notified of the 2013 indirect purchaser settlement and declined to opt out of the class, the Third Circuit held Louisiana’s silence was insufficient to waive sovereign immunity, as failing to opt out was not a clear intention of waiver given that class notifications under CAFA impose no duties on state officials.
GlaxoSmithKline filed for en banc review on January 5, 2018, arguing, inter alia, that the panel’s ruling invites all 50 states to re-litigate settled claims. The development of this issue is important because class-action defendants in the life sciences industry are now routinely facing multiple waves of antitrust plaintiffs: from purchasers, to competitors, to the FTC, to State Attorneys General. Under the Third Circuit’s holding in In re Flonase, life sciences companies may now be exposed to antitrust claims brought by all 50 State Attorneys General in their respective states, even though the state had been notified of a class to which it belongs is in the process of settling, but did not opt out.
In all three cases, important antitrust issues are developing that will impact the life sciences industry. Whether the application of antitrust principles in the context of biosimilar competition, Noerr-Pennington’s protection of a multi-petition strategy, or the potential for costly waves of antitrust cases brought by State Attorneys General despite a prior settlement, these cases highlight the need for pharmaceutical companies to assess the antitrust implications of their strategies. Paul Hastings will be tracking these antitrust cases (and others) with interest over the course of this year.