Case 2:14-cv-06997-KSH-CLW Document 1 Filed 11/07/14 Page 1 of 78 PageID: 1
`
`Frank R. Schirripa (fschirripa@hrsclaw.com)
`David R. Cheverie (dcheverie@hrsclaw.com)
`John A. Blyth (jblyth@hrsclaw.com)
`HACH ROSE SCHIRRIPA & CHEVERIE LLP
`185 Madison Avenue, 14th Floor
`New York, NY 10016
`Tel.: 212.213.8311
`Fax: 212.779.0028
`
`Brent W. Landau (blandau@hausfeld.com)
`HAUSFELD LLP
`325 Chestnut Street, Suite 900
`Philadelphia, PA 19106
`Tel.: 215.985.3270
`Fax: 215.985.3271
`
`Counsel for Plaintiff and Proposed Class
`(Additional Counsel on Signature page)
`
`
` IN THE UNITED STATES DISTRICT COURT
` FOR THE DISTRICT OF NEW JERSEY
`
`
`
`International Union of Bricklayers and Allied
`Craft Workers Local 1 Health Fund, individually
`and on behalf of all others similarly situated,
`
`
`
`
`
`Civil Action No.
`
` Plaintiff,
`
`
`
`Class Action Complaint
`
`
`
`
`
`
`
`
`
` v.
`
`Celgene Corporation,
`
`
`
`
`
`
`
` Defendant.
`
`CFAD VI 1043 - 0001
`CFAD VI v. CELGENE
`IPR2015-01102
`
`

`
`Case 2:14-cv-06997-KSH-CLW Document 1 Filed 11/07/14 Page 2 of 78 PageID: 2
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`
`
`I.
`
`II.
`
`TABLE OF CONTENTS
`
`NATURE OF THE ACTION ..............................................................................................1
`
`JURISDICTION AND VENUE ..........................................................................................3
`
`III.
`
`THE PARTIES.....................................................................................................................3
`
`IV.
`
`INDUSTRY BACKGROUND ............................................................................................4
`
`A.
`
`B.
`
`C.
`
`D.
`
`E.
`
`Characteristics of the Pharmaceutical Marketplace .................................................4
`
`The Regulatory Structure for Approval of Generic Drugs, Listing Patent
`Information in the Orange Book, and the Substitution of Generic Drugs for
`Brand Name Drugs ..................................................................................................6
`
`1.
`
`2.
`
`3.
`
`The Hatch-Waxman Amendments ...............................................................7
`
`Requirements for Listing Patents in the Orange Book ................................8
`
`Paragraph IV Certifications .......................................................................12
`
`The Availability of Citizen Petitions to Delay The FDA Approval of
`Generic Drugs ......................................................................................................155
`
`The Benefits of Generic Drugs ............................................................................177
`
`The Impact of Authorized Generics .......................................................................19
`
`V.
`
`DEFENDANT’S ANTICOMPETITIVE CONDUCT ......................................................21
`
`A.
`
`Celgene’s Monopolization through Anticompetitive Interference by
`Refusing to Sell to Generic Manufacturers ..........................................................211
`
`1.
`
`2.
`
`3.
`
`4.
`
`Celgene Prevents Barr from Obtaining Samples from Seratec by
`Entering into an Exclusive Supply Contract with Seratec .......................233
`
`Celgene Refuses to Sell Samples to Lannett Despite FDA
`Approval to Do So ...................................................................................255
`
`Celgene Refuses to Sell Samples to Mylan, Despite FDA Approval
`to Do So .....................................................................................................27
`
`Celgene Refuses to Sell Samples to Dr. Reddy’s Laboratories,
`Despite FDA Approval to Do So .............................................................300
`
`B.
`
`Celgene Fraudulently Obtained Patents on Thalidomide and Lenalidomide
`to Obstruct Generic Competition and Maintain its Monopoly on Thalomid
`and Revlimid ........................................................................................................311
`
`i
`
`CFAD VI 1043 - 0002
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`

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`
`
`C.
`
`Celgene Files Litigation against Barr, Natco, Arrow, and Watson to
`Prevent or Delay Them from Marketing their Proposed ANDA Product in
`Competition with Celgene .....................................................................................49
`
`1.
`
`2.
`
`Celgene’s Sham Litigation and Citizen Petition Against Barr ................490
`
`Celgene’s Sham Litigation against Natco, Arrow, and Watson ..............523
`
`D.
`
`E.
`
`Celgene’s Settlements with Barr and Lannett Had Anticompetitive Effects .........55
`
`Celgene’s Scheme Was Intended To, And Did, Harm Competition and
`Delay Generic Entry ............................................................................................555
`
`VI.
`
`CLASS ACTION ALLEGATIONS ................................................................................577
`
`VII. OTHER FACTUAL ALLEGATIONS ............................................................................600
`
`A.
`
`B.
`
`C.
`
`Effects on Competition and Damages to Plaintiff and the Class .........................600
`
`Effect on Interstate and Intrastate Commerce ......................................................611
`
`Monopoly Power ..................................................................................................622
`
`VIII. CLAIMS FOR RELIEF ...................................................................................................634
`
`IX.
`
`DEMAND FOR JUDGMENT ...........................................................................................74
`
`X.
`
`JURY DEMAND .............................................................................................................746
`
`
`
`
`
`ii
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`CFAD VI 1043 - 0003
`
`

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`
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`Plaintiff International Union of Bricklayers and Allied Craft Workers Local 1 Health Fund
`
`(“Plaintiff”) brings this class action on behalf of itself and all other similarly situated end-payors
`
`against Celgene Corporation (“Celgene”). Based on personal knowledge as to facts pertaining to
`
`them, and upon information and belief as to all other matters, Plaintiff alleges as follows:
`
`I.
`
`NATURE OF THE ACTION
`
`1.
`
`This is a civil antitrust action seeking damages arising out of Celgene’s unlawful
`
`exclusion of competition from the market for thalidomide (“Thalomid”), which Celgene sells
`
`under the brand-name Thalomid, and lenalidomide (“Revlimid”), which Celgene sells under the
`
`brand-name Revlimid.
`
`2.
`
`Celgene has sold Thalomid and Revlimid in capsule format, which are administered
`
`orally. Both drugs have dangerous side effects; namely, life-threatening birth defects when
`
`ingested by pregnant women. As a result, these drugs are highly regulated by the FDA.
`
`3.
`
`Since 2006, Celgene has recorded $20.9 billion from the sale of Thalomid and
`
`Revlimid combined, comprising between 71 and 93 percent of its annual revenues. A twenty-eight
`
`day supply of Thalomid can cost from between $8,000 to $10,000, and the same supply of
`
`Revlimid costs approximately $15,000 to $20,000. Celgene’s revenues in 2013 from Revlimid
`
`were $4,280,030,000, and $244,500,000 from Thalomid. And Celgene has taken advantage of its
`
`market monopoly: when Thalomid first gained approval to enter the marketplace, it cost
`
`approximately $6 per capsule; now, it costs between $212 and $357 per capsule. Celgene charges
`
`approximately $500 per capsule of Revlimid.
`
`4.
`
`In order to delay the onset of generic competition and squeeze more multi-billion
`
`dollar years out of these products, Celgene engaged in a multi-faceted scheme to maintain its
`
`monopoly and unlawfully interfere with competitors’ efforts to enter the market with generic
`
`versions of Thalomid or Revlimid, including:
`
`1
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`CFAD VI 1043 - 0004
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`

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`
`
`a.
`
`Using FDA safety requirements that were designed to ensure safe access to
`
`these dangerous drugs as a pretext to delay and indefinitely postpone the
`
`availability of cost-saving generic alternatives to these drugs;
`
`b.
`
`Fraudulently obtaining patents on the procedures to ensure safe use of
`
`Thalomid and Revlimid in order to block generic entrants from coming to
`
`market; and
`
`c.
`
`Engaging in sham litigation against any competitor who managed to obtain
`
`samples of Thalomid or Revlimid to do its generic bioequivalence testing.
`
`5.
`
`Although existing federal law already forbids the use of safety regulations to deny
`
`generic drugmakers access to drugs, members of the United States House of Representatives have
`
`taken note of Celgene’s anticompetitive actions, and introduced H.R. 5657, known as the Fair
`
`Access for Safe and Timely Generics Act, or FAST. FAST would require that brand-name
`
`manufacturers, as a condition of product approval, agree not to “adopt, impose or enforce any
`
`condition relating to the sale, resale or distribution” of REMS-restricted drugs that would prevent
`
`generics makers from obtaining needed samples. FAST purports to increase the penalties for
`
`conduct like Celgene’s with Thalomid and Revlimid.
`
`6.
`
`Celgene’s anticompetitive tactics to block generic entry have caused Plaintiff and
`
`the class of end-payors it seeks to represent (as defined below) to pay higher prices to treat the
`
`dangerous conditions (leprosy and multiple myeloma) that Thalomid and Revlimid address.
`
`7.
`
`Plaintiff brings this action as a class action on behalf of all consumers and third
`
`party payors (collectively, “End-Payors”) in certain states, the District of Columbia, and Puerto
`
`Rico who indirectly purchased, paid and/or provided reimbursement for Thalomid and/or
`
`Revlimid, other than for re-sale since November 7, 2010 (see Class Definition below).
`
`2
`
`CFAD VI 1043 - 0005
`
`

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`
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`8.
`
`Plaintiff asserts claims for compensatory and/or treble damages for violations of
`
`the State laws enumerated below.
`
`II.
`
`JURISDICTION AND VENUE
`
`9.
`
`This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332(d) because
`
`this is a class action in which the aggregate amount in controversy exceeds $5,000,000 and at least
`
`one member of the putative class is a citizen of a state different from that of one of the Defendant.
`
`10.
`
`This Court also has jurisdiction over this matter pursuant to 15 U.S.C. § 26 and 28
`
`U.S.C. §§ 1331 and 1337 in that Plaintiff brings claims under Section 16 of the Clayton Act, 15
`
`U.S.C. § 26, for injunctive and equitable relief to remedy the Defendant’s violations of Sections 1
`
`and 2 of the Sherman Antitrust Act, 15 U.S.C. §§ 1 and 2. The Court has supplemental jurisdiction
`
`over Plaintiff’s pendent state law claims pursuant to 28 U.S.C. § 1367.
`
`11.
`
`Venue is appropriate within this district under Section 12 of the Clayton Act, 15
`
`U.S.C. § 22 and 28 U.S.C. §1391(b) and (c), because Defendant transact business within this
`
`district, and/or have an agent and/or can be found in this district, and the interstate trade and
`
`commerce, hereinafter described, is carried out, in substantial part, in this district.
`
`III. THE PARTIES
`
`12.
`
`Plaintiff International Union of Bricklayers and Allied Craft Workers Local 1
`
`Health Fund (“Local 1”) maintains its principal place of business in Wallingford, Connecticut.
`
`Plaintiff has purchased and/or provided reimbursement for some or all of the purchase price for
`
`Revlimid and Thalomid, other than for re-sale, for its members in Massachusetts and Nebraska, at
`
`supra-competitive prices during the Class Period and has thereby been injured.
`
`13.
`
`Defendant Celgene is a corporation organized and existing under the laws of
`
`Delaware, having its principal place of business at 86 Morris Avenue, Summit, New Jersey 07901.
`
`3
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`CFAD VI 1043 - 0006
`
`

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`14.
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`All of Defendant’s wrongful actions described in this complaint are part of, and in
`
`furtherance of, the illegal monopolization and restraint of trade alleged herein, and were
`
`authorized, ordered, and/or undertaken by Defendant’s various officers, agents, employees, or
`
`other representatives while actively engaged in the management of Defendant’s affairs (or that of
`
`their predecessors-in-interest) within the course and scope of their duties and employment, and/or
`
`with the actual, apparent, and/or ostensible authority of Defendant.
`
`IV.
`
`INDUSTRY BACKGROUND
`
`A.
`
`Characteristics of the Pharmaceutical Marketplace
`
`15.
`
`The marketplace for the sale of prescription pharmaceutical products in the United
`
`States contains a significant feature that can be exploited by manufacturers in order to extend a
`
`monopoly in the sale of a particular pharmaceutical composition. In most industries, the person
`
`responsible for paying for a product is also the person who chooses which product to purchase.
`
`When the same person has both the payment obligation and the choice of products, the price of the
`
`product plays a predominant role in the person’s choice of products and, consequently,
`
`manufacturers have a strong incentive to lower the price of their products to maintain profitability.
`
`16.
`
`The pharmaceutical marketplace, by contrast, is characterized by a “disconnect”
`
`between the payment obligation and the product selection. State laws prohibit pharmacists from
`
`dispensing many pharmaceutical products, including Thalomid and Revlimid, to patients without
`
`a prescription written by the patient’s physician. The prohibition on dispensing certain products
`
`without a prescription introduces a “disconnect” in the pharmaceutical marketplace between the
`
`payment obligation and the product selection. The patient (and in many cases his or her insurer)
`
`has the obligation to pay for the pharmaceutical product, but the patient’s physician chooses which
`
`product the patient will buy.
`
`4
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`CFAD VI 1043 - 0007
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`

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`17. Many pharmaceutical manufacturers, including Defendant, exploit this feature of
`
`the pharmaceutical marketplace. The so-called “brand manufacturers” (i.e., the manufacturers of
`
`branded, as opposed to generic, pharmaceuticals) employ large forces of sales representatives,
`
`known as “detailers,” who visit physicians’ offices in an effort to persuade physicians to prescribe
`
`the manufacturer’s products. Importantly, these detailers do not advise the physicians of the cost
`
`of the branded products. Studies show that physicians typically are not aware of the relative costs
`
`of branded pharmaceutical products and that, even when physicians are aware of the relative cost,
`
`they are insensitive to price differences, because they do not pay for the products themselves. The
`
`result is a marketplace in which price plays a comparatively unimportant role in product selection.
`
`18.
`
`In situations in which two manufacturers each sell a drug that serves a similar
`
`medical function and each manufacturer uses a significant detailer force, those products are often
`
`sold at very similar, high prices, thus eliminating any consumer benefit from that “competition.”
`
`This is in stark contrast to the situation in which the competing seller of an AB-rated, bioequivalent
`
`drug is a generic company without a detailer force. In that case, the generic price is significantly
`
`lower than the brand price, and consumers benefit as Congress had intended by enacting the Hatch-
`
`Waxman Act, discussed below.
`
`19. When the relative importance of the price between two branded pharmaceuticals,
`
`or pharmaceuticals that otherwise are not AB-rated to one another, is low, the price elasticity of
`
`demand — the extent to which sales go down when price goes up — is by definition also low,
`
`which in turn gives brand manufacturers the ability to raise or maintain price substantially above
`
`competitive levels without losing sales. The ability to raise price above competitive levels without
`
`losing sales is referred to by economists and antitrust courts as market power or monopoly power.
`
`5
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`CFAD VI 1043 - 0008
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`
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`Thus, the net result of the pharmaceutical industry features and marketing practices described
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`above often is to allow brand manufacturers to gain and maintain monopoly power.
`
`20.
`
`Congress sought to ameliorate the “disconnect,” and to restore some of the normal
`
`competitive pressures to the pharmaceutical marketplace, by authorizing the manufacture and sale
`
`of generic pharmaceuticals under the Hatch-Waxman Act, discussed below. When a pharmacist
`
`receives a prescription for a branded pharmaceutical product, and an AB-rated generic version of
`
`that product is available, state laws permit (or in some cases require) the pharmacist to dispense
`
`the generic product in lieu of the branded product. In this way, the importance of price is
`
`reintroduced to the product selection decision at the pharmacy counter, and the pharmaceutical
`
`marketplace “disconnect” is ameliorated between the AB-rated generic product and the
`
`corresponding branded product. When an AB-rated generic product is introduced and is not
`
`prevented from competing unfettered, branded pharmaceutical manufacturers are no longer able
`
`to exploit the features of the pharmaceutical industry, their monopoly power dissipates, and some
`
`of the normal competitive pressures are restored.
`
`21.
`
`If Defendant’s unlawful conduct had not prevented generic manufacturers from
`
`successfully entering the market with generic versions of Thalomid and Revlimid, end-payors like
`
`Plaintiff and members of the Class would have saved millions of dollars in purchases. Defendant’s
`
`anticompetitive scheme purposely manipulated generic competition to Thalomid and Revlimid.
`
`B.
`
`The Regulatory Structure for Approval of Generic Drugs, Listing
`Patent Information in the Orange Book, and the Substitution of
`Generic Drugs for Brand Name Drugs
`
`22.
`
`Under the Federal Food, Drug, and Cosmetic Act (“FDCA”), branded drug
`
`manufacturers must obtain FDA approval to sell a new drug product by filing a New Drug
`
`Application (“NDA”). 21 U.S.C. §§ 301–392. An NDA must include specific data concerning the
`
`6
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`CFAD VI 1043 - 0009
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`safety and effectiveness of the drug, as well as any information on applicable patents. 21 U.S.C. §
`
`355(a), (b).
`
`23. When the FDA approves a branded drug manufacturer’s NDA, the manufacturer
`
`may list in the Orange Book any patents the manufacturer believes could reasonably be asserted
`
`against a generic manufacturer that makes, uses, or sells a generic version of the branded drug
`
`before the expiration of the listed patents. The branded drug manufacturer may also list in the
`
`Orange Book any patents issued after the FDA approved the NDA within thirty days of their
`
`issuance. 21 U.S.C. § 355(b)(1) & (c)(2).
`
`24.
`
`The FDA relies completely on a branded drug manufacturer’s truthfulness about
`
`patent validity and applicability because the FDA does not have the resources or authority to verify
`
`a branded drug manufacturer’s patents and patent information for accuracy or trustworthiness. In
`
`listing patents and patent information in the Orange Book, the FDA merely performs a ministerial
`
`act.
`
`1.
`
`The Hatch-Waxman Amendments
`
`25. The Hatch-Waxman Act, enacted in 1984, simplified the regulatory hurdles for
`
`prospective generic drug manufacturers by eliminating the need to file lengthy and costly NDAs.
`
`See Drug Price Competition and Patent Term Restoration Act, Pub. L. No. 98-417, 98 Stat. 1585
`
`(1984). A manufacturer seeking approval to sell a generic version of a brand drug may instead file
`
`an ANDA. An ANDA relies on the scientific findings of safety and effectiveness included in a
`
`branded drug manufacturer’s original NDA, but must further show that the generic drug (i)
`
`contains the same active ingredient(s), dosage form, route of administration, and strength as the
`
`brand drug, and (ii) is absorbed at the same rate and to the same extent as the brand drug—that is,
`
`that the generic drug is pharmaceutically equivalent and bioequivalent (together, “therapeutically
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`7
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`CFAD VI 1043 - 0010
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`
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`equivalent”) to the brand drug. The FDA assigns an “AB” rating to generic drugs that are
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`therapeutically equivalent to their brand-name counterparts.
`
`26. The FDCA and Hatch-Waxman Act operate on the presumption that bioequivalent
`
`drugs containing identical amounts of the same active ingredients, having the same route of
`
`administration and dosage form, and meeting applicable standards of strength, quality, purity and
`
`identity, are therapeutically equivalent and may be substituted for one another. Bioequivalence
`
`means that the active ingredient of the proposed generic drug would be present in the blood of a
`
`patient to the same extent and for the same amount of time as its branded counterpart. 21 U.S.C. §
`
`355(j)(8)(B).
`
`27. Congress enacted the Hatch-Waxman Act to expedite the entry of legitimate (non-
`
`infringing) generic competitors, thereby reducing healthcare expenses nationwide. Congress also
`
`sought to protect pharmaceutical manufacturers’ incentives to create new and innovative products.
`
`28. The Hatch-Waxman Act achieved both goals, advancing substantially the rate of
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`generic product launches and ushering in an era of historic high profit margins for branded drug
`
`manufacturers. In 1983, before the Hatch-Waxman Act, only 35% of the top-selling branded drugs
`
`with expired patents had generic alternatives; by 1998, nearly all did. In 1984, annual prescription
`
`drug revenue for branded and generic drugs totaled $21.6 billion; by 2009 total annual prescription
`
`drug revenue had soared to $300 billion.
`
`2.
`
`Requirements for Listing Patents in the Orange Book
`
`29.
`
`The regulatory structure created by the Hatch-Waxman Act includes a process for
`
`identifying and addressing patents that arguably apply to brand and generic drug products. This
`
`regulatory structure requires the holder of an NDA to submit information concerning its patents to
`
`the FDA, which incorporates the information into the Orange Book. Patent information is listed in
`
`8
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`CFAD VI 1043 - 0011
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`
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`the Orange Book for each NDA to which the patent may apply and can be reasonably asserted
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`against potential infringers in patent litigation. Then, when a generic company seeks to file an
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`ANDA, it must submit patent certifications or statements, described more fully below, to each
`
`patent listed in the Orange Book for the NDA that is the reference listed drug for the ANDA.
`
`30.
`
` Under the Hatch-Waxman Act, the NDA holder must submit certain required
`
`information concerning “any patent which claims the drug for which the application was submitted
`
`or which claims a method of using such drug and with respect to which a claim of patent
`
`infringement could reasonably be asserted if a person not licensed by the owner engaged in the
`
`manufacture, use, or sale of the drug.” 21 U.S.C. § 355(b)(1)(G).
`
`31. When Celgene submitted patent information regarding the Thalomid and Revlimid
`
`patents, respectively—the relevant statute required the NDA applicant to list “any patent which
`
`claims the drug for which the applicant submitted the application or which claims a method of
`
`using such drug and with respect to which a claim of patent infringement could reasonably be
`
`asserted if a person not licensed by the owner engaged in the manufacture, use, or sale of the drug.”
`
`21 U.S.C.A. § 355(b)(1) (1999) & (2002).
`
`32.
`
`The then-applicable regulations identified three types of patents that could properly
`
`be listed: “drug substance (ingredient) patents, drug product (formulation and composition)
`
`patents, and method of use patents.” 21 C.F.R. § 314.53(b) (1999) & (2002). The regulations
`
`further provided that “[f]or patents that claim a drug substance or drug product, the [NDA]
`
`applicant shall submit information only on those patents that claim a drug product that is the
`
`subject of a pending or approved application, or that claim a drug substance that is a component
`
`of such a product.” Id. (emphasis added). The NDA holder also could properly list a patent for a
`
`drug product only “with respect to which a claim of patent infringement could reasonably be
`
`9
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`CFAD VI 1043 - 0012
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`asserted if a person not licensed by the owner of the patent engaged in the manufacture, use, or
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`sale of the drug product.” Id. (emphasis added). In short, for patents that claimed a drug product,
`
`the NDA applicant could submit information describing the patent as a “drug product patent” only
`
`if the patent claimed the drug product that was the subject of the NDA; the patent’s drug product
`
`claim could claim not just some drug product – it had to claim the relevant drug product, i.e., the
`
`FDA approved drug product as to which the NDA applicant listed the patent.
`
`33.
`
`NDA applicants were on their honor to properly identify the “Type of patent, i.e.,
`
`drug, drug product, or method of use.” 21 C.F.R. § 314.53(c)(2)(ii) (1999) & (2002). The FDA
`
`expressly refused to police the proper listing of patents and patent information, noting that it “does
`
`not have the resources or the expertise to review patent information for its accuracy and relevance
`
`to an NDA,” and that it “believes that the declaration requirements under § 314.53(c) [requiring
`
`the applicant to declare “that Patent No. ____ covers the formulation, composition, and/or method
`
`of use of (name of drug product)”], as well as an applicant’s potential liability if it submits an
`
`untrue statement of material fact, will help ensure that accurate patent information is submitted.”
`
`Abbreviated New Drug Application Regulations: Patent and Exclusivity Provisions, 59 Fed. Reg.
`
`50338, 50343-45 (Oct. 3, 1994).
`
`34.
`
`Important regulatory and competitive consequences flow from the distinction
`
`between patents described as containing relevant drug product claims, and patents described as
`
`containing only method-of-use claims. If the patentee describes the patent in the patent information
`
`as containing a relevant drug product claim, an ANDA applicant desiring to market its generic
`
`product before the patent expires must file a Paragraph IV Certification, certifying that the patent
`
`is invalid, unenforceable, or would not be infringed by the generic product. 21 U.S.C.
§
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`355(j)(2)(A)(vii)(IV); 21 C.F.R. § 314.94(a)(12)(i)(A)(4). The patentee and/or NDA holder then
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`has the opportunity to obtain an automatic 30-month stay on generic competition by filing a patent
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`infringement lawsuit against the ANDA applicant. In addition, and of particular importance here,
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`the FDA is prohibited from approving a subsequent applicant’s ANDA until 180 days after the
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`first-filer has entered the market. 21 U.S.C. § 355(j)(5)(B)(iv). As discussed in detail below, this
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`“180-day exclusivity” creates an opportunity for the patentee to craft a “bottleneck” to delay all
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`generic competition by paying the first-filer to delay its entry into the market.
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`35.
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`By contrast, if the patentee describes the patent on the basis of method-of-use
`
`claims, in certain circumstances an ANDA applicant can submit what is known as a “Section viii
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`Statement.” 21 U.S.C. § 355(j)(2)(A)(viii); 21 C.F.R. § 314.94(a)(12)(ii i). In a Section viii
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`Statement, the ANDA applicant states it is not seeking approval for the particular use covered by
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`the method-of-use patent. If an ANDA applicant makes only a Section viii Statement, then the
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`patentee or NDA holder cannot obtain an automatic 30-month stay on generic competition even if
`
`it sues the ANDA applicant for patent infringement. The FDA can approve an ANDA containing
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`only a Section viii Statement without regard to whether any other ANDA applicant is otherwise
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`entitled to a 180-day exclusivity period.
`
`36. Whether a patent actually contains drug product claims that claim the relevant drug
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`product is irrelevant for purposes of Paragraph IV certifications. Rather, FDA regulations and
`
`instructions made unmistakably clear that the patent information submitted by the NDA applicant
`
`determined whether generic manufacturers would be permitted to make Paragraph IV certifications
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`and thus would be eligible for the 180-day exclusivity period. See, for example, FDA Proposed
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`Rule, Abbreviated New Drug Application Regulations, 54 FR 28872, at 28885 (July 10, 1989)
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`(“the patent information submitted to FDA, whether or not published in the list, should be the basis
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`of the [generic company’s] certification”); 21 C.F.R. § 314.94(a)(12)(iii) (ability to submit only a
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`Section viii statement is based on “patent information … submitted under … § 319.53”).
`
`37.
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`In short, describing a patent as containing a relevant drug product claim gives the
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`patentee two key competitive advantages—an automatic 30-month stay on generic competition,
`
`and an ability to create a bottleneck delaying all generic competition by paying the first generic
`
`filer to delay entry into the market.
`
`3.
`
`Paragraph IV Certifications
`
`38. Where the NDA holder has submitted patent information describing a listed patent
`
`as claiming a relevant drug substance or drug product, an ANDA applicant must certify that the
`
`generic drug will not infringe those patents. Under the Hatch-Waxman Act, a generic
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`manufacturer’s ANDA must contain one of four certifications:
`
`1.
`
`2.
`
`3.
`
`4.
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`that no patent for the branded drug has been filed with the FDA (a
`“Paragraph I certification”);
`
`that the patent for the branded drug has expired (a “Paragraph II
`certification”);
`
`that the patent for the branded drug will expire on a particular date
`and the manufacturer does not seek to market its generic product
`before that date (a “Paragraph III certification”); or
`
`that the patent for the branded drug is invalid or will not be
`infringed by the generic drug manufacturer’s proposed product (a
`“Paragraph IV certification”).
`
`39.
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`If a generic drug manufacturer files a Paragraph IV Certification, a branded drug
`
`manufacturer can delay FDA approval of the ANDA simply by suing the ANDA applicant for
`
`patent infringement. If the branded drug manufacturer initiates a patent infringement action against
`
`the generic drug manufacturer filer within forty-five days of receiving notification of the Paragraph
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`IV certification (“Paragraph IV Litigation”), the FDA will not grant final approval to the ANDA
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`until the earlier of (a) the passage of 30 months, or (b) the issuance of a decision by a court that
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`the patent is invalid or not infringed by the generic drug manufacturer’s ANDA. Until one of those
`
`conditions occurs, the FDA may grant “tentative approval,” but cannot authorize the generic drug
`
`manufacturer to market its product. FDA may grant an ANDA tentative approval when it
`
`determines that the ANDA would otherwise be ready for final approval but for the 30-month stay.
`
`40.
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`As an incentive to generic drug manufacturers to seek approval of generic
`
`alternatives to branded drugs, the first generic drug manufacturer to file an ANDA containing a
`
`Paragraph IV Certification typically receives a period of protection from competition from other
`
`generic versions of the drug. For Paragraph IV Certifications made before December 8, 2003, the
`
`first generic drug manufacturer applicants received 180 days of market exclusivity, which could
`
`not be forfeited and was triggered only by commercial marketing of the generic product. For
`
`Paragraph IV Certifications made after December 8, 2003, the first generic drug manufacturer