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IN RE TAMOXIFEN CITRATE ANTITRUST LITIGATION

May 13, 2003

IN RE TAMOXIFEN CITRATE ANTITRUST LITIGATION


The opinion of the court was delivered by: I. Leo Glasser, Senior District Judge.

MEMORANDUM AND ORDER

SUMMARY

Plaintiffs are eighteen individuals (the "consumer plaintiffs"), eleven organizations (or their trustees) which provide certain medical benefits for their members (the "third-party payor plaintiffs"), and six consumer advocacy groups representing consumer plaintiffs (the "consumer advocacy plaintiffs") (collectively, "Plaintiffs"). Plaintiffs bring this action essentially alleging that defendant Zeneca, Inc. (together with co-defendant Astrazeneca Pharmaceuticals LP, "Zeneca") entered into an agreement with defendant Barr Laboratories, Inc. ("Barr") (collectively, "Defendants") that, while nominally settling an appeal of a judgment that declared the patent for the drug tamoxifen citrate ("tamoxifen") invalid, in fact monopolized and allocated the United States market for tamoxifen. Plaintiffs allege that this agreement violated the laws of the United States and the laws of twenty-two states. Defendants now move to dismiss the complaint on a variety of grounds. For the reasons states below, their motions are granted.

BACKGROUND

The actions involve the drug tamoxifen, the most essential drug for treatment of breast cancer.*fn1 Breast cancer is the most common malignancy and is one of the leading causes of death among women. During the 1990's, more than 1.5 million women in the United States were newly diagnosed with breast cancer. Tamoxifen is a synthetic hormone developed in the 1970's that is used, in addition to or in lieu of more drastic forms of therapy, to treat both early and advanced-stage breast cancer and to prevent recurrence. Tamoxifen has become the most widely prescribed treatment for breast cancer, and indeed is the single most-prescribed drug in the world for any cancer. The World Health Organization lists tamoxifen as an "Essential Drug," and tamoxifen is the standard of comparison in most clinical trials.

On August 20, 1985, Imperial Chemical Industries, PLC ("ICI") obtained United States Patent 4,536,516 (the '516 Patent) for tamoxifen. In December 1985 Barr filed an Abbreviated New Drug Application ("ANDA") with the Food and Drug Administration ("FDA"), requesting approval to sell a generic bioequivalent version of the pioneer drug tamoxifen. An ANDA filing is governed by the Hatch-Waxman Act, 21 U.S.C. § 355, which provides an expedient method of obtaining FDA approval to bring generic bioequivalent drugs to the market. In addition to affirming that the generic drug contains the same active ingredient(s) as the patented drug already approved and listed by the FDA, an ANDA filer must certify why the patent would not be infringed pursuant to one of four reason:

I. No patent was in fact filed for the pioneer drug;
II. The patent for the pioneer drug has expired;
III. The patent for the pioneer drug will expire on a particular date and the ANDA filer will not market its generic product before that date; or
IV. The patent for the pioneer drug is invalid or will not be infringed upon the proposed generic product.
See 21 U.S.C. § 355 (j)(2)(A)(vii)(I)-(IV).

Upon the filing of an ANDA with a paragraph IV certification, the holder of the patent whose validity is being questioned may bring an action for declaratory judgment against the ANDA filer. Such a lawsuit has the effect of staying FDA consideration and approval of the ANDA for thirty months or until the date of a court decision as to the validity of the patent whichever comes first. See 21 U.S.C. § 355 (j)(5)(B)(iii). A court, in its discretion, however, may extend the stay if the litigation is not resolved within the thirty month period. See id. One of the benefits of being the first ANDA filer to obtain FDA approval is an exclusive 180-day period in which to sell the generic drug free from other generic drug competition. See 21 U.S.C. § 355 (j)(5)(B)(iv). The 180-day period of market exclusivity is triggered either by the first sale of the applicant's product or when a court determines either that the patent is invalid or will not be infringed, whichever is earlier.*fn2 Id.

Barr's ANDA application, as amended in September 1987, certified that the '516 Patent was invalid and unenforceable. Within forty-five days of receiving notice of Barr's ANDA application, ICI sued Barr for patent infringement in the Southern District of New York.*fn3 ICI's patent infringement suit against Barr was tried before the late Honorable Vincent L. Broderick. On April 20, 1992, Judge Broderick held that the '516 Patent was invalid and unenforceable because ICI wrongfully withheld relevant material from the United States Patent and Trademark Office. Imperial Chem. Industries, PLC v. Barr Labs., Inc., 795 F. Supp. 619 (S.D.N.Y. 1992) ("ICI v. Barr"). ICI appealed that determination to the Federal Circuit.

Zeneca and Barr Settle the Patent Infringement Dispute

In 1993, while the appeal was pending, Zeneca (which had recently succeeded to ICI's rights in the '516 Patent) and Barr entered into a settlement agreement (the "Settlement Agreement"). Pursuant to the Settlement Agreement, Barr withdrew its challenge to the validity of the '516 Patent and amended its ANDA application to certify that it would not seek to market its generic version of tamoxifen until the patent expired. In return, Zeneca paid Barr $21 million and licensed Barr to sell tamoxifen manufactured by Zeneca in the United States, including Puerto Rico and the District of Columbia. The Settlement Agreement was conditioned upon the Federal Circuit vacating Judge Broderick's judgement declaring the '516 Patent invalid.*fn4

Plaintiffs allege that, as part of the Settlement Agreement, Barr and Zeneca also agreed that Barr would not commercially market its generic product to avoid triggering the 180-day exclusivity period. Zeneca and Barr's understanding allegedly was that, although Barr's ANDA application would be amended to paragraph III, if a subsequent ANDA filer successfully invalidated the '516 Patent then Barr would insist upon its exclusivity rights (as the first paragraph IV filer) and not commercially market the generic until 2002, thereby delaying the triggering of the 180-day exclusivity period.

Barr and Zeneca filed a Joint Motion to Dismiss the Appeal as Moot and to Vacate the Judgment Below. No copy of the Settlement Agreement was presented to the Court of Appeals. Sidmak Laboratories, Inc. ("Sidmak"), a generic drug manufacturer, sought leave to file, untimely, a brief as amicus curiae objecting to dismissal of the appeal. On March 19, 1993, the Federal Circuit granted the joint motion pursuant to its practice at the time to honor settlement agreements and denied Sidmak's motion. See Imperial Chem. Indus., PLC v. Heumann Pharma GmbH & Co., 991 F.2d 811 (table) (Fed. Cir. Mar. 19, 1993).*fn5 On March 23, 1993 Judge Broderick vacated the judgement and dismissed the case. Consequently, the '516 Patent remained valid, and Zeneca's Nolvadex® brand and Barr's licensed version of tamoxifen were the only products on the market. Although Barr could produce tamoxifen at a lower cost than the price at which it obtains tamoxifen from Zeneca under license, Barr's ability to price the licensed version is restrained by that higher cost.

Subsequent ANDAs for Tamoxifen

In June 1994, Novopharm Ltd. ("Novopharm") filed an ANDA for tamoxifen that claimed the '516 Patent was invalid.*fn6 Subsequently, on January 18, 1995 Zeneca sued Novopharm for patent infringement. Before discovery began, Novopharm moved for summary judgment on the basis that the ICI v. Barr Judgment should be given preclusive effect and that the vacatur should be ignored. (Change Dec., Ex. 8.) The district court disagreed. Zeneca Ltd. v. Novopharm Ltd., 923 F. Supp. 75 (D. Md. 1995). After discovery was completed, Novopharm again moved for summary judgment, this time arguing that the court should adopt two factual findings made in the vacated judgment in ICI v. Barr under the doctrine of issue preclusion. Zeneca Ltd. v. Novopharm Ltd., 919 F. Supp. 193, 196 (D. Md. 1996). Again the district court denied the motion, id. at 196-98, and subsequently found that Zeneca did not engage in inequitable conduct before the PTO, and therefore granted judgment to Zeneca upholding the validity of the '516 Patent. (Chang Dec., Exs. 9 and 10.) On appeal, the Federal Circuit affirmed the validity of the '516 Patent in an unpublished decision. Zeneca Ltd. v. Novopharm Ltd., 111 F.3d 144, 1997 WL 168318 (Fed. Cir. Apr. 10, 1997) (Table).

In August 1994, Pharmachemie, B.V. ("Pharmachemie") submitted an ANDA with a paragraph III certification for its version of tamoxifen. In February 1996, Pharmachemie amended its ANDA to include a paragraph IV certification. Zeneca then sued Pharmachemie for patent infringement within 45 days of the amendment, see Zeneca Ltd. v. Pharmachemie, B.V., Civ. No. 96-21413 (RCL) (D. Mass.), triggering the statutory 30-month stay. The FDA gave tentative approval to Pharmachemie's ANDA on April 3, 1997. Before the 30-month stay expired, Zeneca moved the court to extend the stay. The motion was denied in a published decision. Zeneca Ltd. v. Pharmachemie, B.V. 16 F. Supp.2d 112 (D. Mass. 1998). Although not mentioned in the Complaint, prior to trial the district court granted Zeneca's motion for partial summary judgment on the issues of collateral estoppel, patent misuse, and unclean hands. Zeneca Ltd. v. Pharmachemie, B.V., 37 F. Supp.2d 85 (D. Mass. 1999). At trial, Pharmachemie argued that the '516 Patent was unenforceable because Zeneca had engaged in inequitable conduct before the PTO and that the patent was invalid because it did not set forth the "best mode" for carrying out the invention, as required by 35 U.S.C. § 112. Zeneca Ltd. v. Pharmachemie, B.V., Civ. No. 96-21413 (RCL), slip op. at 3 (D. Mass. Sept. 14, 2000). The court granted judgment as a matter of law to Zeneca on the inequitable conduct claim, and a jury returned a verdict in Zeneca's favor on the best mode claim. Id. at 4-5. No appeal was taken.

In January 1996, Mylan Pharmaceuticals, Inc. ("Mylan") submitted an ANDA with a paragraph IV certification for its version of tamoxifen. Zeneca sued Mylan in the Western District of Pennsylvania for patent infringement within 45 days of that certification, also thus triggering the 30-month statutory stay of FDA approval for Mylan's ANDA. Mylan then agreed to follow the Pharmachemie court's decision, and the case was dismissed after that court ruled in favor of Zeneca. Zeneca Ltd. v. Mylan Labs., No. 96-333 (W.D. Pa. Nov. 30, 2000).

Barr's Petition to the FDA

While Mylan and Pharmachemie's actions were pending before the district courts, on June 26, 1998, Barr filed a Petition for Stay of Action with the FDA to block final marketing approval for Mylan's ANDA (the "FDA Petition"). Although Barr had amended its ANDA from a paragraph IV certification to a paragraph III certification after the ICI v. Barr settlement Barr contended in its FDA Petition that it was entitled nonetheless to the 180-day exclusivity period as the first paragraph IV filer. The FDA acceded to Barr's petition and announced in a letter to Barr, dated March 2, 1999, that it would stay any approval of tamoxifen ANDAs until 180 days after the date of the first commercial marketing of the drug under Barr's ANDA or the date of a final court decision holding the tamoxifen patent to be invalid or not infringed.

Pharmachemie and Mylan later successfully challenged this decision in court. Mylan Pharmaceuticals, Inc. v. Henney, 94 F. Supp.2d 36, 54 (D.D.C. 2000), vacated as moot sub nom. Pharmachemie, B.V. v. Barr Labs., Inc., 276 F.3d 627 (D.C. Cir. 2002). In response to the district court's order, on June 26, 2000 the FDA revoked Barr's eligibility for the 180-day exclusivity period.

Allegations Regarding Injury

Plaintiffs essentially allege that but for the Settlement Agreement, the judgment declaring the '516 Patent invalid would have been affirmed, Barr's 180-day exclusivity period would have been triggered, and a competitive market for tamoxifen would have resulted. Plaintiffs further allege that Zeneca and Barr maintain a duopoly in which Zeneca illegally shares its monopolistic profits with Barr through the licensing agreement. The discount for purchasing tamoxifen distributed by Barr is only about 5% compared to the price for Zeneca's brand name version, Nolvadex®. Plaintiffs allege that because the Settlement Agreement permits Zeneca and Barr to charge artificially inflated prices, Plaintiffs were overcharged for tamoxifen.

Procedural History

The Settlement Agreement has spawned thirty lawsuits around the country, all of which have been transferred to this Court, pursuant to 28 U.S.C. § 1407, by the Judicial Panel on Multi-District Litigation for coordination of pre-trial matters. A coordinated class action complaint was subsequently filed. The complaint alleges that the Settlement Agreement enabled Zeneca and Barr to (I) resuscitate a patent that Barr had established by clear and convincing evidence was invalid and unenforceable; (ii) confine the entire United States market for tamoxifen to one manufacturer, Zeneca; (iii) share the monopoly profits of Zeneca's tamoxifen; (iv) avoid price competition and maintain artificially inflated market prices for Nolvadex® and its Zeneca-manufactured generic licensed to Barr; and (v) exclude competition from other generic manufacturers. (See Compl. ¶ 53.) The Complaint further alleges that but for the Settlement Agreement, Judge Broderick's judgment would have been affirmed, the FDA would have granted final approval to Barr's generic version of tamoxifen, Barr would have marketed a generic version of tamoxifen, a highly competitive market for tamoxifen would have developed after Barr's 180-day exclusivity period had run, and Zeneca would have been collaterally estopped from enforcing the '516 Patent against other ANDA filers. (See Id. ¶ 54.) Plaintiffs also allege that by refusing to market a generic version of tamoxifen, Barr could prevent another challenger to the '516 Patent from being able to market the generic counterpart.

STANDARD FOR MOTION TO DISMISS

When deciding a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), the court must take all allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Niagara Mohawk Power Corp. v. Federal Energy Reg. Comm'n, 306 F.3d 1264, 1267 (2d Cir. 2002). A complaint should not be dismissed "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief" FD Property Holding Inc. v. US Traffic Corp., 206 F. Supp.2d 362, 369 (E.D.N.Y. 2002) (internal quotation marks omitted). However, the Court may consider matters of public record, such as court decisions, statutes, and documents such as briefs filed with courts and other public bodies. See, e.g., Papasan v. Allain, 478 U.S. 265, 268 n. 1 (1986) ("Although this case comes to us on a ...


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