EDPA: Alleged Wellbutrin Pay-for-delay Agreement Actually Promoted Competition | Practical Law

EDPA: Alleged Wellbutrin Pay-for-delay Agreement Actually Promoted Competition | Practical Law

The US District Court for the Eastern District of Pennsylvania held in In re Wellbutrin XL Antitrust Litigation that agreements between GlaxoSmithKline plc and generic manufacturers regarding introduction of generic versions of Wellbutrin XL promoted competition, and granted summary judgment in favor of defendants.

EDPA: Alleged Wellbutrin Pay-for-delay Agreement Actually Promoted Competition

Practical Law Legal Update w-000-6168 (Approx. 4 pages)

EDPA: Alleged Wellbutrin Pay-for-delay Agreement Actually Promoted Competition

by Practical Law Antitrust
Published on 25 Sep 2015 • USA (National/Federal)
The US District Court for the Eastern District of Pennsylvania held in In re Wellbutrin XL Antitrust Litigation that agreements between GlaxoSmithKline plc and generic manufacturers regarding introduction of generic versions of Wellbutrin XL promoted competition, and granted summary judgment in favor of defendants.
On September 23, 2015, Judge Mary McLaughlin of the US District Court for the Eastern District of Pennsylvania held in In re Wellbutrin XL Antitrust Litigation that a settlement agreement between brand-name manufacturer GlaxoSmithKline plc (GSK) and generic manufacturers Teva Pharamceuticals, Anchen Pharmaceuticals, Inc., Impax Laboratories, Inc. and Watson Laboratories, Inc. (Generic Manufacturers) actually promoted competition and was not an anticompetitive pay-for-delay settlement (No. 2:08-cv-02431 (E.D. Pa. Sept. 23, 2015)). The court granted summary judgment in favor of the drug manufacturers.

Background

In Wellbutrin, plaintiffs, classes of direct and indirect purchasers of Wellbutrin XL, alleged that GSK entered an anticompetitive pay-for-delay settlement with the generic manufacturers to delay introduction of generic Wellbutrin XL. The settlement at issue was intended to resolve the Generic Manufacturers' challenges to GSK's Wellbutrin XL patent and provided:
  • The Generic Manufacturers' underlying Hatch-Waxman litigation challenging the patent could continue.
  • The Generic Manufacturers could introduce generic Wellbutrin XL:
    • if GSK's patent was found invalid;
    • if the court ruled that there was no infringement; or
    • even if the patent was not invalidated, no later than May 30, 2008, ten years before the patent expired.
  • The Generic Manufacturers with sublicenses to patents at issue in a separate lawsuit.
  • The Generic Manufacturers a guaranteed supply of generic Wellbutrin XL.
  • GSK would not introduce an authorized generic version of Wellbutrin XL during the Generic Manufacturers' period of guaranteed exclusivity.
  • The FTC would give enhanced review to the settlement.

Outcome

The court held that the agreements in fact promoted competition, and granted summary judgment in favor of defendants. The court reasoned that:
  • Though FTC v. Actavis stated that pay-for-delay agreements are subject to antitrust scrutiny, the agreements at issue in this case differed from those in other post-Actavis challenges in that they allowed the Generic Manufacturers' claim challenging GSK's patent to proceed.
  • The plaintiffs were unable to establish anticompetitive harm under Actavis as required by the rule of reason because the defendant did not abandon its patent claims.
  • Even if there were anticompetitive effects from the settlement agreement, a reasonable jury would find that the anticompetitive effects did not outweigh the procompetitive benefits.
The court reasoned that the settlement was procompetitive because it granted the Generic Manufacturers more than they would have obtained through successful litigation, including:
  • Sublicenses to a separate patent.
  • A supply of generic Wellbutrin XL.
Further, the court noted that the defendants met with the FTC to discuss the terms of the settlement, and the FTC did not object.
Finally, the court stated that the plaintiffs were unable to show that the settlement, as opposed to an independent patent, was the proximate cause of any antitrust injury.
The court noted that though this agreement was procompetitive and did not violate antitrust laws under Actavis, it declined to state that all similar agreements were exempt from antitrust scrutiny. The court wanted to avoid:
  • Granting blanket immunity to any pay-for-delay settlement that allowed the underlying patent litigation to continue.
  • Creating a loophole to exploit Actavis.
For more information on pay-for-delay agreements, see Practice Note, Reverse Payment Settlement Agreements. For more on Actavis, see Practice Note, Actavis Case Tracker.
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