Litigation Details for In Re Namenda Direct Purchaser Antitrust Litigation (S.D.N.Y. 2015)

In Re Namenda Direct Purchaser Antitrust Litigation (S.D.N.Y. 2015)

Docket		Date Filed	2015-09-22
Court	District Court, S.D. New York	Date Terminated	2020-05-27
Cause	15:15 Antitrust Litigation	Assigned To
Jury Demand	Both	Referred To
Patents	5,023,282; 6,469,012; 8,039,009
Link to Docket	External link to docket

Details for In Re Namenda Direct Purchaser Antitrust Litigation (S.D.N.Y. 2015)

Date Filed	Document No.	Description	Snippet	Link To Document
2015-09-22				External link to document
2015-09-22	677		United States Patent No. 5,250,534 United States Patent No. 6,469,012 United States Patent No. 644,077 … “red flags.” >! U.S, Patent No. 5,250,534. *1.S, Patent No. 6,469,012. 29 Case 1:15-cv-07488-CM-RWL…the U.S. patent. See Exhibit C, The number of claims in a patent varies from patent to patent. See id.…to a patent holder by a U.S. patent is defined by the issued claims of the patent — the “patented invention… 03/06/19 Page 9 of 220 PATENTING PROCESS A U.S. patent provides the patent holder with the right to	External link to document
2015-09-22	710	Memorandum of Law in Opposition to Motion	also allowed Forest time to obtain U.S. Patent No. 8,039,009 for Namenda XR, which did not suffer from…fatal flaws of the ’703 patent, and which expired a decade after the ‘703 patent. In a draft letter…from the patent settlements, the desire to preclude additional challenges to the ‘703 patent (i.e., the…Namenda IR to drop their legal challenges to the ’703 Patent and delay launch of generic versions…date three months after the expiration of the ’703 Patent; and (2) using this improperly obtained	External link to document

In Re Namenda Direct Purchaser Antitrust Litigation: A Comprehensive Analysis

Introduction

The In Re Namenda Direct Purchaser Antitrust Litigation is a landmark case that highlights the complexities and implications of antitrust laws in the pharmaceutical industry. This litigation involves allegations of anticompetitive practices by the defendants, including Actavis PLC (now Allergan PLC) and Forest Laboratories, related to the drug Namenda, used to treat Alzheimer's disease.

Background of the Case

The case began when direct purchaser plaintiffs, J.M. Smith Corporation and Rochester Drug Co-Operative, Inc., filed an antitrust lawsuit against the defendants. The plaintiffs alleged that the defendants engaged in a two-part anticompetitive scheme to block generic competition for Namenda IR (immediate release)[2][4].

The Anticompetitive Scheme

Conspiracy with Generic Manufacturers

The first part of the scheme involved conspiring with manufacturers of generic versions of Namenda IR to drop their legal challenges and delay the launch of generic versions. This was achieved through reverse-payment settlements, where the brand-name manufacturer paid the generic manufacturers to delay their market entry. This tactic allowed the defendants to maintain exclusivity for a longer period[2][3].

Hard Switch Strategy

The second part of the scheme was the "hard switch" strategy. The defendants prematurely removed Namenda IR from the market and launched Namenda XR (extended release) before the patent expiration of Namenda IR. This forced patients and healthcare providers to switch to Namenda XR, which was clinically equivalent but had a later patent expiration date. The plaintiffs argued that this switch reduced the likelihood of patients reverting to generic versions of Namenda IR once they became available[2][3].

Legal Allegations and Theories

Antitrust Violations

The plaintiffs alleged that the defendants' actions violated antitrust laws by delaying the entry of generic competitors and maintaining a monopoly on the market. The Supreme Court has held that reverse payments are not immune from antitrust scrutiny, which supported the plaintiffs' claims[3].

Product Hopping

The defendants were accused of "product hopping," a strategy where a brand-name manufacturer develops a new version of a drug with a different delivery mechanism to prevent generic equivalents from being rated as AB-equivalent. This tactic exploits the AB-rating requirement, which ensures that generics deliver the same amount of the drug in the same way and over the same time period as the brand-name drug[3].

Court Proceedings and Rulings

Class Certification

The court had to determine whether class certification was proper under the two theories of recovery proposed by the plaintiffs. The court analyzed separately whether certification would be proper for each theory, considering the impact of the defendants' actions on competition and prices[3].

Settlement Approval

In 2020, the court approved a settlement in the direct purchaser case, where the brand defendants agreed to pay $54,400,000 into a settlement fund to compensate third-party payors (TPPs) and cover other costs. The court found the proposed plan of allocation to be fair and reasonable[4][5].

Impact on Competition and Prices

The defendants' actions were alleged to have resulted in higher prices for Namenda than would have been the case if generic competition had been allowed to enter the market earlier. The delay in generic entry and the hard switch strategy ensured that the defendants maintained their market advantage, harming competition and consumers[2][3].

Expert Testimony and Evidence

The admissibility of expert testimony played a crucial role in the case. If expert testimony was excluded, the court had to make summary judgment determinations without that evidence. This highlights the importance of credible and admissible evidence in antitrust litigation[1].

Industry Implications

The In Re Namenda case has significant implications for the pharmaceutical industry. It underscores the need for compliance with antitrust laws and the potential consequences of engaging in anticompetitive practices. The case also emphasizes the importance of monitoring product hopping and reverse-payment settlements to ensure fair competition[3].

Quotes from Industry Experts

"The Supreme Court has held that reverse payments are not immune from antitrust scrutiny. This is a critical precedent in cases involving pharmaceuticals and generic competition."[3]

Illustrative Statistics

• The settlement fund established for the direct purchaser class was $54,400,000[4][5].
• The period of alleged anticompetitive conduct spanned from June 1, 2012, to December 31, 2017[3].

Key Takeaways

• The In Re Namenda case involves allegations of anticompetitive practices, including reverse-payment settlements and product hopping.
• The defendants' actions delayed generic competition and maintained a monopoly on the market.
• The case highlights the importance of antitrust compliance in the pharmaceutical industry.
• The court approved a significant settlement to compensate affected parties.
• The case sets a precedent for scrutinizing reverse payments and product hopping strategies.

Frequently Asked Questions (FAQs)

Q: What was the main allegation against the defendants in the In Re Namenda case? A: The main allegation was that the defendants engaged in a two-part anticompetitive scheme to block generic competition for Namenda IR by conspiring with generic manufacturers and implementing a "hard switch" strategy.

Q: What is "product hopping" in the context of pharmaceuticals? A: Product hopping involves developing a new version of a drug with a different delivery mechanism to prevent generic equivalents from being rated as AB-equivalent, thereby maintaining market exclusivity.

Q: How did the defendants' actions affect prices for Namenda? A: The defendants' actions were alleged to have resulted in higher prices for Namenda by delaying the entry of generic competitors and forcing patients to switch to a newer, patented version of the drug.

Q: What was the outcome of the settlement in the direct purchaser case? A: The court approved a settlement where the brand defendants agreed to pay $54,400,000 into a settlement fund to compensate third-party payors and cover other costs.

Q: What is the significance of the Supreme Court's ruling on reverse payments in this case? A: The Supreme Court's ruling that reverse payments are not immune from antitrust scrutiny is crucial, as it allows for greater scrutiny of such payments and helps to prevent anticompetitive practices in the pharmaceutical industry.

Cited Sources:

1. In re Namenda Direct Purchaser Antitrust Litig. - Federal Cases.
2. In re Namenda Direct Purchaser Antitrust Litig., 331 F. Supp. 3d 152 - Casetext.
3. In re Namenda Indirect Purchaser Antitrust Litig. - Casetext.
4. In Re Namenda Direct Purchaser Antitrust Litigation, No. 1:2015cv07488 - Justia Law.
5. In re Namenda Indirect Purchaser Antitrust Litigation - Official Settlement Website.