Last month, Judge Manish Shah of the United States District Court of the Northern District of Illinois dismissed an antitrust complaint brought by indirect purchasers of AbbVie’s blockbuster rheumatoid arthritis drug, Humira®. The suit alleged antitrust violations under a novel “patent thicket” theory, citing § 2 of the Sherman Act, and “pay-for-delay” and “market allocation” theories under § 1 of the Sherman Act. Mem. Op. and Order (Dkt. 170), In Re: Humira (Adalimumab)Antitrust Litigation, No. 19-cv-1873 (N.D. Ill. June 8, 2020).
Humira is an anti-inflammatory biologic that, according to plaintiffs, generated almost $20 billion in worldwide sales in 2018 alone and more than $56 billion in the US between 2012 and 2018, making it the best-selling drug in the country. Id. at 3. Plaintiffs alleged that Humira’s original patent expired in 2016, but in the months and years leading up to the expiration of the patent, AbbVie allegedly secured so many additional patents relating to Humira, a so-called “patent thicket,” that it prevented would-be challengers from entering the market with lower cost biosimilar alternatives. Id. at 4. Plaintiffs alleged that AbbVie was granted over 100 patents on not only the many uses of Humira but also the process for manufacturing it and the ingredients and formulations. Id. at 9. Plaintiffs alleged that AbbVie violated § 2 of the Sherman Act by abusing its monopoly over the US market for Humira when it thwarted lower prices by obtaining and asserting “swaths of invalid, unenforceable, or noninfringed patents without regard to the patents’ merits.” Id. at 19. Plaintiffs’ underlying theory was that by repeatedly and aggressively asserting this patent thicket during regulatory process and infringement litigation, AbbVie was able to delay biosimilars coming into the market and avoid any real examination of the patents’ validity thereby extending Humira’s monopoly profits. Id.
The court rejected plaintiffs’ “patent thicket” theory under the Noerr-Pennington doctrine, which protects activities that involve petitioning the government from antitrust liability under the First Amendment, except when they are objectively baseless and intended mainly to stifle competition. In so holding, the court explained that patent prosecutions, the FDA approval process, and district court litigation were immunized, unless such “petitioning is nothing more than a sham meant to inhibit competition.” Id. at 20. In assessing plaintiffs’ allegations, the court examined whether the plaintiffs plausibly alleged “objectively baseless conduct” during patent prosecutions and inter partes review proceedings before the USPTO, the biologic licensing process before the FDA, or patent infringement actions in federal district court. Id. at 24. The court found that AbbVie engaged in legitimate petitioning activities immunized under Noerr-Pennington based on the fact that more than half of its patent applications resulted in patents (id.), AbbVie’s success rate in defending inter partes review challenges by biosimilar defendants was high (id. 26-27), and patent infringement lawsuits were “settled on terms that foreclose a finding of objective baselessness” by allowing biosimilar applicants to enter the US market before the expiration of its US patents (id. at 30-31). The only alleged activities found not to be immunized as petitioning activity took place during the pre-litigation “patent dance,” which the court found was followed by objectively reasonable litigation, and insufficient alone to allege an antitrust violation. See id. at 27-31.
Plaintiffs also alleged that AbbVie and the biosimilar defendants violated § 1 of the Sherman Act under “pay-for-delay” and “market- allocation” theories by entering into settlement agreements that allegedly required the biosimilar defendants to temporarily give up their efforts to introduce biosimilars in the US market in return for near-immediate permission to launch their biosimilars in Europe. Id at 36. The court rejected both theories. While the court recognized that market allocation is a “classic example” of a per se violation of § 1, the court found that plaintiffs failed to allege that AbbVie planned to stop selling Humira in Europe after the biosimilar defendants introduced their biosimilars. Id. at 37-38. The court also recognized that “[p]atents come with the right to selectively license the patent ‘to the whole or any specific part of the United States’” and that a “patentee may also issue territorial licenses that allow competitors to sell patented products in some foreign countries but not others (and not in the US).” Therefore, the settlement agreements are not market-allocation agreements. Id. at 38-39. In its ruling, the court noted that “patents are different from other types of intellectual property when it comes to geographic restrictions, and an agreement to permit entry into a market previously protected by a patent does not become a per se invalid market allocation agreement just because it is specific to one territory (or one country).” Id. at 39.
In rejecting plaintiffs’ “pay-for-delay” theory, the court reasoned that the settlement agreements at issue are distinguishable from the reverse-payment settlements in FTC v. Actavis, Inc., 570 U.S. 136, 158 (2013), where the patentee purchased an opportunity to keep prices set at its preferred level thereby “sharing monopoly profits with a competitor without consumer gain.” Id. at 40-41, 43. The fact that nine companies will be able to enter the US and European markets prior to the expiration of the patent undermined plaintiffs’ allegation that the defendants shared monopoly profits to the detriment of consumers. Id. at 43, 45. In so concluding, the court applied an important exception recognized by the Supreme Court in Actavis, namely “[p]arties remain free to settle on other terms—for example, ‘by allowing the generic manufacturer to enter the patentee’s market prior to the patent’s expiration, without the patentee paying the challenger to stay out prior to that point.’” Id. at 42 (quoting Actavis, 570 U.S. at 158). While there may have been a “transfer of value” from AbbVie to the biosimilar defendants based on the allegation that AbbVie allowed biosimilars to enter the European market in exchange for a later US entry date, the court found that the “effect of the payment was to increase, not restrain competition by bringing competitors into the market when patents otherwise prohibited the competition.” Id. at 46.
Judge Shah’s decision indicates that plaintiffs face a high threshold in attempting to cast the pursuit and enforcement of large patent estates on biologics products into antitrust liability. The ruling also rejects efforts to expand the concept of what constitutes an impermissible settlement under Actavis.
