Generics Can Press Antitrust Claims Over Drug Samples

, The Litigation Daily

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Generic drug companies have scored an early win in a test case that could determine whether brand-name drug companies are obligated to turn over samples of their products.

At a hearing on Friday, U.S. District Judge Noel Hillman in Camden, N.J., refused to dismiss claims that Actelion Pharmaceuticals Ltd. violated antitrust laws by refusing to share samples of its drugs Tracleer and Zavesca with its generic rivals. The ruling is a win for Apotex Inc., Actavis Elizabeth LLC, Roxane Laboratories Inc. and other generic drug companies that argue Actelion is withholding the samples in order to block them from bringing low-cost versions of Tracleer and Zavesca to market. (Hillman has yet to release an opinion explaining his ruling, though he did issue a two-page order on Monday denying Actelion's motion for judgment on the pleadings.)

Generic drug companies must test their products to ensure that they are identical (or "bioequivalent") to the brand-name versions. To perform these lab tests, the companies need to get their hands on samples of the brand-name drug. For decades, these drug samples have typically been bought from wholesale distributors.

This system got more complicated, however, when Congress passed a law known as the Food and Drug Administration Amendments Act of 2007. That law required brand-name drug companies to adopt strategies for minimizing the potential damage inflicted by drugs with known side effects. Because Tracleer and Zavesca have been linked to serious side effects, Actelion imposed certain protocols on pharmacists and customers. Actelion also forbade its wholesale distributors from selling drug samples to generics like Roxane and Apotex. According to Actelion, the generics failed to show that they would follow sufficient risk management protocols.

The generics threatened to sue, alleging that Actelion is breaking antitrust laws by blocking distribution of the samples. Actelion's lawyers at Dechert sued for declaratory judgment in September 2012, arguing that the company is just trying to follow FDA regulations.

"Any harm caused a a result of the potential misuse of Tracleer during testing by a generic could have a significant impact on Actelion's and Tracleer's reputation and standing in the marketplace," Actelion's lawyers argued. And in any event, "it is well settled that Actelion, like any other company, has an independent right to choose with whom it deals," they wrote.

The generic drug companies filed antitrust counterclaims in December 2012, arguing that Actelion is using the FDA regulations as a pretext for stifling generic competition and abusing its monopoly power. A ruling for Actelion would "give brand-name drug manufacturers carte blanche to obstruct the only pathway for generic competition that has stood in place for nearly 30 years," the generics wrote. In March the Federal Trade Commission sought permission to file an amicus brief siding with the generics.

At Friday's hearing, Hillman refused to grant Actelion's motion for judgment on the pleadings, concluding that the generics are entitled to fact discovery to flesh out their antitrust theories.

A judgment for Actelion could have been "potentially disastrous for the generic drug industry," said Aitan Goelman of Zuckerman Spaeder, who represents Apotex along with lawyers at Bazelon Less & Feldman. Goelman said that it's becoming very common for brand-name drug companies to adopt "pretextual reasons" for blocking the distribution of crucial samples. This is the first case to challenge that practice, he said.

Dechert's Ezra Rosenberg, who represents Actelion, did not immediately return a call seeking comment.

The other generic drug companies are represented by Kirkland & Ellis and Sills Cummis & Gross (for Roxane); Latham & Watkins and solo practitioner and former Latham & Watkins partner Jason Lattimore (for Actavis); Hill Wallack (for Zydus Pharmaceuticals USA Inc.); and Skadden, Arps, Slate, Meagher & Flom (for Johnson Matthey Inc.).

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