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King Drug Co. of Florence v. Abbott Laboratories

United States District Court, E.D. Pennsylvania

January 6, 2020

KING DRUG CO. OF FLORENCE, et al.
v.
ABBOTT LABORATORIES, et al.

          MEMORANDUM

          Bartle, J.

         This is a civil antitrust action alleging anticompetitive conduct by defendants related to a pharmaceutical product, AndroGel. Plaintiffs are wholesalers which allege they were denied the opportunity to purchase lower-priced generic versions of AndroGel due to the alleged anticompetitive conduct and thereby suffered overcharges. Before the court is the motion of defendants to transfer venue of this action to the United States District Court for the Northern District of Georgia pursuant to 28 U.S.C. § 1404(a).

         I

         The complaint alleges that defendant AbbVie engaged in a scheme from at least 2007 to 2014 to delay and to exclude generic competition for its blockbuster drug AndroGel. AndroGel is a brand-name transdermal testosterone gel product approved by the FDA for the treatment of hypogonadism, a clinical syndrome that results from failure of a man's body to produce adequate amounts of testosterone.

         Plaintiffs are King Drug Co. of Florence, Inc. (“King Drug”), AmerisourceBergen Corp. and AmerisourceBergen Drug Corp. (collectively, “AmerisourceBergen”), Bellco Drug Co. (“Bellco”), H.D. Smith LLC (“H.D. Smith”), Cardinal Health, Inc. (“Cardinal”), Harvard Drug Group, LLC (“Harvard Drug”), McKesson Corp. (“McKesson”), J.M. Smith Corp. d/b/a/ Smith Drug Co. (“J.M Smith”), Burlington Drug Co., Inc. (“Burlington”), North Carolina Mutual Wholesale Drug Co. (“North Carolina Mutual”), Dakota Drug Inc. (“Dakota”), Value Drug Co. (“Value Drug”), and FWK Holdings, LLC (“FWK”). Defendants are AbbVie Inc., AbbVie Products LLC, Abbot Laboratories, and Unimed Pharmaceuticals LLC (collectively, “AbbVie”), Besins Healthcare, Inc. (“Besins”), Actavis, Inc. and Actavis Holdco U.S. (collectively, “Actavis”), Par Pharmaceutical, Inc. and Paddock Laboratories, Inc. (collectively, “Par/Paddock”), and Teva Pharmaceuticals USA, Inc. (“Teva”). The complaint alleges the following claims: (1) the unlawful maintenance and extension of a monopoly through an overarching conspiracy in violation of 15 U.S.C. § 2 against AbbVie (Count I); (2) an anticompetitive reverse payment agreement in violation of 15 U.S.C. § 1 against AbbVie and Actavis (Count II); (3) an anticompetitive reverse payment agreement in violation of 15 U.S.C. § 1 against AbbVie and Par/Paddock (Count III); (4) the unlawful maintenance and extension of a monopoly through sham litigation in violation of 15 U.S.C. § 2 against AbbVie and Besins (Count IV); and (5) an anticompetitive reverse payment agreement in violation of 15 U.S.C. § 1 against AbbVie and Teva (Count V).

         Unimed Pharmaceuticals, a successor of AbbVie, and an affiliate of defendant Besins, jointly developed AndroGel 1% in the 1990s. The FDA approved AndroGel 1% in 2000 and Solvay Pharmaceuticals, Inc., which had acquired Unimed and was later acquired by AbbVie, began marketing AndroGel. Solvay and Unimed were headquartered in Marietta, Georgia.

         In 2003, the United States Patent Office issued the ‘894 patent relating to AndroGel to Unimed and Besins. Soon thereafter, Unimed and Besins filed patent infringement lawsuits in the Northern District of Georgia against Watson Pharmaceuticals, Inc. and Paddock, based on Watson and Paddock's filing of Abbreviated New Drug Applications (“ANDAs”) requesting approval from the United States Food and Drug Administration (“FDA”) to market a generic version of AndroGel 1%. See 21 U.S.C. § 355(j). Par was later added to the lawsuits. The patent lawsuits were assigned to The Honorable Thomas W. Thrash, Jr. In September 2006, while motions for summary judgment were pending, the parties settled. As part of each settlement, Solvay agreed to license Watson and Par to launch generic versions of AndroGel 1% in August 2015, five years before expiration of the ‘894 patent. The parties also entered into an agreement whereby Solvay hired Watson, Paddock, and Par to provide promotion and/or manufacturing services for AndroGel.

         On January 27, 2009, the Federal Trade Commission (“FTC”) brought an antitrust suit against Solvay, Watson, and Par/Paddock concerning the reverse payments to Watson and Par/Paddock in the United States District Court for the Central District of California. The FTC action against Solvay, Watson, and Par/Paddock precipitated a wave of private antitrust litigation based on the same allegations. Shortly thereafter, on February 2, 2009, a direct purchaser of AndroGel, Meijer Inc. and Meijer Distribution, Inc. (collectively, “Meijer”) filed a putative class action complaint in that district. The next day, direct purchasers Rochester Drug Cooperative, Inc. (“RDC”) and Louisiana Wholesale Drug Co. (“LWD”) each filed putative class action complaints.

         On April 8, 2009, the court in the Central District of California granted the defendants' motion to transfer venue of the FTC action and the putative class actions to the Northern District of Georgia pursuant to § 1404(a). See F.T.C. v. Watson Pharm., Inc., 611 F.Supp.2d 1081, 1084 (C.D. Cal. 2009). The court determined that the Northern District of Georgia, where the underlying patent suits were litigated and settled, was a more convenient forum for the actions. Id. at 1090.

         In June 2009, Rite Aid Corp. and several other retailers of AndroGel filed two antitrust actions challenging the 2006 reverse payment agreements with Watson and Par/Paddock in the Middle District of Pennsylvania. Three consumers also filed purported class actions in the District of New Jersey. See Stephen L. LaFrance Pharmacy, Inc. v. Unimed Pharm., Inc., No. 09-1507, 2009 WL 3230206, at *1 (D.N.J. Sept. 30, 2009). The three consumer antitrust actions were transferred to the Northern District of Georgia pursuant to § 1404(a).[1] Id. Thereafter, the Judicial Panel on Multidistrict Litigation created a multidistrict litigation (“MDL”) in the Northern District of Georgia to coordinate for pretrial proceedings pursuant to 28 U.S.C. § 1407 the Middle District of Pennsylvania actions with those pending in the Northern District of Georgia and a related action in the District of Minnesota. See In re Androgel Antitrust Litig., 655 F.Supp.2d 1351, 1352 (U.S. Jud. Pan. Mult. Lit. 2009). Thereafter, on May 8, 2015, Giant Eagle Inc. (“Giant Eagle”), another retailer of AndroGel, filed an antitrust action in the Western District of Pennsylvania which was subsequently transferred to the Northern District of Georgia MDL.

         Since the transfer to the Northern District of Georgia of these actions, Judge Thrash has presided over extensive discovery and litigation. Judge Thrash initially dismissed the reverse payment claim asserted by the FTC. See In re Androgel Antitrust Litig., 687 F.Supp.2d 1371, 1379 (N.D.Ga. 2010). His decision was later overturned by the Supreme Court. See F.T.C. v. Actavis, 570 U.S. 136 (2013). On remand, Judge Thrash decided five summary judgment motions regarding the scope of private damages, viable causation theories, and standards for liability. See In re Androgel Antitrust Litig., No. 09-955, 2018 WL 2984873, at *1, *19 (N.D.Ga. June 14, 2018). In July 2018, Judge Thrash denied certification of a class of direct purchasers of AndroGel. He found that joinder of parties would not be impractical and thus there was no need to certify a class. In re Androgel Antitrust Litig., No. 09-956, 2018 WL 3424612, at *4 (N.D.Ga. July 16, 2018). Trial in that action and most of the retailer actions was set for February 2020. However, all but one of the plaintiffs, Giant Eagle, have now settled their claims in those cases. Giant Eagle originally filed suit in the Western District of Pennsylvania and is seeking remand to that district for trial now that pretrial proceedings have been completed in the MDL. See Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26, 40 (1998).

         There is also litigation related to AndroGel in this district. On September 8, 2014, the FTC brought suit against AbbVie and Besins in the Eastern District of Pennsylvania alleging two antitrust violations. First, the FTC alleged that AbbVie and Besins illegally maintained a monopoly through sham litigation against Teva and Perrigo Company (“Perrigo”), another generic drug manufacturer. Second, it alleged that AbbVie entered into an unlawful reverse payment agreement with Teva whereby AbbVie shared a portion of its monopoly profits with Teva in exchange for Teva's agreement to keep generic AndroGel off the market. This court dismissed the FTC's reverse payment claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure. See F.T.C. v. AbbVie Inc., 107 F.Supp.3d 428, 438 (E.D. Pa. 2015). As for the sham litigation claim, this court entered judgment in favor of the FTC following a bench trial and awarded $448 million in monetary relief. See F.T.C. v. AbbVie Inc., 329 F.Supp.3d 98, 146 (E.D. Pa. 2018). The action is currently on appeal. See F.T.C. v. AbbVie Inc., Nos. 18-261, 18-2748 & 18-1758 (3d Cir.).

         On July 2, 2018, RDC and Value Drug filed suit in this district against AbbVie and Besins alleging sham litigation against Teva and Perrigo. See Value Drug Co. v. AbbVie Inc., No. 18-2804 (E.D. Pa.). The court thereafter granted the defendants' unopposed motion to stay that action until the earlier of a decision by the Court of Appeals resolving the appeals in F.T.C. v. Abbvie, Inc. or sixty days after any party files a Notice of Termination of Stipulated Stay.

         On August 17, 2018, CVS Pharmacy, Inc., Rite Aid Corp., Walgreen Co., and several other indirect purchasers filed suit against AbbVie and Besins alleging unlawful monopolization through sham litigation against Teva and Perrigo. See Walgreen Co. v. AbbVie, Inc., No. 18-3494 (E.D. Pa.); CVS Pharm., Inc. v. AbbVie,Inc., No. 18-3495 (E.D. Pa.). Plaintiffs brought their claims on their own behalf and as the assignees of Cardinal, McKesson, and/or AmerisourceBergen. The ...


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