Case 3:21-cv-07935 Document 1 Filed 10/08/21 Page 1 of 66
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`Todd M. Schneider (SBN 158253)
`Jason H. Kim (SBN 220279)
`Matthew S. Weiler (SBN 236052)
`SCHNEIDER WALLACE
`COTTRELL KONECKY LLP
`2000 Powell Street, Suite 1400
`Emeryville, CA 94608
`Telephone: (415) 421-7100
`TSchneider@schneiderwallace.com
`JKim@schneiderwallace.com
`MWeiler@schneiderwallace.com
`
`Peter D. St. Phillip (Pro hac vice to be filed)
`LOWEY DANNENBERG, P.C.
`44 South Broadway, Suite 1100
`White Plains, NY 10601
`Telephone: (914) 997-0500
`PStPhillip@lowey.com
`
`[Additional counsel on signature page]
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`
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`
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`UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF CALIFORNIA
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` Plaintiff,
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`Case No.
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`
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`COMPLAINT
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`JURY TRIAL DEMANDED
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`
`
`
`
`vs.
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`MOLINA HEALTHCARE INC.,
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`
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`JAZZ PHARMACEUTICALS, INC.;
`JAZZ PHARMACEUTICALS IRELAND
`LIMITED;
`JAZZ PHARMACEUTICALS PUBLIC
`LIMITED COMPANY;
`HIKMA PHARMACEUTICALS PLC;
`HIKMA PHARMACEUTICALS USA INC.;
`HIKMA LABS, INC.;
`EUROHEALTH (USA), INC.;
`AMNEAL PHARMACEUTICALS LLC;
`PAR PHARMACEUTICAL, INC.;
`LUPIN LTD.;
`LUPIN PHARMACEUTICALS INC.;
`LUPIN INC.,
`
`
`Defendants.
`
`COMPLAINT
`Molina Healthcare Inc. v. Jazz Pharms., Inc., et al.
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`Case 3:21-cv-07935 Document 1 Filed 10/08/21 Page 2 of 66
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`TABLE OF CONTENTS
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`I.
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`INTRODUCTION......................................................................................................................................... 1
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`II.
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`JURISDICTION AND VENUE ................................................................................................................. 4
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`III. THE PARTIES ............................................................................................................................................... 4
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`IV. REGULATORY BACKGROUND ............................................................................................................ 8
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`A. Regulatory Structure for Approval and Substitution of Generic Drugs. ................................. 8
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`1. The Prescription Drug Market Place .............................................................................. 8
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`2. The Hatch-Waxman Act and FDA Approval Process............................................................ 9
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`3. Use of Authorized Generics to Maximize Profits Following Generic Entry. ................... 14
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`4. Acceleration Clauses As a “Poison Pill” to Further Generic Entry. ................................... 16
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`V. DEFENDANTS’ ANTICOMPETITIVE CONDUCT ........................................................................ 17
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`A. The Development of Sodium Oxybate ................................................................................ 17
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`B.
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`Sodium Oxybate as a Treatment for Narcolepsy .................................................................. 18
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`C.
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`Jazz Obtains All Rights To Xyrem Through Orphan Medical Acquisition ........................... 20
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`D. The Xyrem Patents .............................................................................................................. 20
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`1. The ’431 Family Of Patents (Formulations And Methods Of Treatment) .................... 21
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`2. The ’730 Family Of Patents (Drug Distribution System And Method) ......................... 22
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`3. The ’302 Family Of Patents (Method Of Administration) ............................................ 22
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`E.
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`Jazz Jacks Up Xyrem Prices “to the Moon”. ........................................................................ 23
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`F.
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`Jazz Seeks A Multiple Pharmacy Rems In Conjunction With Its Request For Approval To
`Market Xyrem For Fibromyalgia .......................................................................................... 25
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`G. Generic Challengers Make Paragraph IV Certifications. ....................................................... 25
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`H.
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`Jazz Files Sham Litigation to Combat Roxane’s (Now Hikma’s) Threat. .............................. 26
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`I.
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`Jazz Reverses Course In Its REMS Negotiations, Discouraging Generic Entry ................... 27
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`K. The ’730 Family Are Declared Invalid in Inter Partes Review. ............................................. 31
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`L.
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`The Jazz-Hikma Reverse Payment Agreement ..................................................................... 31
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`M.
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`Jazz Enters Into Unlawful Reverse Payment Agreements With Par, Lupin, And Amneal: the
`Later Generic Defendants.................................................................................................... 34
`
`COMPLAINT
`Molina Healthcare Inc. v. Jazz Pharms., Inc., et al.
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`Case 3:21-cv-07935 Document 1 Filed 10/08/21 Page 3 of 66
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`N. The Jazz-Hikma Agreement Has Caused, And Will Continue To Cause, Anticompetitive
`Effects ................................................................................................................................. 36
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`VI. DEFENDANTS’ ANTICOMPETIVE EFFECTS IN THE MARKET FOR SODIUM
`OXYBATE..................................................................................................................................................... 39
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`VII. JAZZ’S MONOPOLY POWER ................................................................................................................ 40
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`VIII. EFFECTS ON TRADE AND COMMERCE ....................................................................................... 41
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`IX. ANTITRUST INJURY ................................................................................................................................ 41
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`X. PLAINTIFF’S CLAIMS ARE TIMELY ................................................................................................... 42
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`A. Defendants Fraudulently Concealed by Omission Their Unlawful Agreements. .................. 42
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`B. Defendants’ Continuing Violations. ..................................................................................... 43
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`XI. CLAIMS FOR RELIEF ............................................................................................................................... 44
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`XII. DEMAND FOR JUDGMENT ................................................................................................................. 62
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`XIII. JURY DEMAND ........................................................................................................................................ 62
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`COMPLAINT
`Molina Healthcare Inc. v. Jazz Pharms., Inc., et al.
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`Case 3:21-cv-07935 Document 1 Filed 10/08/21 Page 4 of 66
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`1.
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`Plaintiff Molina Healthcare Inc. (“Molina” or “Plaintiff”) brings this action against
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`Defendants Jazz Pharmaceuticals, Inc., Jazz Pharmaceuticals Ireland Limited, Jazz Pharmaceuticals
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`Public Limited Company, Hikma Pharmaceuticals plc, Hikma Pharmaceuticals USA Inc., Hikma Labs,
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`Inc., Eurohealth (USA), Inc., Amneal Pharmaceuticals LLC, Par Pharmaceutical, Inc., Lupin Ltd., Lupin
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`Pharmaceuticals Inc., and Lupin Inc., (collectively, “Defendants”) for violations of antitrust, consumer
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`protection, and common laws. Plaintiff’s claims concern Defendants’ scheme to restrain competition for
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`branded Xyrem and its AB rated generic bioequivalents in the United States. Defendants, the brand
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`manufacturer of Xyrem and several competitors, abused the patent laws for profit by allocating the
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`market for a drug that was invented nearly 150 years ago. Sodium oxybate, sold under the brand name
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`Xyrem (also known as γ-hydroxybutyric acid (GHB)) is a naturally occurring substance found in the
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`central nervous system. Xyrem is manufactured by Jazz Pharmaceuticals, Inc and its affiliates (“Jazz”).
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`Xyrem has historically been Jazz’s main source of revenue, making up 70% or more of its revenues since
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`2007. Jazz’s growth and profits have been entirely linked to its ability to increase prices on Xyrem and
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`keep the market to itself. To prevent generic competition and unlawfully maintain this monopoly, Jazz
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`first manipulated an FDA safety program meant to mitigate safety risks of certain drugs (“REMS”);
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`engaged in sham patent litigation; abused the REMS process to further frustrate generic competitors;
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`and finally agreed with other Defendants to delay generic entry in exchange for allocating the generic
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`market for AB-rated generic Xyrem. All the while, Jazz imposed a series of grotesque price hikes that
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`would have been impossible had generic entry been successful. This scheme caused Plaintiff to pay
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`inflated prices for Xyrem from July 17, 2017 through the present, until the anticompetitive effects of the
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`Defendants’ unlawful conduct cease.
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`I.
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`INTRODUCTION
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`2.
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`This litigation challenges a comprehensive anticompetitive scheme to suppress generic
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`competition for Xyrem, a leading treatment of narcolepsy. Defendants abused an FDA drug safety
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`program called “Risk Evaluation and Mitigation Strategy,” engaged in sham patent litigation, and entered
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`into reverse payments to generic manufacturers to preserve their monopoly in Xyrem. Through this
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`COMPLAINT
`Molina Healthcare Inc. v. Jazz Pharms., Inc., et al.
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`scheme Defendants suppressed generic competition and raised the price of Xyrem 841% between 2007
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`and 2014. Third-party payors such as Plaintiff footed the bill for this manipulation.
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`3.
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`Sodium oxybate, the active ingredient in Xyrem, is a central nervous system depressant
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`that has been widely available in the United States since the 1960s. Sodium oxybate is the chemically
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`derived version of γ-Hydroxybutyric acid (GHB), which occurs naturally in human bodies’ central
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`nervous systems, as well as wine, beef, small citrus fruits, and almost all animals.1
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`4.
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`Narcolepsy is a disorder characterized by excessive daytime sleepiness (“EDS”) and
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`intermittent manifestations of REM sleep during wakefulness. In 1994, the Food and Drug
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`Administration’s (“FDA”) Orphan Products Development Division and a non-profit advocacy
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`organization approached a small Minnesota-based drug company, Orphan Medical, to suggest the
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`development of sodium oxybate for treatment of cataplexy, which is a common symptom of narcolepsy
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`manifested by sudden episodes of bilateral skeletal muscle weakness induced by an emotional trigger
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`such as laughter, anger, embarrassment, or surprise.
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`5.
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`Orphan Medical began development of what would become Xyrem and, in 2002,
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`obtained FDA approval to market sodium oxybate for the treatment of cataplexy associated with
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`narcolepsy in adults. Orphan branded its product Xyrem. In 2005, Orphan Medical obtained FDA
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`approval to market Xyrem for EDS associated with narcolepsy in adults. Until 2021, Xyrem was the
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`only drug approved by the FDA to treat both EDS and cataplexy associated with narcolepsy. In 2020,
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`the FDA also approved Jazz’s follow-on sodium oxybate product, Xywav, for the treatment of those
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`conditions.
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`6.
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`In 2005, Jazz Pharmaceuticals, Inc. acquired Orphan Medical. “The acquisition was
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`unprofitable at first .… By 2009, Jazz was on the verge of bankruptcy. … Jazz responded by replacing
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`its management team.”2 Jazz then began a series of epic price hikes. In May of 2014, Bloomberg
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`published a ranking of drug price increases from 2007 to 2014. Xyrem ranked first with an overall
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`1 “Gamma-hydroxybutyric acid (GHB), Critical Review Report,” World Health Organization Expert
`Committee on Drug Dependence (2012);
`https://www.who.int/medicines/areas/quality_safety/4.1GHBcritical_review.pdf
`2 In re Xyrem Antitrust Litig., Case No. 5:20-md-02966-LHK, ECF No. 138, at 2 (N.D. Cal. Aug. 13,
`2021).
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`COMPLAINT
`Molina Healthcare Inc. v. Jazz Pharms., Inc., et al.
`2
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`Case 3:21-cv-07935 Document 1 Filed 10/08/21 Page 6 of 66
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`increase of 841% from 2007 to 2014, well-ahead of notorious products such as EpiPen.3 Overall, from
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`2007 to the present the price of Xyrem has increased from about $2/ml to over $31/ml, an increase of
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`over 1000%.
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`7.
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`Jazz could only impose these gruesome price hikes on Plaintiff and other parties
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`responsible for managing health care costs because it unlawfully maintained its monopoly in Xyrem. As
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`Jazz’s CEO admitted at a 2011 investor conference, Jazz’s monopoly was central to its value
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`proposition: “There’s really no competition. The other drugs used to treat narcolepsy for the excessive
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`daytime sleepiness part of narcolepsy are stimulants. Those can and are used together with Xyrem, so
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`that’s not an ‘either/or’, it’s an ‘and’ proposition. Probably 80% to 90% of our patients and the patients
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`in our clinical trials were also on stimulants.”4
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`8.
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`To maintain its Xyrem monopoly, Jazz enacted a series of anticompetitive measures
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`directed at ensuring there would be “no competition” from AB-rated generic Xyrem, the only product
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`that could reign in Jazz’s ability to profitably inflate prices.
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`9.
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`Jazz’s scheme “had three main parts that operated in roughly chronological but
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`overlapping order: (a) abuse of an FDA drug safety program called ‘Risk Evaluation and Mitigation
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`Strategy’; (b) sham litigation; and (c) reverse payments to four of the generic manufacturers.”5
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`10.
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`The capstone to Jazz’s scheme came in 2017, when it agreed with perhaps its strongest
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`competitor, Hikma, to delay generic entry in exchange by a promise by Jazz to not launch an authorized
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`generic. This “no AG” agreement, which was hidden from the market when it was reached in 2017,
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`ensured Jazz would see no serious generic competition until July 2023: “on April 5, 2017, after nearly
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`seven years of trying to bring an AB-rated generic to market, Hikma agreed to buy and relabel Xyrem
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`rather than manufacture a generic version of Xyrem. By agreeing to this, Hikma delayed its allegedly
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`3 “Drug Prices Soar for Top-Selling Brands,” Bloomberg, May 1, 2014;
`https://www.bloomberg.com/graphics/infographics/drug-prices-soar-for-top-selling-brands.html.
`4 Conference Call Transcript; Jazz Pharmaceuticals, Inc. at Piper Jaffray Health Care Conference, Jazz
`Pharmaceuticals (Nov. 30. 2011), https://investor.jazzpharma.com/node/12191/html.
`5 In re Xyrem Antitrust Litig., Case No. 5:20-md-02966-LHK, ECF No. 138, at 8 (N.D. Cal. Aug. 13,
`2021).
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`COMPLAINT
`Molina Healthcare Inc. v. Jazz Pharms., Inc., et al.
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`impending entry into Jazz’s market over six years until at least July 1, 2023 (i.e., the end of the six month
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`term for Hikma’s AG).”6
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`11.
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`Plaintiff seeks damages for the overcharges it paid as a result of Defendants’ conduct as
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`well as injunctive relief to prevent the Defendants from continuing their unlawful agreements.
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`II.
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`JURISDICTION AND VENUE
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`12.
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`As this is an action asserting claims under Sections 1 and 2 of the Sherman Act, 28
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`U.S.C. §§ 1 and 2, this Court has subject matter jurisdiction under 28 U.S.C. §§ 1331, 1337(a), and 15
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`U.S.C. § 15.
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`13.
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`The Court has subject-matter jurisdiction over the state-law claims alleged in this action
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`pursuant to 28 U.S.C. § 1367, as the state law claims are factually and legally related to the federal claims
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`such that they form part of the same “case or controversy.” Similar state law claims are pending in this
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`District in In re Xyrem Antitrust Litig., Case No. 5:20-md-02966-LHK, and thus exercising subject-matter
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`jurisdiction avoids unnecessary duplicity or multiplicity of actions.7 Supplemental or pendant jurisdiction
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`should be exercised in the interest of judicial economy, and avoiding both duplicative litigation and
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`inconsistent results.
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`14.
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`Venue is appropriate in this District under 28 U.S.C. §1391 because the claims alleged in
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`this action accrued in this District and the Defendants regularly transact business within this District,
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`have maintained business offices in this District, and Defendants have directed their conduct towards
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`Plaintiff this District.
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`15.
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`Each Defendant has transacted business, maintained substantial contacts, or committed
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`overt acts in furtherance of the illegal scheme and conspiracy throughout the United States, including in
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`this District. The scheme and conspiracy have been directed at persons and businesses residing in,
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`located in, or doing business throughout the United States, including in this District.
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`III.
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` THE PARTIES
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`
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`6 Id. at 29.
`7 Plaintiff has pled all applicable causes of action, but seeks only to presently advance those claims
`identified by Judge Koh as “10 causes of action for the parties to litigate through resolution.” Xyrem,
`ECF No. 83 at 2.
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`COMPLAINT
`Molina Healthcare Inc. v. Jazz Pharms., Inc., et al.
`4
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`Case 3:21-cv-07935 Document 1 Filed 10/08/21 Page 8 of 66
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`16. Molina Healthcare Inc. (“Molina”) is a publicly traded healthcare management
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`organization with its principal place of business at 200 Oceangate, Suite 100, Long Beach, CA 90802.
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`Molina provides health care services to families and individuals who qualify for government-sponsored
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`programs like Medicaid. Molina is driven by the belief that each person deserves quality care.
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`17.
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`In 1996, as the need to more effectively manage and deliver health care services to low-
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`income populations grew, Molina became a licensed health plan in California. Subsequently, Molina
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`expanded to numerous other states across the nation, operating through state-licensed subsidiaries.
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`Molina currently serves approximately 4.7 million members across 18states and Puerto Rico.
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`18. Molina is the parent company, and assignee of the claims, of subsidiaries and affiliates
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`that provide health insurance that cover medical expenses incurred by the plan’s beneficiaries. These
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`assignor subsidiaries include: Molina Healthcare of California, Molina Healthcare of California Partner
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`Plan, Inc., Molina Healthcare of Florida, Inc., Molina Healthcare of Illinois, Inc., Molina Healthcare of
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`Kentucky, Inc., Molina Healthcare of Michigan, Inc., Molina Healthcare of Mississippi, Inc., Molina
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`Healthcare of New Mexico, Inc., Molina Healthcare of New York, Inc., Molina Healthcare of Ohio,
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`Inc., Molina Healthcare of South Carolina, Inc., Molina Healthcare of Texas, Inc., Molina Healthcare of
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`Texas Insurance Company, Molina Healthcare of Utah, Inc. (d/b/a Molina Healthcare of Utah and
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`Molina Healthcare of Idaho), Molina Healthcare of Washington, Inc., Molina Healthcare of Wisconsin,
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`Inc., and Senior Whole Health of New York, Inc. Collectively, the purchases of these entities are
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`referred to as the “Molina Purchases.”
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`19. When Molina’s health plans listed above purchase Xyrem, they source Xyrem from
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`Express Scripts and purchase it directly from Express Scripts. Express Scripts then delivers Xyrem to
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`Molina’s members in various states. Express Scripts has an exclusive distribution agreement with
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`Defendant Jazz, so Xyrem is not purchased at retail pharmacies like many drugs are. Molina’s and/or its
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`health plans obligation to pay is triggered by the presence of Molina’s members, who reside in numerous
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`U.S. states.
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`20.
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`Defendant Jazz Pharmaceuticals, Inc. is a corporation organized and existing under the
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`laws of the State of Delaware, with its principal place of business at Waterloo Exchange, Waterloo Road,
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`COMPLAINT
`Molina Healthcare Inc. v. Jazz Pharms., Inc., et al.
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`Case 3:21-cv-07935 Document 1 Filed 10/08/21 Page 9 of 66
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`Dublin 4, Ireland. Its U.S. headquarters is located at 3170 Porter Drive, Palo Alto, CA 94304, with
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`offices in Philadelphia, Pennsylvania and Ewing, New Jersey. Jazz principally develops, manufactures
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`and markets brand name drugs.
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`21.
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`Defendant Jazz Pharmaceuticals Ireland Limited is a corporation organized and existing
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`under the laws of Ireland, with its principal place of business at Waterloo Exchange, Waterloo Road,
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`Dublin 4, Ireland.
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`22.
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`Defendant Jazz Pharmaceuticals Public Limited Company is an Ireland public limited
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`biopharmaceutical company organized and existing under the laws of Ireland, with its principal place of
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`business at Waterloo Exchange, Waterloo Road, Dublin 4, Ireland. Jazz Pharmaceuticals plc common
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`stock is publicly traded in the United States on the NASDAQ stock exchange. Jazz Pharmaceuticals plc
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`is the parent company of Jazz Pharmaceuticals, Inc. and Jazz Pharmaceuticals Ireland Limited.
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`23.
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`Each of the three Jazz Defendants was directly and substantially involved in planning
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`and undertaking the anticompetitive acts alleged in this complaint. Among other things, Jazz
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`Pharmaceuticals, Inc. and Jazz Pharmaceuticals Ireland Limited were parties to the document styled as
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`the “Settlement Agreement” in this complaint. Among other things, Jazz Pharmaceuticals plc was
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`directly involved in the negotiation of the unlawful agreements described in this complaint. The three
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`Jazz entities are referred to collectively as “Jazz.”
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`24.
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`Jazz manufactures and sells Xyrem, the only product approved by the FDA to be
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`marketed in the U.S. for the treatment of both cataplexy and excessive daytime sleepiness, or EDS, in
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`both adult and pediatric patients with narcolepsy.
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`25.
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`Defendant Hikma Pharmaceuticals plc is a public limited company organized and
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`existing under the laws of the United Kingdom, with its principal place of business at 1 New Burlington
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`Place, London, W1S 2HR and its U.S. headquarters at 246 Industrial Way West, Eatontown, New
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`Jersey, 07724.
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`26.
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`Defendant Hikma Pharmaceuticals USA Inc. is a corporation organized and existing
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`under the laws of the State of Delaware, with its principal place of business at 246 Industrial Way West,
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`Eatontown, New Jersey, 07724, and is a wholly-owned subsidiary of Hikma plc. Before June 20, 2018,
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`COMPLAINT
`Molina Healthcare Inc. v. Jazz Pharms., Inc., et al.
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`Case 3:21-cv-07935 Document 1 Filed 10/08/21 Page 10 of 66
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`Hikma Pharmaceuticals USA Inc. was organized under the name West-Ward Pharmaceuticals Corp.,
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`which had been acquired by Hikma Pharmaceuticals plc in 1998.
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`27.
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`Defendant Hikma Labs, Inc. is a corporation organized and existing under the laws of
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`the State of Nevada, with its principal place of business at 1809 Wilson Road, Columbus, Ohio, 43328.
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`Hikma Labs, Inc. was formerly known as Roxane Laboratories, Inc., which was purchased by West-
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`Ward Pharmaceuticals Corp. in 2016 and is now a wholly-owned subsidiary of Hikma Pharmaceuticals
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`plc. In June 2018, the company’s name was changed from Roxane Laboratories, Inc. to Hikma Labs,
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`Inc.
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`28.
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`Defendant Eurohealth (USA), Inc. is a holding company for Hikma Pharmaceuticals
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`USA Inc. and a wholly-owned subsidiary of Hikma Pharmaceuticals plc, organized and existing under
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`the laws of the State of Delaware, with its principal place of business at 246 Industrial Way West,
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`Eatontown, New Jersey, 07724.
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`29.
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`Each of the Hikma-related Defendants was directly and substantially involved in
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`planning, entering into, and performing under the agreements reached beginning in 2017, as alleged in
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`this complaint. Among other things, Roxane Laboratories, Inc., West-Ward Pharmaceuticals Corp.,
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`Eurohealth (USA), Inc., and Hikma Pharmaceuticals plc were parties to the document styled as the
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`“Settlement Agreement” in this complaint.
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`30.
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`Defendant Amneal Pharmaceuticals LLC is a limited liability company organized and
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`existing under the laws of the State of Delaware, with its principal place of business at 400 Crossing
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`Boulevard, Bridgewater, New Jersey, 08807.
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`31.
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`Defendant Par Pharmaceutical, Inc. is a corporation organized and existing under the
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`laws of the State of Delaware, with its principal place of business at One Ram Ridge Rd., Chestnut
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`Ridge, New York 10977. Par is a subsidiary of Endo International plc, an Irish public limited company
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`with its U.S. headquarters located in Malvern, Pennsylvania. In September 2015, Endo completed an
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`acquisition of Par Pharmaceuticals Holdings, Inc. and its subsidiaries, including Par Pharmaceutical, Inc.,
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`and combined it with Endo’s existing generics subsidiary, Qualitest Pharmaceuticals. As used in this
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`complaint, “Par” encompasses relevant predecessors-and-successors-in-interest.
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`COMPLAINT
`Molina Healthcare Inc. v. Jazz Pharms., Inc., et al.
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`Case 3:21-cv-07935 Document 1 Filed 10/08/21 Page 11 of 66
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`32.
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`Defendant Lupin Ltd. is a public limited company organized and existing under the laws
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`of India, with its principal place of business at B/4 Laxmi Towers, Bandra-Kurla Complex, Bandra (E),
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`Mumbai 400 051, India.
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`33.
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`Defendant Lupin Pharmaceuticals Inc., a wholly-owned subsidiary of Lupin Ltd., is a
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`corporation organized and existing under the laws of the State of Delaware, with its principal place of
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`business at 111 South Calvert Street, Baltimore, Maryland, 21202.
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`34.
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`Defendant Lupin Inc., a wholly-owned subsidiary of Lupin Ltd., is a corporation
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`organized and existing under the laws of the State of Delaware, with its principal place of business at
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`111 South Calvert Street, Baltimore, Maryland, 21202.
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`35.
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`All of Defendants’ wrongful actions described in this complaint are part of, and in
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`furtherance of, the illegal monopolization and restraint of trade alleged herein, and were authorized,
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`ordered, and/or undertaken by Defendants’ various officers, agents, employees, or other representatives
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`while actively engaged in the management of Defendants’ affairs (or that of their predecessors-in-
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`interest) within the course and scope of their duties and employment, and/or with the actual, apparent,
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`and/or ostensible authority of Defendants.
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`IV.
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`REGULATORY BACKGROUND
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`A.
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`Regulatory Structure for Approval and Substitution of Generic Drugs.
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`1.
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`The Prescription Drug Market Place
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`36.
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`Defendants manipulated the unique features of the prescription drug marketplace,
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`ensuring that their anticompetitive market allocation scheme would reap them the maximum profits to
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`the detriment of purchasers such as Plaintiff.
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`37.
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`In the pharmaceutical marketplace, the consumer does not freely select pharmaceuticals
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`as her or she does groceries in a supermarket.
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`38.
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`Prescription drugs may be dispensed only pursuant to a doctor’s prescription. For a
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`given script, and a pharmacist may dispense only the brand-name drug named in the prescription or its
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`AB-rated, FDA-approved generic equivalent.
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`COMPLAINT
`Molina Healthcare Inc. v. Jazz Pharms., Inc., et al.
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`Case 3:21-cv-07935 Document 1 Filed 10/08/21 Page 12 of 66
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`39.
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`In most instances, the patient and his health insurer pay for the prescription drug that a
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`doctor has prescribed. Like the pharmacist, their “choice” is limited to the brand name drug named in
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`the prescription or its AB-rated generic equivalent.
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`40.
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`Therefore, the doctor’s prescription defines the relevant product market, because it
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`limits the consumer’s (and pharmacist’s) choice to the drug named therein.
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`41. When there is no generic competition for a brand name drug, the brand manufacturers
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`can set and maintain prices without losing market share. The ability to do this is the result of the brand
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`name drug company’s monopoly power over the market for that drug in both its brand name and
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`generic form.
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`2.
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`The Hatch-Waxman Act and FDA Approval Process.
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`42.
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`The Federal Food, Drug and Cosmetics Act (21 U.S.C. §§ 301-392) (“FDCA”), provides
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`that a manufacturer that creates a new drug must obtain the approval of the FDA to sell the new drug
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`by filing a New Drug Application (“NDA”). An NDA is submitted with extensive, expensive testing
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`data, that must include submission of specific data concerning the safety and efficacy of the drug and
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`identify any patents claiming the drug. 21 U.S.C. § 355(b).
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`43.
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`To encourage substitution of generic drugs, and reign in high drug costs, Congress in
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`1984 amended the FDCA with the enactment of the Hatch-Waxman Act (“Hatch-Waxman”). The
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`Hatch-Waxman Act streamlined and simplified the process for approving generic drugs. The Act
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`replaced the lengthy and costly NDA approval process with an expedited Abbreviated New Drug
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`Application (“ANDA”) process. ANDA was intended to be a game-changer that would reduce the
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`regulatory hurdles for prospective generic manufacturers.8 Under the Act, an ANDA applicant may rely
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`on the safety and efficacy findings of the NDA for the referenced brand-name drug, if the ANDA
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`demonstrates the proposed generic drug is “bioequivalent,” i.e., it contains the same active ingredient(s),
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`dosage form, route of administration, and strength as the brand-name drug, and is absorbed at the same
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`rate and to the same extent as the brand-name drug.
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`8 See Drug Price Competition and Patent Term Restoration Act, Pub. L. No. 98-417, 98 Stat. 1585
`(1984).
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`COMPLAINT
`Molina Healthcare Inc. v. Jazz Pharms., Inc., et al.
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`Case 3:21-cv-07935 Document 1 Filed 10/08/21 Page 13 of 66
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`44.
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`For drugs that are submitted through this ANDA process successfully, the FDA assigns
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`them an “AB” rating. To be an “AB” rated generic drug is to be in the eyes of U.S. regulatory authorities
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`a substitute for the brand drug in terms of the ingredients and efficacy.
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`45.
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`The Act, along with paving the road for generic competition, gave some protection to
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`brand manufacturers in the form of delay to facilitate legitimate exercise of brand manufacturer’s patent
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`rights. The Act allowed the brand-name manufacturer a 30-month stay, simply by filing a patent
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`infringement lawsuit. This process, which gives the equivalent of a preliminary injunction to the brand
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`manufacturer for up to 30 months has, sadly, been repeatedly abused by brand manufactures who file
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`frivolous patent lawsuits to delay generic competition.9
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`46. When the FDA approves a brand-name manufacturer’s NDA, it lists in a publication
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`entitled the “Approved Drug Products with Therapeutic Equivalence Evaluations” (known as the
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`“Orange Book”) any patents which, according to the information supplied to the FDA by the brand-
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`name manufacturer: (1) claim the approved drug or its approved uses; and (2) for which a “claim of
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`patent infringement could reasonably be asserted if a person is not licensed by the owner engaged in the
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`manufacture, use, or sale of the drug.” 21 U.S.C. § 355(b)(1); 21 U.S.C. § 355(g)(7)(A)(iii).
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`47.
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`To obtain FDA approval of an ANDA the generic manufacturer must certify that it will
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`infringe no patent listed in the