Case 2:21-cv-17363 Document 1 Filed 09/22/21 Page 1 of 75 PageID: 1
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`CROWELL & MORING LLP
`Preetha Chakrabarti
`590 Madison Avenue, 20th Floor
`New York, NY 10022-2544
`Telephone: 212.223.4000
`Facsimile: 212.223.4134
`PChakrabarti@crowell.com
`
`Daniel A. Sasse *
`Tiffanie L. McDowell *
`3 Park Plaza, 20th Floor
`Irvine, California 92614
`Telephone: 949.263.8400
`Facsimile: 949.263.8414
`DSasse@crowell.com
`TMcDowell@crowell.com
`* Pro Hac Vice application forthcoming
`
`
`
`
`Kent A. Gardiner *
`Mark M. Supko *
`Diane A. Shrewsbury *
`1001 Pennsylvania Avenue NW
`Washington, D.C. 20004
`Telephone: 202.624.2500
`Facsimile: 202.628.5116
`KGardiner@crowell.com
`MSupko@crowell.com
`DShrewsbury@crowell.com
`* Pro Hac Vice application forthcoming
`
`Attorneys for Plaintiffs
`Centene Corporation, WellCare Health Plans, Inc.,
`New York Quality Healthcare Corporation dba Fidelis
`Care, and Health Net, LLC
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`
`UNITED STATES DISTRICT COURT
`DISTRICT OF NEW JERSEY
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`
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`Civil Action No. _________________
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`COMPLAINT
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`JURY TRIAL DEMANDED
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`
`CENTENE CORPORATION;
`WELLCARE HEALTH PLANS, INC.;
`NEW YORK QUALITY HEALTHCARE
`CORPORATION dba FIDELIS CARE; and
`HEALTH NET, LLC,
`Plaintiffs,
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`v.
`MERCK & COMPANY, INC.;
`MERCK SHARP & DOHME
`CORPORATION;
`SCHERING-PLOUGH CORPORATION;
`SCHERING CORPORATION; and
`GLENMARK PHARMACEUTICALS LTD.,
`Defendants.
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`TABLE OF CONTENTS
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`Page
`NATURE OF THE CASE ......................................................................................................... 1
`PARTIES.................................................................................................................................. 4
`CO-CONSPIRATORS OF DEFENDANTS............................................................................... 8
`JURISDICTION AND VENUE ................................................................................................ 9
`FACTUAL BACKGROUND .................................................................................................... 9
`A.
`The Regulatory Structure for Approval and Substitution of Generic Drugs. .................. 9
`B.
`Economics of Reverse Payment Agreements. ............................................................. 15
`CHOLESTEROL LOWERING DRUGS ................................................................................. 16
`A.
`Blocking the Liver’s Production of Cholesterol — the Development of Statins. .......... 17
`B.
`Blocking the Absorption of Cholesterol — Zetia. ....................................................... 18
`THE DEFENDANTS’ ANTICOMPETITIVE CONDUCT ...................................................... 19
`A. Merck Improperly Seeks and Obtains at Least the ’115 and RE ’721 Patents. ............. 19
`B. Merck Improperly Lists Patents for Zetia in the Orange Book. ................................... 21
`C. Merck Improperly Obtains Additional ’106 Patent and Lists it for Zetia in the
`Orange Book. ........................................................................................................... 22
`D. Merck Receives New Regulatory Exclusivities. ......................................................... 23
`E.
`Glenmark Files the First ANDA for Generic Zetia, and Merck Files a Baseless
`Lawsuit Against Glenmark. ....................................................................................... 24
`F. Merck Admits that Its Lawsuit Against Glenmark Had No Merit. ............................... 28
`G.
`Prior to the Settlement and Reissue, Par Becomes Glenmark’s Partner in Generic
`Zetia, and Approves the Illegal Settlement Agreement. .............................................. 30
`The Confidential Merck-Glenmark Settlement Agreement Includes An Illegal
`Reverse Payment. ..................................................................................................... 32
`Absent the Illegal Settlement Agreement and Other Improper Conduct, Generic
`Competition Would Have Begun Much Earlier. ......................................................... 35
`Merck Is Challenged by Additional Generic Manufacturers. ....................................... 38
`J.
`Glenmark Launches a Generic Form of Zetia — Merck Does Not. ............................. 39
`K.
`180 Days Later, Five More Generics Launch. ............................................................ 40
`L.
`M. Merck Used These Same Zetia Patents to Improperly Prevent Generic Competition to
`Vytorin. .................................................................................................................... 40
`The Generic Manufacturers Challenge Vytorin. ......................................................... 42
`N.
`Defendants Intended to and Did Harm Competition. .................................................. 43
`O.
`Effects on Interstate Commerce. ................................................................................ 44
`P.
`MERCK’S MONOPOLY POWER.......................................................................................... 46
`ACCRUAL AND TOLLING .................................................................................................. 49
`CLAIMS FOR RELIEF........................................................................................................... 50
`DEMAND FOR JUDGMENT ................................................................................................. 72
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`Plaintiffs Centene Corporation (“Centene”), WellCare Health Plans, Inc. (“WellCare”),
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`New York Quality Healthcare Corporation dba Fidelis Care (“Fidelis”), and Health Net, LLC
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`(“Health Net”) (collectively, “Plaintiffs” or the “Centene Companies”) bring this antitrust action
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`against Merck & Company, Inc., Merck Sharp & Dohme Corporation, Schering-Plough
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`Corporation, and Schering Corporation (collectively, “Merck”); and Glenmark Pharmaceuticals
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`Ltd. (“Glenmark”, with Merck, “Defendants”), seeking damages resulting from Defendants’
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`anticompetitive conduct. Based on the investigation of counsel, and upon information and belief
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`as to all other matters, the Centene Companies allege as follows:
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`NATURE OF THE CASE
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`1.
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`Heart disease is the leading cause of death in the United States, accounting for 1
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`out of every 4 deaths.1 One of the major risk factors for heart disease is high cholesterol. In the
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`United States, more than 93 million adults have cholesterol levels higher than 200 mg/dL and
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`nearly 29 million have cholesterol levels exceeding 240 mg/dL.2 Pharmaceutical companies
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`have developed a litany of statins and other lipid-regulating drugs to treat this condition. And
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`these companies have reaped enormous profits from their efforts. In 2011 alone, sales of
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`cholesterol regulating drugs exceeded $39.1 billion per year.
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`2.
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`Merck has developed and marketed several blockbuster cholesterol-reducing
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`drugs. Indeed, two of its drugs — Zetia, the first drug in a new class of lipid-lowering
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`medications, and Vytorin, a fixed-dosed combination pill comprised of Zetia and simvastatin
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`(generic Zocor) — have been among the best-selling cholesterol treatment drugs over the past
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`fifteen years, each consistently generating more than $1 billion in sales per year (and more than
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`1 See Centers for Disease Control and Prevention, Heart Disease (Oct. 22, 2020), available at
`https://www.cdc.gov/heartdisease/index.htm.
`2 See Centers for Disease Control and Prevention, High Cholesterol Facts (Sept. 8, 2020),
`available at https://www.cdc.gov/cholesterol/facts.htm.
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`$2 billion in some years). As a result, when the new chemical exclusivity period on Zetia was
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`nearing its end, and generic manufacturers were poised to enter with competing drugs, Merck
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`took aggressive measures to protect its profits.
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`3.
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`Seeing an opportunity to capitalize on Zetia’s loss of exclusivity, Glenmark, a
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`manufacturer of generic drugs, was the first company to file an Abbreviated New Drug
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`Application (“ANDA”) seeking to launch a generic to compete with Zetia. Shortly after the
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`ANDA was filed, Merck sued Glenmark, alleging that Glenmark’s generic would infringe one of
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`Merck’s patents covering Zetia. Merck later admitted its lawsuit had no merit because it had
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`failed to disclose prior art to the United States Patent and Trademark Office (“USPTO”) that
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`would have resulted in the denial of patent protection for Zetia. But simply by initiating the
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`litigation, Merck triggered a 30-month stay, which precluded the Food & Drug Administration
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`(“FDA”) from granting final approval of Glenmark’s ANDA.
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`4.
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`Glenmark responded to Merck’s lawsuit by asserting several meritorious
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`affirmative defenses and counterclaims. Despite being put on notice of the various defects in its
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`patent infringement claim, Merck did not dismiss its meritless litigation; rather, it continued to
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`prosecute its action to blockade Glenmark’s competition. During the course of the litigation,
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`Merck and Glenmark discussed potential settlement. When they were unable to reach an
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`agreement, Glenmark asked the court to rule on its pending motions for partial summary
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`judgment. After the court granted in part and denied in part Glenmark’s motions, Glenmark
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`entered into a Marketing and Distribution Agreement (the “Distribution Agreement”) with Par
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`Pharmaceutical, Inc. (“Par”). Under the terms of the Distribution Agreement, Par would be the
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`exclusive distributor for Glenmark’s generic Zetia, and it would share in all potential Zetia
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`settlement proceeds and profits on sales of Glenmark’s generic Zetia in the United States.
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`5.
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`Approximately seven days after Glenmark executed the Distribution Agreement
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`with Par, Glenmark and Merck settled their action. This settlement, along with Merck’s pursuit
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`of litigation to enforce a patent it knew was invalid, was at the heart of Merck’s — and now
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`Glenmark’s — anticompetitive scheme to deprive the market of generic competition. Pursuant
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`to their settlement agreement, Glenmark agreed to drop its meritorious claims and defenses
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`against Merck and delay its launch of generic Zetia for nearly five years. In exchange, Merck
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`agreed to refrain from competing with Glenmark by not introducing its own authorized generic
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`(“AG”) version of Zetia during Glenmark’s 180-day period of first-filer exclusivity. Par played
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`an integral role in negotiating these terms.
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`6.
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`As a result of Merck’s monopolistic scheme and its anticompetitive agreement
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`with Glenmark, Merck reaped billions of dollars in additional sales of Zetia and Vytorin.
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`Glenmark also reaped millions of dollars in additional profits once its product finally reached the
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`market. Meanwhile, health plans, like the Centene Companies, were forced to significantly
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`overpay for Zetia and Vytorin because there were no generic equivalents of Zetia. By the time
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`Glenmark finally entered the market with its generic on December 12, 2016, the Centene
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`Companies had overpaid by hundreds of millions of dollars for their members’ Zetia and Vytorin
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`prescriptions. And the Centene Companies continued to overpay, due to the delay-inflated drug
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`prices and the lack of competition associated with Merck’s agreement not to launch an AG.
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`7.
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`If Merck had not failed to disclose prior art to the USPTO and not brought or
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`maintained its frivolous patent litigation blocking generic competition, or Merck, Glenmark, and
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`Par had not conspired to allocate the market for Zetia via their anticompetitive settlement
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`agreement, both Merck and Glenmark would have launched generic versions of Zetia at least as
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`early as December 2011. And, six months later, additional generics would have entered the
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`market, further driving down prices. The Centene Companies’ members would have substituted
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`lower-priced generic Zetia for higher-priced branded Zetia, and lower-priced simvastatin for
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`higher-priced Vytorin, for the vast majority of their prescriptions.
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`8.
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`Merck’s overarching monopolistic scheme, Merck and Glenmark’s
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`anticompetitive settlement agreement, and Merck, Par, and Glenmark’s unlawful business
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`arrangement violated numerous State antitrust and consumer protection laws. Defendants were
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`also unjustly enriched from their actions. Accordingly, the Centene Companies seek damages
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`for overcharges they paid as a direct result of Defendants’ anticompetitive conduct.
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`PARTIES
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`9.
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`The Centene Company Plaintiffs. Plaintiff Centene Corporation3 is a Delaware
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`corporation with its principal place of business at Centene Plaza, 7700 Forsyth Boulevard, St.
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`Louis, Missouri 63105. Centene and its subsidiaries are providers of healthcare related services,
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`3 Centene operates its insurance business through a variety of wholly owned subsidiaries
`including: Absolute Total Care, Inc.; Ambetter of Magnolia Inc.; Ambetter of North Carolina
`Inc.; Ambetter of Peach State Inc.; Arkansas Health & Wellness Health Plan, Inc.; Arkansas
`Total Care, Inc.; Bankers Reserve Life Insurance Company of Wisconsin; Blue Sky Health Plan,
`Inc.; Bridgeway Health Solutions of Arizona, Inc.; Buckeye Community Health Plan, Inc.;
`Buckeye Health Plan Community Solutions, Inc.; California Health & Wellness Plan; Carolina
`Complete Health, Inc.; CeltiCare Health Plan of Massachusetts, Inc.; Celtic Insurance Company;
`Coordinated Care Corporation; Coordinated Care of Washington, Inc.; Delaware First Health
`Plan, Inc.; Granite State Health Plan, Inc.; Hallmark Life Insurance Company; HealthSmart;
`Healthy Oklahoma Holdings, Inc.; Healthy Washington Holdings, Inc.; Home State Health Plan,
`Inc.; IlliniCare Health Plan, Inc.; Iowa Total Care, Inc.; Isla Holding Co., Inc.; Kentucky Spirit
`Health Plan, Inc.; Louisiana Healthcare Connections Inc.; Magnolia Health Plan, Inc.; Managed
`Health Services Illinois, Inc.; Managed Health Services Insurance Corp.; Michigan Complete
`Health, Inc.; Nebraska Total Care, Inc.; New York Quality Healthcare Corporation; Oklahoma
`Complete Health Inc.; Peach State Health Plan, Inc.; Pennsylvania Health & Wellness, Inc.;
`SilverSummit Healthplan, Inc.; Sunflower State Health Plan, Inc.; Sunshine Health Community
`Solutions, Inc.; Sunshine State Health Plan, Inc.; Superior HealthPlan Community Solutions,
`Inc.; Superior HealthPlan, Inc.; Tennessee Total Care, Inc.; Trillium Community Health Plan,
`Inc.; University Health Plans, Inc.; Virginia Total Care, Inc.; and Western Sky Community Care,
`Inc. All of these subsidiaries have assigned their claims in this action to Centene.
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`including insuring risk for prescription drug costs for more than 15.2 million insureds in all 50
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`States, the District of Columbia, and Puerto Rico.
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`10.
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`Plaintiff WellCare Health Plans, Inc.4 is a Delaware corporation with its principal
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`place of business at 8735 Henderson Road, Tampa, Florida 33634. WellCare was acquired by
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`Centene on January 23, 2020. WellCare is a provider of healthcare related services, including
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`insuring risk for prescription drug costs for more than 5.5 million members in all 50 States, the
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`District of Columbia, and Puerto Rico and generally directs payments it makes to pharmacies
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`and providers in connection with those benefits from its headquarters in Florida.
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`11.
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`Plaintiff New York Quality Healthcare Corporation dba Fidelis Care5 is a New
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`York corporation with its principal place of business at 9525 Queens Blvd Rego Park, New York
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`11374. Fidelis was acquired by Centene on July 1, 2018. Fidelis is a provider of healthcare
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`4 WellCare operates its insurance business through a variety of wholly owned subsidiaries:
`America’s 1st Choice California Holdings, LLC; Comprehensive Health Management, Inc. (also
`does business as Comprehensive Health Management Inc. of Florida, Comprehensive Health
`Management of Florida, Inc., Florida Comprehensive Health Management, Inc., Malama ‘Ohana
`Case Management and WellCare Innovation Institute); Comprehensive Reinsurance, Ltd.; Easy
`Choice Health Plan, Inc.; Exactus Pharmacy Solutions, Inc. (f/k/a WellCare Specialty Pharmacy,
`Inc.); Harmony Behavioral Health, Inc.; Harmony Behavioral Health IPA, Inc.; Harmony Health
`Management, Inc.; Harmony Health Plan of Illinois, Inc. (also does business as Harmony Health
`Plan of Indiana and Harmony Health Plan of Missouri); Harmony Health Systems, Inc.; ‘Ohana
`Health Plan, Inc.; The WellCare Management Group, Inc.; WCG Health Management, Inc.;
`WellCare Health Insurance of Arizona, Inc. (also does business as ‘Ohana Health Plan, Inc.);
`WellCare Health Insurance of Illinois, Inc. (also does business as WellCare of Kentucky, Inc.);
`WellCare Health Insurance of New York, Inc.; WellCare Health Plans of California, Inc.;
`WellCare Health Plans of New Jersey, Inc.; WellCare Health Plans of Tennessee, Inc.; WellCare
`of Connecticut, Inc.; WellCare of Florida, Inc. (also does business as Staywell Health Plan of
`Florida and HealthEase); WellCare of Georgia, Inc.; WellCare of Kansas, Inc.; WellCare of
`Louisiana, Inc.; WellCare of New York, Inc.; WellCare of Ohio, Inc.; WellCare of South
`Carolina, Inc.; WellCare of Texas, Inc.; WellCare Pharmacy Benefits Management, Inc.; and
`WellCare Prescription Insurance, Inc. All of these subsidiaries have assigned their claims in this
`action to WellCare.
`5 Fidelis also operates its business through a subsidiary, Salus Administrative Services, Inc.,
`which has assigned its claims in this action to Fidelis.
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`related services, including insuring risk for prescription drug costs for more than 1.7 million
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`members who make pharmaceutical purchases in at least 19 States and generally directs
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`payments it makes to pharmacies and providers in connection with those benefits from its
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`headquarters in New York.
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`12.
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`Plaintiff Health Net LLC6 is a Delaware limited liability company with its
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`principal place of business at 21281 Burbank Boulevard in Woodland Hills, Los Angeles,
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`California 91367. Health Net was acquired by Centene on March 24, 2016. Health Net is a
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`provider of healthcare related services, including insuring risk for prescription drug costs for
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`more than 3.3 million members across the United States and generally directs payments it makes
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`to pharmacies and providers in connection with those benefits from its headquarters in
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`California.
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`13.
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`The Centene Companies are also authorized to bring claims through services they
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`offer other health plans and health-related services. In particular, the Centene Companies offer
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`Administrative Services Only (“ASO”) to self-funded health plans and other plans across the
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`United States. As part of these services, the Centene Companies generally process claims,
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`respond to customer inquiries, and offer access to their provider networks and clinical programs
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`to self-funded health plans, but the self-funded plan sponsors typically retain the risk of
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`financing substantially all of the cost of health benefits. At all times relevant to this Complaint,
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`the Centene Companies processed claims and provided administrative services on behalf of self-
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`funded plans and their membership related to expenditures for Zetia, Vytorin, and their generic
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`6 Health Net: Health Net Access, Inc.; Health Net Community Solutions of Arizona, Inc.;
`Health Net Community Solutions, Inc.; Health Net Health Plan of Oregon, Inc.; Health Net Life
`Insurance Company; Health Net Life Reinsurance Company; Health Net of Arizona
`Administrative Services, Inc.; Health Net of Arizona, Inc.; and Health Net of California, Inc. All
`of these subsidiaries have assigned their claims in this action to Health Net.
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`equivalents from third-party pharmacies in all 50 States, as well as the District of Columbia and
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`Puerto Rico.
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`14. Merck Defendants. Merck & Company, Inc. is a corporation organized and
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`existing under the laws of the state of New Jersey, with a principal place of business at 2000
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`Galloping Hill Road, Kenilworth, New Jersey 07033. It is or was the parent company of Merck
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`Sharp & Dohme Corporation and MSP Singapore Company LLC.
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`15. Merck Sharp & Dohme Corporation is a corporation organized and existing under
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`the laws of the state of New Jersey, with a principal place of business at 2000 Galloping Hill
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`Road, Kenilworth, New Jersey 07033. It is a subsidiary of Merck & Company, Inc. and the
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`assignee of patents relevant to this lawsuit.
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`16.
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`Schering-Plough Corporation (“Schering-Plough”) was a corporation organized
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`and existing under the laws of the state of New Jersey, with a principal place of business at 2000
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`Galloping Hill Road, Kenilworth, New Jersey 07033.
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`17.
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`Schering Corporation (“Schering”) was a corporation organized and existing
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`under the laws of the state of New Jersey, with a principal place of business at 2000 Galloping
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`Hill Road, Kenilworth, New Jersey 07033. It was a wholly owned subsidiary of Schering-
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`Plough Corporation and the original assignee of the relevant patents.
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`18.
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`In 2009, as part of Merck & Company, Inc.’s acquisition of Schering-Plough
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`Corporation, Merck & Company, Inc. merged into Schering-Plough Corporation. Schering-
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`Plough Corporation subsequently changed its name to Merck & Company, Inc., and the company
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`originally known as Merck & Company, Inc. changed its named to Merck Sharp & Dohme
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`Corporation.
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`19. Glenmark Defendant. Glenmark Pharmaceuticals Limited is an Indian
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`corporation with a principal place of business at Glenmark House, B.D. Sawant Marg, Andheri
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`(E), Mumbai 400 099, India, and its registered office at B/2 Mahalaxmi Chambers, 22,
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`Bhulabhai Desai Road, Mumbai 400 026, India.
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`CO-CONSPIRATORS OF DEFENDANTS
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`20.
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`Par Pharmaceutical, Inc. is a New York corporation with a principal place of
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`business at One Ram Ridge Road, Chestnut Ridge, New York 10977. Par Pharmaceutical, Inc. is
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`a subsidiary of Endo International plc, an Irish corporation with a U.S. headquarters in Malvern,
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`Pennsylvania. In September 2015, Endo completed its acquisition of Par Pharmaceutical
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`Holdings, Inc. and its subsidiaries, including Par Pharmaceutical, Inc., and combined it with
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`Endo’s existing generics subsidiary, Qualitest Pharmaceuticals. In this Complaint, “Par” refers
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`to all of Par’s predecessors and successors. Par conspired with Defendants to blockade and delay
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`generic competition in order to enhance profits, in which it shared.
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`21. MSP Singapore Company LLC is a company with a principal place of business at
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`2000 Galloping Hill Road, Kenilworth, NJ 07033. MSP Singapore LLC is a subsidiary of Merck
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`& Company, Inc. and was the exclusive licensee of the relevant patents.
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`22.
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`Glenmark Pharmaceuticals Inc., USA is a corporation with a principal place of
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`business at 750 Corporate Drive, Mahwah, New Jersey 07430. It is a wholly owned subsidiary
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`of Glenmark Pharmaceuticals Limited. Since 2002, when Glenmark Pharmaceuticals Inc., USA
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`was incorporated, the company has been referred to, done business as, and/or been known as
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`both Glenmark Pharmaceuticals Inc., USA and, at times, Glenmark Generics Inc., USA.
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`JURISDICTION AND VENUE
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`23.
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`This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C.
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`§ 1332(a). This action is between citizens of different states and the amount in controversy
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`exceeds $75,000.
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`24.
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`This Court has general personal jurisdiction over Defendants because Defendants
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`are either residents of New Jersey or have continuous and systematic connections with New
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`Jersey as to render them essentially at home in the State. The Court also has specific personal
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`jurisdiction over Defendants as they have purposefully availed themselves of the privilege of
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`doing business in New Jersey and this action arises out of or relates to Defendants’ contacts with
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`New Jersey.
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`25.
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`Venue is proper and appropriate in this district pursuant to 28 U.S.C. § 1391. All
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`of the Merck Defendants reside in this district, Glenmark conducts significant business in this
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`district through its wholly owned subsidiary Glenmark Pharmaceuticals Inc., USA, a substantial
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`part of the events giving rise to the claim occurred in this district, and the Defendants are subject
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`to the court’s personal jurisdiction in this district.
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`FACTUAL BACKGROUND
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`A.
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`26.
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`The Regulatory Structure for Approval and Substitution of Generic Drugs.
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`The Drug Price Competition and Patent Term Restoration Act (“Hatch-Waxman
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`Act”) provides regulatory exclusivity for new pharmaceuticals while providing a pathway for
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`entry of low-priced generic drugs. A company seeking to market a new pharmaceutical product
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`must file a New Drug Application (“NDA”) with the FDA demonstrating the safety and efficacy
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`of the new product, as well as any information on applicable patents. The products based on
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`these NDAs are generally referred to as “brand-name drugs” or “branded drugs.”
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`27. When the FDA approves a manufacturer’s NDA, it lists certain information about
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`any patents identified by the manufacturer as covering the new drug in the “Approved Drug
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`Products with Therapeutic Equivalence Evaluations” (the “Orange Book”). Specifically, the
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`FDA lists any patents that: (1) claim the approved drug or its approved uses; and (2) for which a
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`“claim of patent infringement could reasonably be asserted if a person is not listed by the owner
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`engaged in the manufacture, use, or sale of the drug.” 21 U.S.C. §§ 355(b)(1) & (c)(2).
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`28.
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`The FDA’s listing of patents in the Orange Book is solely a ministerial act. The
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`agency relies completely on a manufacturer’s representations about patent validity and
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`applicability, as it lacks resources and authority to verify the patents for accuracy and
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`trustworthiness. When patents are issued after the FDA approves an NDA, a manufacturer may
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`subsequently list the patents in the Orange Book, provided it does so within 30 days of the patent
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`issuing.
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`29.
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`A drug that receives NDA approval is entitled to regulatory exclusivity for a
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`limited period of time — in other words, the FDA cannot approve any generic drug applications
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`during this period.
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`1.
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`The Hatch-Waxman Act and ANDA Approval Process.
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`30. When a branded drug’s regulatory exclusivity is about to expire, a generic
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`manufacturer may submit an ANDA that demonstrates that a generic version of the drug is
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`essentially the same as the branded version: i.e., it has the same active ingredients, dosage form,
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`safety, strength, route of administration, quality, performance characteristics, and intended use.
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`31.
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`To obtain FDA approval of an ANDA, a manufacturer must certify that the
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`generic drug will not infringe any patents listed in the Orange Book. Pursuant to Hatch-
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`Waxman, a generic manufacturer’s ANDA must contain one of four certifications:
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`a. Paragraph I Certification: No patent for the branded drug has been filed with the
`FDA;
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`b. Paragraph II Certification: The patent for the branded drug has expired;
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`c. Paragraph III Certification: The patent for the branded drug will expire on a
`particular date, and the manufacturer does not seek to market its generic drug
`before that date; or
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`d. Paragraph IV Certification: The patent for the branded drug is invalid or will not
`be infringed by a generic manufacturer’s proposed product.
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`32.
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`If a generic manufacturer files a Paragraph IV certification, a brand manufacturer
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`can delay FDA approval of the ANDA simply by suing the generic manufacturer for patent
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`infringement. If the brand manufacturer initiates a patent infringement action against the generic
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`filer within forty-five days of receiving notification of the Paragraph IV certification, the FDA
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`will not grant final approval of the ANDA until the earlier of: (a) the passage of 30 months, or
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`(b) the issuance of a decision by a court that the patent is invalid or not infringed by the generic
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`manufacturer’s proposed product. Until one of these two things occur, the FDA may tentatively
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`approve the ANDA, but it cannot authorize the generic manufacturer to market its product. The
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`FDA may grant tentative approval of an ANDA when it determines that the ANDA would
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`otherwise be ready for final approval but for the 30-month stay.
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`33.
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`To incentivize manufacturers to develop and seek approval of generic drugs, the
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`Hatch-Waxman Act grants a 180-day period of market exclusivity to the first Paragraph IV
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`ANDA applicant to file a substantially complete ANDA (the “first-filer”). The first-filer’s
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`exclusivity period is measured from the date the generic drug is first commercially marketed or
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`the date of a court decision finding the patent(s) which are the subject of the Paragraph IV
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`certification to be invalid, unenforceable, or not infringed, whichever is earlier. During this
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`exclusivity period, the first-filer can market and sell its generic free from competition with other
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`generics, except that the brand manufacturer is permitted to launch its own AG. As a result,
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`during the 180-day exclusivity period, the generic manufacturer effectively has a duopoly with
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`the brand manufacturer.
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`34.
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`Generic manufacturers frequently compete to be the first-filer in order to reap the
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`benefits of the 180-day exclusivity period. Before a generic enters, a branded drug is typically
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`priced far above competitive levels. Therefore, during the 180-day exclusivity period, the
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`generic price, although lower than the branded price, is much higher than it would be in the
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`presence of two or more generic competitors. This results in greater profits to the first-filer.
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`35.
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`Generic drugs are typically at least 25% less expensive than their brand-name
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`counterparts when there is a single generic competitor. This discount typically increases to 80-
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`90% (or more) where there are multiple generic competitors on the market. For a generic
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`manufacturer, being able to sell at a higher price for 180 days may equate to hundreds of millions
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`of dollars in profits.
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`36.
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`Under the Hatch-Waxman regulatory scheme, brand manufacturers have strong
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`financial incentives to illegally prevent generic entry by listing patents in the Orange Book —
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`even if those patents are not eligible for listing because they are invalid or unenforceable or, in
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`some cases, do not even cover the product for which they are listed. Brand manufacturers also
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`illegally block competition by suing any generic competitor that files an ANDA with a Paragraph
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`IV certification, even if the generic manufacturer’s product does not actually infringe a listed
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`patent. This is because merely filing suit — even a baseless one — ensures a generic cannot
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`enter the market during the automatic 30-month stay.
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`37.
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`The first generic applicant can help the brand manufacturer’s anticompetitive
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`scheme by agreeing to delay its own market entry, which effectively blocks the market entry of
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`all generic products because generic manufacturers who file after the first generic applicant
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`cannot launch until the first applicant uses or for