`Case 2:21-cv-20451-SDW-LDW Document 1 Filed 12/10/21 Page 1 of 134 PageID: 1
`
`Anthony J. Davis, Esq. (#033811992) (adavis@ogcsolutions.com)
`Brian E. Moffitt, Esq. (#020831992) (bmoffitt@ogcsolutions.com)
`SANTOMASSIMO DAVIS LLP
`1 Gatehall Drive, Suite 100
`Parsippany, New Jersey 07054
`(201) 712-1616
`Attorneys for Plaintiffs
`
`
`
`Civil Action No. ___:21-cv-__________
`
`
`
`
`
`COMPLAINT
`
`JURY TRIAL DEMANDED
`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF NEW JERSEY
`
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`MSP RECOVERY CLAIMS, SERIES LLC.;
`MSPA CLAIMS 1, LLC; MAO-MSO
`RECOVERY II, LLC, SERIES PMPI, a
`segregated series of MAO-MSO RECOVERY
`II, LLC; MSP RECOVERY CLAIMS SERIES
`44, LLC, MSP RECOVERY CLAIMS PROV,
`SERIES LLC, and MSP RECOVERY
`CLAIMS CAID, SERIES LLC,
`
`
`
`
`
`CELGENE CORPORATION AND BRISTOL-
`MYERS SQUIBB COMPANY,
`
`
`
`
`
` PLAINTIFFS,
`
`VS.
`
` DEFENDANTS.
`
`Plaintiffs MSP Recovery Claims, Series LLC, MSPA Claims 1, LLC and MAO-MSO
`
`Recovery II, LLC, Series PMPI, a segregated series of MAO-MSO Recovery II, LLC, MSP
`
`Recovery Series 44, LLC, MSP Recovery Claims PROV, Series LLC, and MSP Recovery
`
`Claims CAID, Series LLC (collectively referred to as “Plaintiffs” or “MSP” unless otherwise
`
`specifically identified hereby), through its attorneys, Santomassimo Davis LLP, by way of
`
`Complaint against Defendant Celgene Corporation (“Celgene”) and Defendant Bristol-Myers
`
`Squibb Company (“Bristol-Myers Squibb”) (collectively referred to as “Defendants”) state as
`
`follows:
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`{00622548 - 1}
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`Case 2:21-cv-20451-SDW-LDW Document 1 Filed 12/10/21 Page 2 of 134 PageID: 2
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`
`I.
`
`
`NATURE OF THE CASE
`
`1.
`
`Plaintiffs bring this action against Celgene and its parent Bristol-Myers Squibb for
`
`violations of consumer protection and common law claims, arising out of Celgene’s
`
`anticompetitive scheme that has prevented generic brands from entering the market to compete
`
`with Celgene’s high-priced drugs Thalomid and Revlimid. The improper actions described below
`
`have allowed Celgene to maintain supracompetitive prices that thwart legitimate competition that
`
`would have benefited consumers and the public at large by drastically lowering the price of these
`
`medically necessary drugs. Celgene’s misconduct is a textbook example of the type that is
`
`proscribed by both federal and state law and is emblematic of the historic and unprecedented
`
`increase in pharmaceutical drug costs. Plaintiffs’ allegations are made on personal knowledge as
`
`to Plaintiffs, publicly available information and upon information and belief as to all other matters.
`
`2.
`
`The subject drug Thalomid was originally developed, marketed, and sold under the
`
`brand name Thalidomide in the late 1950s and early 1960s as a sedative and anti-nausea
`
`medication. Thalidomide had catastrophic results “[w]hen taken by pregnant women for morning
`
`sickness, it caused missing limb parts in the fetus . . . as well as organ damage and death. Fifty
`
`years after the drug’s heyday, the fear it inspired haunts arguments about the safety and regulation
`
`of medications . . . That tragedy is a major reason the Food and Drug Administration has as much
`
`authority over new drugs as it does today.”1
`
`
`3.
`
`In 1998, Celgene obtained U.S. Food and Drug Administration (“FDA”) approval
`
`to market Thalomid® (thalidomide) for a leprosy complication known as erythema nodosum
`
`leprosum (“ENL”).
`
`4.
`
`In 2005, Celgene successfully developed a thalidomide analog, Revlimid®
`
`(lenalidomide), and obtained FDA approval to market it for a specific chromosomal variant of
`
`
`1 Amanda Schaffer, Thalidomide’s Comeback, Slate, Jan. 10, 2011,
`http://www.slate.com/articles/double_x/doublex/2011/01/thalidomides_comeback.html.
`
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`Case 2:21-cv-20451-SDW-LDW Document 1 Filed 12/10/21 Page 3 of 134 PageID: 3
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`myelodysplastic syndromes (“MDS”). Celgene would go on to obtain FDA approvals for
`
`additional Revlimid indications, including for a subset of multiple myeloma (“MM”) patients in
`
`2006,2 and later for a subset of mantle cell lymphoma (“MCL”) patients in 2013.
`
`
`5.
`
`However, unsatisfied with profits earned within the pharmaceutical legal and
`
`regulatory framework, Celgene commenced an anticompetitive scheme to illegally monopolize the
`
`market for Thalomid an Revlimid. Celgene constructed an impenetrable monopolistic fortress and
`
`engaged in a multi-prong scheme to unlawfully maintain an 100% share of the market for these
`
`two drugs by successfully interfering with competitors’ efforts to develop and/or obtain FDA
`
`approval for generic versions of Thalomid and/or Revlimid at each progressive step of
`
`development.
`
`6.
`
`As part of this anticompetitive scheme, plaintiffs allege that Celgene is: (1)
`
`manipulated the safety program designed to protect patients from thalidomide’s and
`
`lenalidomide’s teratogenic properties; (2) prevented pharmacies and ingredient suppliers from
`
`acting as alternative sources of samples for such would-be generic competitors; (3) fraudulently
`
`obtained various patents from the U.S. Patent and Trademark Office (“USPTO”) for Thalomid and
`
`Revlimid and their associated safety distribution protocols; (4) serially commencing “sham” patent
`
`infringement lawsuits; and (5) filed baseless citizen petitions with the FDA to stymie generic
`
`approvals.
`
`7.
`
`In the rare instances where Celgene’s efforts failed to prevent a would-be competitor
`
`from prosecuting an Abbreviated New Drug Application (“ANDA”), and FDA approval of an ANDA
`
`for a generic version of Revlimid or Thalomid became possible, Celgene entered into confidential
`
`
`2 Under the FDA’s orphan drug exclusivity program, 21 U.S.C. §§ 360aa-cc, the FDA may not approve a
`generic equivalent for a specific indication or “rare disease” that a brand drug is FDA-approved to treat for
`a period of seven (7) years. MM is such a “rare disease.” Therefore, until May 25, 2013, the FDA could not
`approve a generic thalidomide for the treatment of MM. It could, nevertheless, approve generic thalidomide
`for the treatment of other indications. This is known as a “skinny label.”
`
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`Case 2:21-cv-20451-SDW-LDW Document 1 Filed 12/10/21 Page 4 of 134 PageID: 4
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`settlements with its competitors that, upon information and belief, included anti-competitive “pay-
`
`for-delay” reverse payments. The federal government has routinely criticized – and challenged in
`
`court – the same sort of anticompetitive practices in which Celgene engages.3
`
`
`8.
`
`In 2006, a month’s supply of Revlimid cost $6,195.4 In 2010, the price was about
`
`$8,000 for a one-month supply. Now, a twenty-eight (28) day supply of Revlimid costs patients
`
`and their health insurers as much as $20,000, and a twenty-eight (28) day supply of Thalomid costs
`
`them as much as $10,000. In 2016, Celgene’s total revenue was $11.23 billion, of which $6.97
`
`billion was from Revlimid and $152.10 million was from Thalomid. When Thalomid first entered
`
`the market, it cost approximately $6 per capsule. In 2014, its price soared to as much as $357 per
`
`capsule.
`
`
`9.
`
`In the last ten (10) years, as a result of Celgene’s anticompetitive conduct to
`
`eliminate/limit generic alternatives from the market, Celgene has been able to routinely increase
`
`its prices either once or twice per year.
`
`10.
`
`Celgene’s illicit and monopolistic efforts with respect to Thalomid and Revlimid
`
`have been enormously profitable. Between 2006 and 2016, Celgene recorded $35.60 billion of
`
`Revlimid sales and $3.65 billion of Thalomid sales, yielding the following respective annual sales:5
`
`
`
`Revlimid 6974M 5800M 4980M 4280M 3770M 3210M 2470M 1706M 1325M 774M 321M
`
`
`
`2016
`
`2015
`
`2014
`
`2013
`
`2012
`
`2011
`
`2010
`
`2009
`
`2008 2007
`
`
`3 See, e.g., Federal Trade Commission, Pay for Delay: How Drug Company Pay-Offs Cost Consumers
`(Jan. 2010), https://www.ftc.gov/sites/default/files/documents/reports/pay-delay-how-drug-
`Billions
`company-pay-offs-cost-consumers-billions-federal-trade-commission-staff-
`study/100112payfordelayrpt.pdf.
`
` 4
`
` Alison Kodjak, How A Drugmaker Gamed The System to Keep Generic Competition Away (May 17,
`2018),
`https://www.npr.org/sections/health-shots/2018/05/17/571986468/how-a-drugmaker-gamed-the-
`system-to-keep-generic-competition-away.
`
` 5
`
` Net product sales figures drawn from Celgene’s Annual Reports/Form 10-K filings for fiscal years ending
`2007-2016.
`
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`Case 2:21-cv-20451-SDW-LDW Document 1 Filed 12/10/21 Page 5 of 134 PageID: 5
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`Thalomid
`
`
`
`
`11.
`
` 152M 185M 221M 245M 302M 339M 387M 437M 505M 447M
`
`In December 2016, Revlimid was the second-highest grossing drug worldwide.6
`
`For the year ended December 31, 2020, Bristol-Myers Squibb reported that Revlimid revenue had
`
`grown to more than $12.1 billion worldwide, including more than $8.29 billion in the United
`
`States.7
`
`
`12.
`
`There has never been a generic substitute for Revlimid or Thalomid available in the
`
`U.S., enabling Celgene to price the drugs at levels unrestrained by generic competition.
`
`13.
`
`Celgene’s anticompetitive tactics to block generic entry have caused Plaintiffs to
`
`pay supracompetitive prices for these drugs in violation of various federal antitrust laws, states’
`
`antitrust, consumer protection, trade practices, and insurance fraud laws.
`
`14.
`
`Plaintiffs seek to recover incurred civil damages and over payments made on behalf
`
`of their Assignors who purchased or otherwise provided reimbursement for Thalomid and/or
`
`Revlimid, which was prescribed and dispensed to Plaintiffs’ Assignors’ Enrollees as well as
`
`injunctive relief.
`
`II.
`
`JURISDICTION AND VENUE
`
`15.
`
`This Court has jurisdiction over this action pursuant to 28 U.S.C. §§ 1331 and
`
`1337 as well as 15 U.S.C. §§ 15 and 26. Plaintiffs assert federal claims for treble damages,
`
`injunctive relief and costs of suit, including reasonable attorneys’ fees, against Defendants under
`
`Section 2 of the Sherman Act, 15 U.S.C. § 2, and Sections 4 and 16 of the Clayton Act, 15
`
`U.S.C. §§ 15 and 26.
`
`
`6 Amy Brown, EP Vantage 2017 Preview (Dec. 2016), http://info.evaluategroup.com/rs/607-YGS-
`364/images/EPV2017Prev.pdf.
`
` https://news.bms.com/news/details/2021/Bristol-Myers-Squibb-Reports-Fourth-Quarter-and-Full-Year-
`Financial-Results-for-2020/default.aspx.
`
` 7
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`16.
`
` This Court has supplemental jurisdiction over Plaintiffs’ pendent state law claims
`
`pursuant to 28 U.S.C. § 1367, as the state law claims are so related as to form part of the same case
`
`or controversy. Such supplemental or pendent jurisdiction will also avoid unnecessary duplication
`
`and multiplicity of actions, and should be exercised in the interests of judicial economy,
`
`convenience and fairness.
`
`17.
`
`This Court has personal jurisdiction over Defendants because they purposefully
`
`directed their business activities toward this jurisdiction and has substantial contacts with this
`
`jurisdiction, and because Plaintiffs’ claims for relief arise from and relate to illegal acts committed
`
`by Defendants within this jurisdiction.
`
`18.
`
`Venue is appropriate within this district because Defendants transact business
`
`within this district, have agents and can be found in this district, and the cause of action or some
`
`part thereof arose in this district. Venue is also appropriate within this district under Section 12 of
`
`PARTIES
`
`the Clayton Act, 15 U.S.C. § 22, and 28 U.S.C. §§ 1391(b) and (c).
`
`III.
`
`
`19.
`
`Plaintiff, MSP Recovery Claims, Series LLC (“MSPRC”), is a Delaware limited
`
`liability company with its principal place of business located at 2701 S. Le Jeune Rd., Coral
`
`Gables, Florida 33134. MSPRC’s limited liability company agreement provides for the
`
`establishment of one or more designated series. MSPRC has established various designated series
`
`pursuant to Delaware law in order to maintain various claims recovery assignments separate from
`
`other Company assets, and in order to account for and associate certain assets with certain
`
`particular series. Pursuant to MSPRC’s limited liability agreement, all designated series form a
`
`part of MSPRC. MSPRC may receive assignments in the name of MSPRC and further associate
`
`such assignments with a particular series or may have claims assigned directly to a particular series.
`
`In either event, MSPRC will maintain the right to sue on behalf of each series and pursue any and
`
`{00622548 - 1}
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`all rights, benefits, and causes of action arising from assignments to a series. Any claim or suit
`
`may be brought by MSPRC in its own name or it may elect to bring suit in the name of its
`
`designated series. MSPRC’s limited liability agreement provides that any rights and benefits
`
`arising from assignments to its series shall belong to MSPRC. Certain series of this Plaintiff has
`
`been assigned the right to assert the causes of action alleged in this Complaint from numerous
`
`Health Maintenance Organizations, first-tier, downstream and related entities that provide health
`
`care coverage and benefits, including prescription drug coverage (“Health Plans”) to its
`
`beneficiaries (“Enrollees”). Because of the assignment, or assignments, Plaintiff, through its
`
`operating agreement, has been authorized and is empowered to bring this action to recover the cost
`
`of payments for Thalomid and Revlimid made on behalf of the Assignors’ Enrollees for which
`
`Defendants are liable. Plaintiff’s assignments, samples of which are alleged in detail in the
`
`Appendix to this Complaint, are valid and binding contracts.
`
`20.
`
`Plaintiff, MSPA Claims 1, LLC, is a Florida limited liability company, with its
`
`principal place of business located at 2701 S. Le Jeune Rd., Coral Gables, Florida 33134. One or
`
`more Health Plans irrevocably assigned to this Plaintiff the right to assert the causes of action
`
`alleged in this Complaint. Because of the assignment, or assignments, Plaintiff has been authorized
`
`and is empowered to bring this action to recover the cost of payments for Thalomid and Revlimid
`
`made on behalf of the Assignors’ Enrollees for which Defendants are liable. Plaintiff’s
`
`assignments, samples of which are alleged in detail in the Appendix to this Complaint, are valid
`
`and binding contracts.
`
`21.
`
`Plaintiff, MAO-MSO Recovery II, LLC, Series PMPI, a segregated series of MAO-
`
`MSO Recovery II, LLC, is a Delaware limited liability company with its principal place of
`
`business at 45 Legion Drive, Cresskill, New Jersey 07626. One or more Health Plans irrevocably
`
`assigned to this Plaintiff the right to assert the causes of action alleged in this Complaint. Because
`
`of the assignment, or assignments, Plaintiff has been authorized and is empowered to bring this
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`action to recover the cost of payments for Thalomid and Revlimid made on behalf of the Assignors’
`
`Enrollees for which Defendants are liable. Plaintiff’s assignments, samples of which are alleged
`
`in detail in the Appendix to this Complaint, are valid and binding contracts.
`
`22.
`
`Plaintiff, MSP Recovery Claims Series 44, LLC (“Series 44”) is a duly organized
`
`and existing Delaware series limited liability company with its principal place of business located
`
`in Coral Gables, Florida. Series 44’s limited liability company operating agreement provides for
`
`the establishment of one or more designated series as permitted by Delaware law. Del. Code Ann.
`
`Tit. 6, § 18-215(a). Accordingly, Series 44 established various designated series to serve as units
`
`of the company for the purpose of maintaining various claims recovery assignments separate from
`
`other company assets, and in order to account for and associate certain assets with certain particular
`
`series. Series 44 has enumerated rights relating to its designated series pursuant to its limited
`
`liability agreement and consistent with Delaware law. Del. Code Ann. Tit. 6, §§ 18-215(a)-(c).
`
`Specifically, all rights and benefits arising from assignments to its series shall belong to Series 44.
`
`Series 44 may receive assignments in the name of Series 44 and further associate such assignments
`
`with a particular series or may have claims assigned directly to a particular series. In either event,
`
`Series 44 and the designated series are authorized to pursue or assert any claim or suit capable of
`
`being asserted by any designated series arising from, or by virtue of, an assignment to a designated
`
`series. Series 44 retains the legal right to sue on behalf of each designated series and pursue all
`
`rights, benefits, and causes of action arising from assignments to a series in its own name or in the
`
`name of the designated series. One or more Health Plans irrevocably assigned to certain series of
`
`this Plaintiff the right to assert the causes of action alleged in this Complaint. Because of the
`
`assignment, or assignments, Plaintiff, through its operating agreement, has been authorized and is
`
`empowered to bring this action to recover the cost of payments for Thalomid and Revlimid made
`
`on behalf of the Assignors’ Enrollees for which Defendants are liable. Plaintiff’s assignments,
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`{00622548 - 1}
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`samples of which are alleged in detail in the Appendix to this Complaint, are valid and binding
`
`contracts.
`
`23.
`
`Plaintiff, MSP Recovery Claims PROV, Series LLC (“Claims PROV”) is a duly
`
`organized and existing Delaware series limited liability company with its principal place of
`
`business located in Coral Gables, Florida. Claims PROV’s limited liability company operating
`
`agreement provides for the establishment of one or more designated series as permitted by
`
`Delaware law. Del. Code Ann. Tit. 6, § 18-215(a). Accordingly, Claims PROV established various
`
`designated series to serve as units of the company for the purpose of maintaining various claims
`
`recovery assignments separate from other company assets, and in order to account for and associate
`
`certain assets with certain particular series. Claims PROV has enumerated rights relating to its
`
`designated series pursuant to its limited liability agreement and consistent with Delaware law. Del.
`
`Code Ann. Tit. 6, §§ 18-215(a)-(c). Specifically, all rights and benefits arising from assignments
`
`to its series shall belong to Claims PROV. Claims PROV may receive assignments in the name of
`
`Claims PROV and further associate such assignments with a particular series or may have claims
`
`assigned directly to a particular series. In either event, Claims PROV and the designated series are
`
`authorized to pursue or assert any claim or suit capable of being asserted by any designated series
`
`arising from, or by virtue of, an assignment to a designated series. Claims PROV retains the legal
`
`right to sue on behalf of each designated series and pursue all rights, benefits, and causes of action
`
`arising from assignments to a series in its own name or in the name of the designated series. One
`
`or more Health Plans irrevocably assigned to certain series of this Plaintiff the right to assert the
`
`causes of action alleged in this Complaint. Because of the assignment, or assignments, Plaintiff,
`
`through its operating agreement, has been authorized and is empowered to bring this action to
`
`recover the cost of payments for Thalomid and Revlimid made on behalf of the Assignors’
`
`Enrollees for which Defendants are liable. Plaintiff’s assignments, samples of which are alleged
`
`in detail in the Appendix to this Complaint, are valid and binding contracts.
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`24.
`
`Plaintiff, MSP Recovery Claims CAID, Series LLC (“Claims CAID”) is a duly
`
`organized and existing Delaware series limited liability company with its principal place of
`
`business located in Coral Gables, Florida. Claims CAID’s limited liability company operating
`
`agreement provides for the establishment of one or more designated series as permitted by
`
`Delaware law. Del. Code Ann. Tit. 6, § 18-215(a). Accordingly, Claims CAID established various
`
`designated series to serve as units of the company for the purpose of maintaining various claims
`
`recovery assignments separate from other company assets, and in order to account for and associate
`
`certain assets with certain particular series. Claims CAID has enumerated rights relating to its
`
`designated series pursuant to its limited liability agreement and consistent with Delaware law. Del.
`
`Code Ann. Tit. 6, §§ 18-215(a)-(c). Specifically, all rights and benefits arising from assignments
`
`to its series shall belong to Claims CAID. Claims CAID may receive assignments in the name of
`
`Claims CAID and further associate such assignments with a particular series or may have claims
`
`assigned directly to a particular series. In either event, Claims CAID and the designated series are
`
`authorized to pursue or assert any claim or suit capable of being asserted by any designated series
`
`arising from, or by virtue of, an assignment to a designated series. Claims CAID retains the legal
`
`right to sue on behalf of each designated series and pursue all rights, benefits, and causes of action
`
`arising from assignments to a series in its own name or in the name of the designated series. One
`
`or more Health Plans irrevocably assigned to certain series of this Plaintiff the right to assert the
`
`causes of action alleged in this Complaint. Because of the assignment, or assignments, Plaintiff,
`
`through its operating agreement, has been authorized and is empowered to bring this action to
`
`recover the cost of payments for Thalomid and Revlimid made on behalf of the Assignors’
`
`Enrollees for which Defendants are liable. Plaintiff’s assignments, samples of which are alleged
`
`in detail in the Appendix to this Complaint, are valid and binding contracts
`
`25.
`
`Plaintiffs’ Assignors provide health benefits to their Enrollees, who reside
`
`throughout the United States. As third-party payers of pharmaceutical claims for their enrollees,
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`Plaintiffs’ Assignors are end payers for their Enrollees’ Thalomid and Revlimid prescriptions and
`
`are thereby injured as a result of Celgene’s unlawful behavior. Plaintiffs’ Assignors’ data confirms
`
`that during the relevant time period they have indirectly purchased and/or provided reimbursement
`
`for Thalomid and Revlimid throughout the United States. When a generic version of a prescription
`
`drug is available, Plaintiffs’ Assignors’ Enrollees – and Plaintiffs’ Assignors – typically purchase
`
`and/or provide reimbursement for the generic version. Because Celgene has restricted the ability
`
`of generics to enter the market, Plaintiffs’ Assignors have purchased and/or provided
`
`reimbursements for Thalomid and Revlimid at anticompetitive price levels. Plaintiffs are pursuing
`
`recovery related to those overpayments.
`
`26.
`
`Plaintiffs’ Assignors provide health insurance coverage and benefits, including
`
`prescription drug coverage, to individual beneficiaries subscribed to their plans i.e., Enrollees.
`
`27.
`
`Plaintiffs’ Assignors provided payment for their Enrollees’ prescriptions for
`
`Thalomid and Revlimid.
`
`28.
`
`Defendant Celgene
`
`is a drug manufacturer,
`
`incorporated
`
`in Delaware and
`
`headquartered at 86 Morris Avenue, Summit, New Jersey. It is publicly traded under the NASDAQ
`
`symbol “CELG.” Celgene manufactures, markets, and sells Thalomid and Revlimid.
`
`29.
`
`Defendant Bristol-Myers Squibb wholly owns Celgene as its subsidiary, having
`
`acquired Celgene pursuant to a January 2, 2019 merger agreement.
`
`30.
`
`Defendant Bristol-Myers Squibb is a biopharmaceutical drug company incorporated
`
`under the laws of Delaware with its principal executive offices located at 430 East 29th Street, 14th
`
`Floor, New York, New York 10016. Bristol-Myers Squibb is a publicly traded corporation registered
`
`on the New York Stock Exchange under the trading symbol “BMY.”
`
`
`
`
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`IV.
`
`
`ECONOMIC BACKGROUND
`
`31.
`
`Due to laws that regulate marketing/selling, prescribing, and filling prescription
`
`drugs, the United States is a fertile venue ripe for illegal anticompetitive exploitation by drug
`
`manufacturers who seek to profit from product monopolies.
`
`32.
`
`For most consumer products, the person responsible for paying for them is also the
`
`person selecting them. The pharmaceutical marketplace departs from this norm.
`
`33.
`
`Prescription drugs may only be dispensed pursuant to a doctor’s prescription, and
`
`a licensed pharmacist may dispense only the brand-name drug named in the prescription or its AB-
`
`rated, FDA-approved generic equivalent.8
`
`34.
`
`In most instances, the patient and his health insurer pay for the prescription drug
`
`that a doctor has prescribed. Like the pharmacist, their “choice” is limited to the drug named in
`
`the prescription or its AB-rated generic equivalent. Therefore, the doctor’s prescription defines the
`
`relevant product market because it limits the patients’ (and pharmacist’s) choice to the drug named
`
`therein.
`
`35. When there is no generic competition for a brand-name drug, the brand
`
`manufacturers can set and maintain prices without losing market share. The ability to do this is the
`
`result of the brand-name drug company’s monopoly power over the market for that drug in both
`
`its brand-name and generic form. When an AB-rated generic is available, price is reintroduced to
`
`the product selection decision at the pharmacy counter, and the disconnect between choice and
`
`payment is lessened, disabling the brand manufacturer from exploiting that disconnect. Generic
`
`introduction restores normal competitive pressures.
`
`
`8 In many states, pharmacists must substitute an AB-rated generic for a brand-name drug without seeking
`permission from the prescribing doctor.
`
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`36.
`
`Typically, AB-rated generic versions of brand-name drugs are priced significantly
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`below their brand-name counterparts. When multiple generic manufacturers enter the market,
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`prices for generic versions of a brand-name drug predictably decrease, sometimes as much as by
`
`90%, because of price competition among generic manufacturers.9 The FDA reports that, in 2010,
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`the use of FDA-approved generics saved $158 billion, or $3 billion per week, and that one year
`
`after entry, a generic drug takes over 90% of the corresponding brand-name drug’s sales at 15%
`
`of the price. Generic drug entry, therefore, is a huge threat to the continued profitability of a
`
`branded drug.
`
`37.
`
`As the price gap between the brand-name drug and its corresponding generic drug
`
`widens, the former’s sale’s volume shrinks. Price is the only material difference between a brand-
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`name drug and its AB-rated generic equivalent.
`
`38.
`
`For every rung in the prescription drug ladder, except for the brand-name drug
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`manufacturer, there is a financial benefit to choose the generic drug, specifically: (1) pharmacies
`
`normally earn a higher markup on generic drugs because of pricing structure and federal
`
`reimbursement rules; (2) private health insurers typically offer incentives to pharmacies to fill
`
`prescriptions with generics; and (3) to incentivize patients to request generic drugs, health insurers
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`often offer lower copays for generic drugs than for brand-name drugs.
`
`39.
`
`Generic competition enables purchasers like Plaintiffs’ Assignors to purchase a
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`generic version of a brand-name drug at substantially lower prices. However, until generic
`
`manufacturers enter the market with an AB-rated generic, there is no generic drug which competes
`
`effectively with the brand-name drug, and therefore, the brand-name manufacturer can continue
`
`
`9 See, e.g., Jon Leibowitz, “Pay for Delay” Settlements in the Pharmaceutical Industry: How Congress
`Can Stop Anticompetitive Conduct, Protect Consumers’ Wallets, and Help Pay for Health Care Reform
`(June 23, 2009), http://www.ftc.gov/sites/default/files/documents/public_statements/pay-delay-
`settlements- pharmaceutical-industry-how-congress-can-stop-anticompetitive-conduct-
`protect/090623payfordelayspeech.pdf.
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`Case 2:21-cv-20451-SDW-LDW Document 1 Filed 12/10/21 Page 14 of 134 PageID: 14
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`to charge supracompetitive prices without losing sales. Given their acute knowledge of the effects
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`of generic entry into a market, brand-name manufacturers like Celgene have a strong incentive to
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`delay the entry of a generic drug onto the market, including by entering illegal reverse “pay for
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`delay” settlement agreements and serially filing frivolous patent infringement lawsuits, among
`
`other anticompetitive tactics.
`
`V.
`
`
`THE REGULATORY BACKGROUND
`
`a. The Hatch-Waxman Act and NDA Approval Process
`
`
`
`40.
`
`Under the Federal Food, Drug and Cosmetics Act (21 U.S.C. §§ 301-392)
`
`(“FDCA”), a manufacturer that creates a new, pioneer drug must obtain the approval of the FDA
`
`to sell the new drug by filing a New Drug Application (“NDA”). An NDA must include submission
`
`of specific data concerning the safety and efficacy of the drug and identify any patents claiming
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`the drug. 21 U.S.C. § 355(b).
`
`41. When the FDA approves a brand-name manufacturer’s NDA, it lists in a
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`publication entitled the “Approved Drug Products with Therapeutic Equivalence Evaluations”
`
`(known as the “Orange Book”) any patents which, according to the information the brand-name
`
`manufacturer supplies to the FDA: (1) claim the approved drug or its approved uses; and (2) for
`
`which a “claim of patent infringement could reasonably be asserted if a person is not licensed by
`
`the owner engaged in the manufacture, use, or sale of the drug.”10
`
`
`42.
`
`The FDA does not investigate the patents or verify the NDA sponsor’s
`
`representations for accuracy or trustworthiness prior to listing patents in the Orange Book. It is a
`
`pure administrative and clerical act.
`
`
`10 21 U.S.C. § 355(b)(1); 21 U.S.C. § 355(g)(7)(A)(iii).
`
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`Case 2:21-cv-20451-SDW-LDW Document 1 Filed 12/10/21 Page 15 of 134 PageID: 15
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`43.
`
`Once a brand manufacturer lists a patent in the Orange Book, it puts potential
`
`generic competitors on notice that the brand manufacturer considers the patent to cover its drug.
`
`
`b. The Hatch-Waxman Act and ANDA Approval Process
`
`
`
`44.
`
`In 1984, Congress amended the FDCA with the enactment of the Hatch-Waxman
`
`Act (“Hatch-Waxman”). 11 Congress’ principal intent was for Hatch-Waxman to simplify and
`
`reduce the regulatory hurdles for prospective generic manufacturers, by replacing the lengthy and
`
`costly NDA approval process with an expedited ANDA review process.12 Under Hatch-Waxman,
`
`an ANDA applicant may rely on the safety and efficacy findings of the NDA for the referenced
`
`brand-name drug, if the ANDA demonstrates the proposed generic drug is therapeutically
`
`equivalent and “bioequivalent,” (“BE”) i.e., it contains the same active ingredient(s), dosage form,
`
`route of administration, and strength as the brand-name drug, and is absorbed at the same rate, and
`
`to the same extent, as the brand-name drug. For ANDAs that pass this test, the FDA assigns an
`
`“AB” rating to the generic drug.
`
`
`45.
`
`BE is generally demonstrated via studies in which the proposed generic is compared
`
`to the Reference Listed Drug (“RLD,” which is, in this instance, the brand-name drug) in either in
`
`vivo or in vitro studies.13 These studies require the ANDA applicant to have access to sufficient
`
`samples of the RLD to conduct the necessary comparisons. Without RLD samples, it is impossible
`
`to complete and file an ANDA application.
`
`
`46.
`
`The FDA illuminates the issue:
`
`To obtain approval for a generic drug, the generic company needs to show, among
`other things, that its version of the product is bi