Case 3:21-cv-13009 Document 1 Filed 06/25/21 Page 1 of 119 PageID: 1
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`UNITED STATES DISTRICT COURT
`DISTRICT OF NEW JERSEY
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`Civil Action No.
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`COMPLAINT and
`DEMAND FOR JURY
`TRIAL
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`LOCAL 464A UNITED FOOD AND
`COMMERCIAL
`WORKERS
`UNION WELFARE
`SERVICE
`BENEFIT FUND, on behalf of itself
`and all others similarly situated,
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`Plaintiff,
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`
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`v.
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`AMARIN PHARMA, INC., AMARIN
`PHARMACEUTICALS IRELAND
`LIMITED, AMARIN
`CORPORATION PLC, BASF
`AMERICAS CORPORATION, BASF
`CORPORATION, BASF PHARMA
`(CALLANISH) LTD, BASF USA
`HOLDING LLC, CHEMPORT, INC.,
`NISSHIN PHARMA, INC.,
`NOVASEP LLC, NOVASEP, INC.,
`GROUPE NOVASEP SAS, AND
`FINORGA SAS,
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`Defendants.
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`
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`Plaintiff Local 464A United Food and Commercial Workers Union Welfare
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`Service Benefit Fund ( “Plaintiff”) brings this action on behalf of itself and all
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`others similarly situated against Amarin Pharma, Inc., Amarin Pharmaceuticals
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`Ireland Limited, Amarin Corporation PLC (collectively “Amarin”); BASF
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`Americas Corporation, BASF Corporation, BASF Pharma (Callanish) Limited,
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`1
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`UNITED STATES DISTRICT COURT
`DISTRICT OF NEW JERSEY
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`
`
`Civil Action No.
`
`
`
`COMPLAINT and
`DEMAND FOR JURY
`TRIAL
`
`LOCAL 464A UNITED FOOD AND
`COMMERCIAL
`WORKERS
`UNION WELFARE
`SERVICE
`BENEFIT FUND, on behalf of itself
`and all others similarly situated,
`
`Plaintiff,
`
`
`
`v.
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`AMARIN PHARMA, INC., AMARIN
`PHARMACEUTICALS IRELAND
`LIMITED, AMARIN
`CORPORATION PLC, BASF
`AMERICAS CORPORATION, BASF
`CORPORATION, BASF PHARMA
`(CALLANISH) LTD, BASF USA
`HOLDING LLC, CHEMPORT, INC.,
`NISSHIN PHARMA, INC.,
`NOVASEP LLC, NOVASEP, INC.,
`GROUPE NOVASEP SAS, AND
`FINORGA SAS,
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`Defendants.
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`
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`Plaintiff Local 464A United Food and Commercial Workers Union Welfare
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`Service Benefit Fund ( “Plaintiff”) brings this action on behalf of itself and all
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`others similarly situated against Amarin Pharma, Inc., Amarin Pharmaceuticals
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`Ireland Limited, Amarin Corporation PLC (collectively “Amarin”); BASF
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`Americas Corporation, BASF Corporation, BASF Pharma (Callanish) Limited,
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`1
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`Case 3:21-cv-13009 Document 1 Filed 06/25/21 Page 2 of 119 PageID: 2
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`BASF USA Holding LLC (collectively “BASF”); Chemport, Inc. (“Chemport”);
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`Nisshin Pharma, Inc. (“Nisshin”); Novasep, LLC, Novasep, Inc., Groupe Novasep
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`SAS, Finorga SAS (collectively “Novasep,” together with Amarin, BASF,
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`Chemport, and Nisshin, “Defendants”). These allegations are based on
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`investigations of counsel, publicly available materials and knowledge, information,
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`and belief.
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`INTRODUCTION
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`1.
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`This case arises from Defendants’ illegal scheme to delay competition
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`in the United States and its territories for Vascepa, a prescription medication
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`approved by the U.S. Food and Drug Administration (“FDA”) to treat
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`hyperglyceridemia in adults. In particular, Plaintiff seeks overcharge damages
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`arising from Amarin’s sham litigation against generic manufacturers, which
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`delayed the regulatory approval and launch of generic versions of Vascepa and
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`from Defendants’ unlawful scheme to prevent generic competition for Vascepa by
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`hoarding the world’s supply of the active pharmaceutical ingredient needed to
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`make the drug.
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`2.
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`The active ingredient in Vascepa is icosapent ethyl (“IPE”), made
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`from eicosapentaeonic acid (“EPA”), an omega-3 fatty acid found in fish oil.
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`Vascepa has been shown both to lower triglycerides and to reduce the risk of
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`cardiovascular events in patients who have high triglycerides (150 mg/dL or
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`2
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`higher). In 2020, annual sales of Vascepa in the United States were over $600
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`million.
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`3.
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`Beginning July 26, 2016, three generic drug companies filed
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`applications with the FDA to launch generic versions of Vascepa: Roxane
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`Laboratories, Inc. and related entities, later acquired by Hikma Pharmaceuticals
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`Plc (“Hikma”), Dr. Reddy’s Laboratories Inc. (“DRL”), and Teva Pharmaceuticals
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`USA, Inc. and related entities (“Teva”).1 Hikma, DRL, and Teva each contended
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`that all of the asserted patent claims were either invalid or not infringed by their
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`respective generic version of Vascepa. Amarin sued each of these generics in turn
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`in the U.S. District Court for the District of Nevada – Amarin Pharma, Inc. v.
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`Roxane Laboratories, Inc., No. 2:16-cv-02525-MMD-NJK (consolidated action)
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`(the “Vascepa Patent Litigation”), which delayed their final approval and launch.
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`Another application for generic Vascepa, which was amended in May 2020, was
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`filed by Apotex, Inc. (“Apotex”). Apotex contended that some of the asserted
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`patent claims were either invalid or not infringed by Apotex’s generic version of
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`Vascepa, but did not challenge all of the asserted patent claims.
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`4.
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`Amarin settled with Teva in May 2018 and Apotex in June 2020.
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`Pursuant to those agreements, Teva and Apotex have agreed to forego selling their
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`1 Applications were previously filed with the FDA, but they were rejected after Amarin
`successfully extended its New Chemical Entity exclusivity period, rendering those earlier-filed
`applications premature
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`3
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`respective generic versions of Vascepa in the United States until August 9, 2029,
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`or earlier under certain circumstances.
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`5.
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`Hikma and DRL, however, continued their patent fight and won at
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`trial – on March 30, 2020, Judge Miranda M. Du, District Court Judge for the
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`District of Nevada, held that Amarin’s patents were invalid due to obviousness.
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`6.
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`After its patent victory, DRL promptly began preparations to launch
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`generic Vascepa, “only to discover that Amarin had foreclosed all the suppliers of
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`the icosapent ethyl API who have sufficient capacity to support a commercial
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`launch in a timely manner.”2
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`7.
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`Hikma received FDA approval to launch its generic version of 1mg
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`Vascepa on May 22, 2020.3
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`8.
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`DRL received FDA approval to launch its generic version of 1mg
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`Vascepa on August 7, 2020.4 As of that date, DRL had removed all legal and
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`regulatory barriers to its entry into the market for 1mg Vascepa, but it was
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`nonetheless foreclosed from entering that market due to Amarin’s use of a series
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`2 Complaint, Doc. No. 1, Dr. Reddy’s Laboratories Inc. v. Amarin Pharma, Inc., Amarin
`Pharmaceuticals Ireland Limited, and Amarin Corporation PLC, No. 3:21-cv-10309-BRM-ZNQ
`(D.N.J. Apr. 27, 2021) (“DRL Complaint”), ¶ 3.
`3 “Hikma receives FDA approval for its generic Vascepa,” PR Newswire (May 22, 2020),
`https://www.prnewswire.com/news-releases/hikma-receives-fda-approval-for-its-generic-
`vascepa-301064061.html
`ANDA 209499,
`4 Product
`Details for
`https://www.accessdata.fda.gov/scripts/cder/ob/results_product.cfm?Appl_Type=A&Appl_No=2
`09499#312
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`4
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`of exclusive contracts and other anticompetitive conduct to lock up the world’s
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`supply of IPE, the active pharmaceutical ingredient in Vascepa. Amarin had
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`secured a supply of several times Amarin’s own needs based on its anticipated
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`sales.
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`9.
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`Amarin lost its appeal of Judge Du’s March 30, 2020, invalidity
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`order on September 3, 2020.
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`10. Hikma launched limited amounts of its 1mg generic Vascepa on
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`November 5, 2020, hampered by Amarin’s anticompetitive capture of the world’s
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`supply of IPE. And, DRL was unable to launch its generic Vascepa product until
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`June 22, 2021.
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`11. Amarin was able to delay and limit Hikma and DRL’s launches of
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`generic Vascepa (and potentially prevent the approval and/or launches of other
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`generic manufacturers) by initiating its sham patent litigation. Further, by
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`purposely contracting with at least four different API suppliers5 – one or two is
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`standard in the pharmaceutical industry – Amarin prevented these suppliers from
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`selling IPE API to any other generic manufacturer.6
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`12. Amarin, by any means necessary, sought to prevent, delay and/or
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`5 Nisshin Pharma Inc., Equatez Ltd., Chemport Inc., and Novasep.
`6 See, e.g., Amarin Corp. plc, Quarterly Report (Form 10-Q), at 16 (Nov. 8, 2011) (“Following
`FDA approval of [Vascepa] both agreements [with Equateq and Chemport] include annual
`purchase levels enabling Amarin to maintain supply exclusivity with each respective supplier”)
`(emphasis added).
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`5
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`limit generic competition of Vascepa. Amarin had no legitimate procompetitive
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`reason for initiating its sham patent litigation or for entering into exclusive supply
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`agreements with the four IPE API suppliers.
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`13. The total annual capacity of these suppliers has been more than triple
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`Amarin’s requirements at relevant times in the past, and is at least double
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`Amarin’s current requirements. Notably, Amarin has repeatedly touted its
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`anticompetitive scheme to investors, often coyly referring to “taking advantage of
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`manufacturing barriers to entry,”7 but sometimes bluntly stating that the addition
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`of a new supplier “fortifies Amarin’s efforts to shield its Vascepa patent beyond
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`its scheduled 2030 expiration.”8
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`14. As a result of Amarin’s scheme, Hikma’s launch of generic Vascepa
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`has been constrained by limited supply, DRL’s launch of generic Vascepa was
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`delayed until June 22, 2021, and Plaintiff and members of the class have been
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`forced to pay anticompetitive prices for Vascepa and its generic equivalent.
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`JURISDICTION AND VENUE
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`15. This Court has jurisdiction over this action pursuant to 28 U.S.C. §
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`1332(d) because this is a class action involving common questions of law or fact in
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`7 Amarin Corp. plc, Annual Report (Form 10-K), at 3 (Feb. 29, 2012).
`8 Press Release, Amarin Corp. plc, “Amarin Announces Approval of Supplemental New Drug
`Application for Chemport as Additional Vascepa® Active Pharmaceutical Ingredient Supplier”
`(Apr. 18, 2013), https://investor.amarincorp.com/news-releases/news-release-details/amarin-
`announces-approval-supplemental-new-drug-application
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`6
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`which the aggregate amount in controversy exceeds $5,000,000, exclusive of
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`interest and costs; there are more than one hundred members of each class; and at
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`least one member of each of the putative classes is a citizen of a state different
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`from that of one of the Defendants.
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`16. This Court also has supplemental jurisdiction over state law claims
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`pursuant to 28 U.S.C. § 1367(a).
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`17. Venue is appropriate within this District under 28 U.S.C. § 1391.
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`Defendants transact business within this District and/or have agents in and/or that
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`can be found in this District, and a portion of the affected interstate trade and
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`commerce discussed below was carried out in this District. At all relevant times,
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`Amarin’s U.S. operations were headquartered in this District.
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`18. The Court has personal jurisdiction over each of the Defendants.
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`Defendants have transacted business, maintained substantial contacts, and/or
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`committed overt acts in furtherance of the illegal scheme throughout the United
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`States, including in this District. The scheme has been directed at and has had the
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`intended effect of causing injury to individuals and companies residing in or doing
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`business throughout the United States, including in this District. Personal
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`jurisdiction lies under FED. R. CIV. P. 4(k)(2) over the foreign domiciliary
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`defendants.
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`7
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`THE PARTIES
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`A.
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`Plaintiff
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`19. Plaintiff Local 464A United Food and Commercial Workers Union
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`Welfare Service Benefit Fund is headquartered, with its principal place of
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`business, in Little Falls, New Jersey. Plaintiff is a joint labor-management-
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`sponsored trust fund authorized by Sections 302(c)(5) and (8) of the Labor
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`Relations Management Act (“LMRA”), established to provide health and welfare
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`benefits to employees and their families, commonly known as a Taft-Hartley Fund,
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`as well as an employee welfare benefit fund within the meaning of Section 3(1) of
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`the Employee Retirement Income Security Act (“ERISA”), that provides a
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`program of health, welfare, legal, and related benefits for its participants and
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`beneficiaries.
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`20. Plaintiff purchased and/or provided reimbursement for some or all of
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`the purchase price for Vascepa other than for re-sale, in at least New Jersey and
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`New York at supracompetitive prices during the Class Period and has thereby been
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`injured. In addition, there is a substantial probability that Plaintiff will in the future
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`purchase and/or provide reimbursement for Vascepa manufactured by Amarin, and
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`it has purchased and/or intends to purchase and/or provide reimbursement for
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`generic versions of Vascepa, other than for re-sale, once they become available.
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`Plaintiff paid and reimbursed more for these products than they would have absent
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`8
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`Defendants’ anticompetitive conduct to fix, raise, maintain, and stabilize the prices
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`and allocate markets for Vascepa.
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`B.
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`Defendants
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`21. Defendant Amarin Pharma, Inc. is a company organized and existing
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`under the laws of Delaware with its principle place of business at 1430 Route 206,
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`Bedminster, NJ 07921.
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`22. Defendant Amarin Pharmaceuticals Ireland Limited is a company
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`incorporated under the laws of Ireland with registered offices at 88 Harcourt
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`Street, Dublin 2, Dublin, Ireland.
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`23. Defendant Amarin Corporation plc is a company incorporated under
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`the laws of England and Wales with principal executive offices at 77 Sir John
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`Rogerson’s Quay, Block C, Gran Canal Docklands, Dublin 2, Ireland. Defendants
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`Amarin Pharma, Inc., Amarin Pharmaceuticals Ireland Limited, and Amarin
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`Corporation plc are collectively referred to herein as “Amarin.”
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`24. Defendant BASF Americas Corporation is a company organized and
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`existing under the laws of Delaware with its principle place of business at 1105
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`North Market Street, Suite 1306, P.O. Box 8985, Wilmington, DE 19899.
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`25. Defendant BASF Corporation is a company organized and existing
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`under the laws of Delaware with its principle place of business at 100 Park
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`Avenue, Florham Park, NJ 07932.
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`26. Defendant BASF Pharma (Callanish) Limited
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`is a company
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`incorporated under the laws of England with registered offices at 2 Stockport
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`Exchange, Railway Road, Stockport, SK1 3GG, United Kingdom.
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`27. Defendant BASF USA Holding LLC is a company organized and
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`existing under the laws of Delaware with its principle place of business at 100 Park
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`Avenue, Florham Park, NJ 07932. Defendants BASF Americas Corporation,
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`BASF Corporation, BASF Pharma (Callanish) Limited, and BASF USA Holding
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`LLC are collectively referred to herein as “BASF.”
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`28. Defendant Chemport Inc. is a company incorporated under the laws
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`of the Republic of Korea with its principal place of business at 15-1, Dongsu-dong,
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`Naju-si, Jeollanam-do 520- 330 Korea.
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`29. Defendant Nisshin Pharma, Inc. is a company incorporated under the
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`laws of Japan with its principal place of business at 25, Kanda-Nishiki-cho 1-
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`chome, Chiyoda-ku, Tokyo 101- 8441, Japan.
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`30. Defendant Novasep, LLC is a company organized and existing under
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`the laws of New Jersey with its principal place of business at 23 Creek Circle,
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`Boothwyn, PA 19061.
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`31. Defendant Novasep, Inc. is a company organized and existing under
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`the laws of New Jersey with its principal place of business at 23 Creek Circle,
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`Boothwyn, PA 19061.
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`10
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`32. Defendant Groupe Novasep SAS is a company incorporated under the
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`laws of France with its principal place of business at 39, Rue Saint Jean De Dieu
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`Lyon, 69007 France.
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`33. Defendant Finorga SAS is a company organized and existing under
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`the laws of France with its principal place of business at Route De Givors Chasse
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`Sur Rhone, 38670 France. Defendants Novasep, LLC, Novasep, Inc., Group
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`Novasep SAS, and Finorga SAS are collectively referred to herein as “Novasep.
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`OBTAINING AND ENFORCING PATENT PROTECTION
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`34. The Patent Act, 35 U.S.C. § 101, provides that “[w]hoever invents or
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`discovers any new and useful process, machine, manufacture, or composition of
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`matter, or any new and useful improvement thereof, may obtain a patent therefor,
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`subject to the conditions and requirements of this title.” To be patentable, subject
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`matter must be novel, non-obvious, and particularly described, among other things.
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`A.
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`Patent applicants must provide full and complete information to
`the PTO when seeking approval of a patent application.
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`35. The process by which a patent applicant seeks a patent consists of a
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`series of communications between the applicant and the U.S. Patent and
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`Trademark Office (“PTO”) examiner to whom the application is assigned. Other
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`interested parties, such as scientists who have published closely related work or
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`competitors that are pursuing similar products, are generally not allowed to
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`participate in this dialogue.
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`36.
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`It is the responsibility of the applicant, or their attorney or agent, to
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`accurately explain the invention to the examiner, identify misunderstandings or
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`errors made by the examiner, submit all relevant material and information known
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`to the applicant, and fully and accurately explain the relevance of that material and
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`information to the examiner. Accordingly, applicants (and their representatives) are
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`operating under a duty of candor and good faith in their dealings with the PTO.
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`37. Because patents are generally obtained in an ex parte setting, with an
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`informational imbalance and no participation by anyone but the applicant and
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`examiner, compliance with the duty of candor and good faith is essential in
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`preventing improper conduct before the PTO, and in avoiding the issuance of
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`patents that will not withstand full scrutiny.
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`38. The duty of candor and good faith is designed to provide the PTO
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`with the information necessary for effective and efficient decision-making.
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`Examiners and other PTO personnel place great reliance on applicants and
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`inventors to fulfill their duty of candor and good faith.
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`39.
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`The PTO processes thousands of patent applications each year. The
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`PTO is overworked, under-funded, and faces massive backlogs. Examiners, on
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`average, spend less than 20 hours reviewing and assessing each application. Most
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`examiners are not lawyers, despite having to assess and respond to legal arguments
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`put before them by the patent applicant’s counsel.
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`40. The Manual of Patent Examining Procedure reminds attorneys that
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`submission of misleading or inaccurate statements may render the resulting patents
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`unenforceable: “The submission by an applicant of misleading or inaccurate
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`statements of facts during the prosecution of applications for patents has resulted in
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`the patents issuing on such applications being held unenforceable.”
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`B.
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`The “presumption of validity” for patents not a conclusive
`determination.
`41. Once issued, patents are generally presumed to be valid. However, the
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`presumption of validity associated with an issued patent is not a conclusive
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`determination that the patent is, in fact, valid. Rather, the presumption of validity is
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`simply a procedural device that allows reviewing bodies to assign the appropriate
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`burdens in proceedings challenging the validity of an issued patent.
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`42.
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`In fact, patents are routinely invalidated or held unenforceable, either
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`upon re- examination by the PTO, through a review by the Patent Trial and Appeal
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`Board (“PTAB”), or by a court decision or jury verdict. A patent can be invalidated
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`for a variety of reasons, including lack of novelty, obviousness, indefiniteness,
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`enablement, or fraud or inequitable conduct.
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`43. When
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`assessing
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`this procedural presumption of validity,
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`understanding the information actually presented to the PTO at the time it was
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`making its decision is important. Evidence not considered by the PTO may carry
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`more weight than evidence that was considered, and go further towards meeting
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`the challenger’s burden. If the PTO did not have all material facts before it when
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`making its initial patentability decision, its considered judgment may lose
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`significant force, and the burden to overcome the presumption may be easier to
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`sustain.
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`C.
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`“Obvious” inventions are not patentable.
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`44. One reason why a claimed invention may be denied a patent, or why
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`an issued patent may later be invalidated, is a determination that the invention was
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`“obvious.”
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`45. A patent claim is invalid as obvious if the purported differences
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`between the subject matter sought to be patented and the prior art are such that the
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`subject matter would have been obvious to a person of ordinary skill in the art. If
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`the prior art and the general knowledge of a person of ordinary skill in the art
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`would be sufficient to teach all parts of the claim, the patent claim is obvious and
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`generally cannot be allowed.
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`46. The question of obviousness is resolved on the basis of underlying
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`factual determinations including: (1) the scope and content of the prior art; (2) any
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`differences between the claimed subject matter and the prior art; (3) the level of
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`ordinary skill in that art; and (4) “secondary” evidence of non-obviousness.
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`47. A patent applicant can attempt to overcome an obviousness rejection
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`by pointing to “secondary considerations,” also referred to as objective indicia of
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`obviousness, such as the commercial success of the claimed invention, a long-felt
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`but unsolved need for the claimed invention, and the failure of others in attempting
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`to make the claimed invention.
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`D.
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`Patent Challenges
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`48. To address the fact that invalid patents can sometimes gain approval,
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`patents are challengeable in court.
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`49.
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`In the case of pharmaceutical patents, a generic can prevail in patent
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`infringement litigation by showing that its product does not infringe the patent
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`(and/or that the patent holder cannot meet its burden to prove infringement). It may
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`also, or in the alternative, show that the patent itself is invalid or unenforceable.
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`For example, a patent is invalid or unenforceable when the disclosed invention is
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`obvious in light of prior art. A patent is also invalid or unenforceable when an
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`inventor, an inventor’s attorney, or another person involved with the application,
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`with intent to mislead or deceive the PTO, fails to disclose to the PTO material
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`information known to that person to be material, or submits materially false
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`information to the PTO during prosecution.
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`50.
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`In those circumstances, the PTO’s decision to issue a patent does not
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`substitute for a fact-specific assessment of (i) whether the applicant made
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`intentional misrepresentations or omissions on which the PTO relied in issuing the
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`patent, and (ii) whether a reasonable manufacturer in the patent holder’s position
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`would have a realistic likelihood of succeeding on the merits of a patent
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`infringement suit.
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`51. As a statistical matter, if the parties litigate to a decision on the merits,
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`it is more likely that a challenged patent will be found invalid or not infringed than
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`upheld. The Federal Trade Commission (“FTC”) reports that generics prevailed in
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`73% of Hatch-Waxman patent litigation cases resolved on the merits between 1992
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`and 2002. An empirical study of all substantive decisions rendered in every patent
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`case filed in 2008 and 2009 similarly reports that when a generic challenger stays
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`the course until a decision on the merits, the generic wins 74% of the time.
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`52. Patents can also be challenged through the inter partes review system,
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`which was established in 2011, when Congress passed the Leahy-Smith America
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`Invents Act (AIA). The inter partes review system allows members of the public to
`
`challenge issued patents. The grounds for an inter partes review is limited to
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`patentability issues under § 102 (novelty) or § 103 (obviousness). Even then, the
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`challenge can only be based on prior art consisting of patents or prior publications.
`
`REGULATORY BACKGROUND
`
`A.
`
`Approval of a first entrant
`
`53. Under the Federal Food, Drug, and Cosmetic Act (“FDCA”), 21
`
`U.S.C. § 301 et seq., manufacturers that create a new drug must obtain approval
`
`16
`
`
`
`Case 3:21-cv-13009 Document 1 Filed 06/25/21 Page 17 of 119 PageID: 17
`
`from the FDA to sell the product by filing a New Drug Application (“NDA”).9 An
`
`NDA must include specific data concerning the safety and effectiveness of the
`
`drug, as well as any information on applicable patents.10
`
`54. When the FDA approves a brand pharmaceutical manufacturer’s
`
`NDA, the manufacturer may list in Approved Drug Products with Therapeutic
`
`Equivalence Evaluations (the “Orange Book”) certain patents that the
`
`manufacturer asserts could reasonably be enforced against a manufacturer that
`
`makes, uses, or sells a generic version of the brand drug before the expiration
`
`of the listed patents. After the FDA approves the NDA, the brand
`
`manufacturer may list such patents in the Orange Book. 11
`
`55. The FDA relies completely on
`
`the brand manufacturer’s
`
`truthfulness about patent validity and applicability because it does not have
`
`the resources or authority to verify the manufacturer’s patents for accuracy or
`
`trustworthiness. In listing patents in the Orange Book, the FDA merely
`
`performs a ministerial act.
`
`56. When they do not face generic competition, brand manufacturers
`
`can usually sell the branded drug far above the marginal cost of production,
`
`generating profit margins well in excess of 70% while making hundreds of
`
`
`9 21 U.S.C. §§ 301-392.
`10 21 U.S.C. §§ 355(a), (b).
`11 21 U.S.C. §§ 355(b)(1), (c)(2).
`
`17
`
`
`
`Case 3:21-cv-13009 Document 1 Filed 06/25/21 Page 18 of 119 PageID: 18
`
`millions of dollars in sales.
`
`B.
`
`Approval of a generic drug
`
`57. Once lawful periods of patent exclusivity expire on branded drug
`
`products, generic drug manufacturers can seek FDA approval to market and sell
`
`generic versions of the branded drug. Under the Drug Price Competition and
`
`Patent Term Restoration Act, Pub. L. No. 98-417, 98 Stat. 1585 (1984)—
`
`commonly known as “Hatch-Waxman”—competitors wishing to sell a generic
`
`equivalent of a branded drug may file an abbreviated new drug application
`
`(“ANDA”), which relies in substantial part on the scientific findings of safety and
`
`efficacy contained in the branded drug manufacturer’s NDA. The brand drug is
`
`called the reference listed drug (“RLD”).
`
`58. To gain FDA approval, generic drugs must be bioequivalent to their
`
`branded counterparts. Bioequivalence means that the active ingredient of the
`
`proposed generic would be present in the blood of a patient to the same extent and
`
`for the same amount of time as the active ingredient of the brand.12 Bioequivalent
`
`drug products containing identical amounts of the same active ingredients, having
`
`the same route of administration and dosage form, and meeting applicable
`
`standards of strength, quality, purity, and identity are therapeutically equivalent
`
`and may be substituted for one another. The FDA assigns an “AB” rating to
`
`
`12 21 U.S.C. § 355(j)(8)(B).
`
`18
`
`
`
`Case 3:21-cv-13009 Document 1 Filed 06/25/21 Page 19 of 119 PageID: 19
`
`generics that meet the necessary criteria in relation to their branded counterparts.
`
`59. Because generic drugs are therapeutically equivalent to brand-name
`
`drugs, generic manufacturers compete by offering their drugs at low prices. Entry
`
`of a single generic can result in steep price reductions for purchasers. Entry of
`
`several generics tends to result in even steeper price reductions, driving price down
`
`close to marginal manufacturing costs.
`
`60. To benefit from these low prices, every state has adopted substitution
`
`laws requiring or permitting pharmacies to substitute AB-rated generic equivalents
`
`when filling branded drug prescriptions, unless the prescribing physician
`
`specifically directs otherwise. Due in part to these substitution laws, the launch of
`
`AB-rated generics causes a rapid price decline and shift from branded to generic
`
`drug sales. A generic that is unconstrained by supply issues often captures 80% or
`
`more of the market within the first six months of entry, regardless of the number of
`
`generic entrants. The effects of generic entry are still more dramatic after a year. In
`
`a review of industry data, the FTC found that on average, within a year of generic
`
`entry, generics had captured 90% of corresponding brand sales and prices had
`
`dropped 85% with multiple generics on the market.13
`
`
`
`13 See Federal Trade Commission, Pay-for-Delay: How Drug Company Pay-Offs Cost
`Consumers Billions 8 (2010), https://www.ftc.gov/sites/default/files/documents/reports/pay-
`delay-how-drug-
`company-payoffs-cost-consumers-billions-federal-trade-commission-staff-
`study/100112payfordelayrpt.pdf.
`
`19
`
`
`
`Case 3:21-cv-13009 Document 1 Filed 06/25/21 Page 20 of 119 PageID: 20
`
`C.
`
`Regulatory exclusivities
`
`61. A “new chemical entity” is a drug that contains an active moiety—the
`
`part of the drug responsible for the physiological or pharmacological action of the
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`drug—that the FDA has not previously approved in another NDA.14 Approval of an
`
`NDA with a new chemical entity provides a five-year exclusivity (“NCE
`
`exclusivity”) during which the FDA cannot approve an ANDA for a drug
`
`containing the same active moiety as the new chemical entity.15
`
`D.
`
`ANDA Paragraph IV Certifications
`
`62. To obtain FDA approval of an ANDA, a manufacturer must certify
`
`that the generic drug will not infringe any patents listed in the Orange Book. Under
`
`the Hatch-Waxman Amendments, a generic manufacturer’s ANDA must contain
`
`one of four certifications:
`
`i.
`
`ii.
`
`
`iii.
`
`that no patent for the brand drug has been filed with the FDA (a
`“Paragraph I certification”);
`
`that the patent for the brand drug has expired (a “Paragraph II
`certification”);
`
`that the patent for the brand drug will expire on a particular date and
`the manufacturer does not seek to market its generic product before
`that date (a “Paragraph III certification”); or
`
`
`
`iv.
`
`that the patent for the brand drug is invalid or will not be infringed by
`the generic manufacturer’s proposed product (a “Paragraph IV
`certification”).
`
`14 21 C.F.R. § 314.108(a).
`15 21 C.F.R. § 314.108(b)(2).
`
`20
`
`
`
`Case 3:21-cv-13009 Document 1 Filed 06/25/21 Page 21 of 119 PageID: 21
`
`
`21 U.S.C. § 355(j)(2)(A)(vii).
`
`63.
`
`If a generic manufacturer files a Paragraph IV certification, a brand
`
`manufacturer has the ability to delay FDA approval of the ANDA simply by suing
`
`the ANDA applicant for patent infringement. If the brand manufacturer initiates a
`
`patent infringement action against the generic filer within forty-five days of
`
`receiving notification of the Paragraph IV certification, the FDA will not grant
`
`final approval to the ANDA until the earlier of (a) the passage of 30 months, or (b)
`
`the issuance of a decision by a court that the patent is invalid or not infringed by
`
`the generic manufacturer’s ANDA. 21 U.S.C. § 355(j)(5)(B)(iii).16
`
`64. Until one of those conditions occurs, the FDA may grant “tentative
`
`approval,” but cannot authorize the generic manufacturer to market its product
`
`(i.e., grant final approval). The FDA may grant an ANDA tentative approval when
`
`it determines that the ANDA would otherwise be ready for final approval but for
`
`the 30-month stay.
`
`E.
`
`The First Filer’s 180-day Exclusivity Period
`
`65. Generics may be classified as (i) first filer generics, (ii) later generic
`
`filers, and (iii) authorized generics.
`
`
`16 This period is commonly called a “30-month stay.” The brand/patent holder can choose to sue
`the generic after 45 days, including waiting until the generic has launched its product, but, in that
`event, the brand cannot take advantage of the 30-month stay of FDA approval, and must instead
`satisfy the showing required to obtain a preliminary injunction to prevent the generic launch.
`
`21
`
`
`
`Case 3:21-cv-13009 Document 1 Filed 06/25/21 Page 22 of 119 PageID: 22
`
`66. To encourage manufacturers to seek approval of generic versions of
`
`branded drugs, the Hatch-Waxman Amendments grant the first Paragraph IV
`
`generic manufacturer ANDA filer
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