In re Lamictal Direct Purchaser Antitrust Litigation
Where a settlement agreement that resolves a Hatch-Waxman patent litigation does not include a reverse payment, the Supreme Court’s FTC v. Actavis analysis is inapplicable.
Case Name: In re Lamictal Direct Purchaser Antitrust Litigation, Case No. 12-cv-995 (WHW), 2014 U.S. Dist. LEXIS 9257 (D.N.J. Jan. 24, 2014) (Walls, J.)
Drug Product and Patent(s)-in-Suit: Lamictal® (lamotrigine); U.S. Patent No. 4,602,017 (“the ’017 patent”)
Nature of the Case and Issue(s) Presented: Plaintiff filed a suit challenging a settlement between GlaxoSmithKline and Teva, which was entered into for purposes of resolving those parties patent litigation concerning the ’017 patent. In relevant part, the settlement agreement provided Teva with an exclusivity period of 37 months for chewable Lamictal and six months exclusivity for Lamictal tablets. GSK also agreed not to launch its own authorized generic drug product during these exclusivity periods. The district court originally found that because the settlement agreement did not involve a transfer of money, it “[was] not subject to antitrust scrutiny” and dismissed the case for failure to state a claim. The case was remanded in light of the Supreme Court’s decision in FTC v. Actavis.
The issue before the court was whether the settlement agreement was subject to the “rule of reason” antitrust analysis provided in Actavis. Plaintiff argued that this analysis should apply even though there was no monetary payment from GSK because Teva gained significant financial benefit from the agreement. Defendants argued that Actavis does not apply because there was no payment, and the factors in Actavis favor dismissal.
Why Defendants Prevailed: The court affirmed its dismissal of the complaint because the scrutiny in Actavis only applies to settlement agreements that include reverse payments. The court reasoned that Actavis only applied in cases where monetary payments were made because the Supreme Court almost always referred to the issue as one involving payments of money. As there was no payment in the settlement agreement here, the Actavis scrutiny was inapplicable.
The court also considered whether the non-payment benefits obtained by Teva in the agreement could fall within the purview of the Actavis holding. The court concluded that such non-monetary benefits did not trigger the Actavis scrutiny because those benefits were necessary for adequate consideration to be present to create an enforceable settlement agreement. The court also noted that other courts considering the issue have similarly applied the Actavis scrutiny in a more limited manner, i.e., when a monetary payment is included as part of the settlement.
Even if the “rule of reason” analysis were to apply, the court found that the five factors weighed in favor of defendants. The court did not find adverse impact on competition because the exclusivity period was short, six months for chewables. The court also noted that the early entry of the generic during the life of the patent was a significant fact in favor of upholding the settlement.
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