Scores of lawyers and stakeholders in the biologics industry had been eagerly awaiting guidance from a federal district court in the In re Humira (Adalimumab) Antitrust Litigation, which was filed in March 2019 by indirect purchasers of Humira® alleging anticompetitive behavior on the part of Humira® manufacturer, AbbVie Inc. (AbbVie). On June 10, 2020, Northern District of Illinois Judge Manish Shah granted AbbVie’s motion to dismiss the complaint, finding that the plaintiffs’ antitrust allegations were too speculative and therefore insufficient to state a claim upon which relief could be granted. The decision suggests that patent “evergreening” practices akin to those the plaintiffs allege AbbVie has exercised will still be available to innovators who wish to find ways to increase patent term on their marketed reference biologics and maintain a dominant position in the market.
Since the Biologics Price Competition and Innovation Act (BPCIA) was signed into law in 2009, and despite hopes at that time that the biosimilar pathway would incentivize a flurry of lower cost competition, biosimilar makers have struggled to make biosimilars available in the United States. There are myriad reasons for this failure to meet expectations, including alleged efforts to stifle competition by reference product sponsors (RPS); structural delays by biosimilar manufacturers relating to uncertainty in market conditions, development costs and litigation; and delays due to stakeholder unfamiliarity and reluctance, including reluctance by the FDA to promulgate rules governing approval and switching. The In re Humira litigation places a spotlight on alleged efforts by the RPS to stifle competition.
The drug product at issue in this litigation is Humira® (adalimumab), a monoclonal antibody indicated for rheumatoid arthritis (RA) and nine additional disorders. First marketed in 2002, Humira® is the best-selling prescription drug in the world, and the second-biggest blockbuster drug of all time. The plaintiffs in this litigation are representatives of a class of indirect purchasers of Humira® who sued AbbVie for violation of the Sherman Antitrust Act under two theories. First, plaintiffs alleged that AbbVie’s practice of “obtaining and asserting swaths of invalid, unenforceable, or noninfringed patents without regard to the patents’ merits,” which blocked the entry of would-be adalimumab biosimilar products, constituted an abuse of AbbVie’s monopoly over the US adalimumab market. For instance, plaintiffs alleged that AbbVie engaged in, inter alia, “objectively baseless” behavior during BPCIA-regulated “patent dance” exchanges with biosimilar manufacturers, asserting patents it allegedly knew to be non-infringed and/or invalid. Plaintiffs’ admittedly new theory of antitrust liability posited that “by repeatedly and aggressively asserting [its] patent thicket, during a lengthy, detailed regulatory process (and subsequent infringement litigation), AbbVie was able to delay its competitors and avoid any real examination of the patents’ validity long enough to reap a few more years’ worth of monopoly profit.”
In their second argument, plaintiffs alleged that AbbVie’s execution of settlement agreements with several biosimilar sponsors (including the three co-defendants), in which AbbVie granted licenses allowing these sponsors to market adalimumab in Europe in 2018 while prohibiting entry into the US market until January 2023, constituted both an unlawful pay-for-delay scheme and an unlawful geographical market allocation. Both of these theories raised issues of first impression and, at the motion to dismiss phase, the court was required to accept plaintiffs’ factual allegations as true on their face.
AbbVie and the co-defendants (other biosimilar manufacturers who settled with AbbVie by agreeing to delay market entry in return for licensing agreements cutting through AbbVie’s patent thicket) moved to dismiss the complaint for failure to plead a claim that “plausibly suggests a right to relief.” The court granted the motion and dismissed all counts of the complaint, holding that the plaintiffs’ antitrust theories were too speculative under the Twombly standard and fell short of the type of competitive harm remedied by antitrust law.
With respect to the first theory (abuse of monopoly power via repeated assertion of questionable patents and sham petitioning of the government to issue such patents), the court held that, under the Noerr-Pennington doctrine, AbbVie’s government petitioning activities were immunized from federal antitrust liability by the First Amendment. Specifically, the court held that AbbVie’s petitioning of the USPTO during prosecution and inter partes reviews (IPRs) and petitioning of federal courts for relief from alleged infringement of its patents was protected because those petitions were not “objectively baseless.” The court found that AbbVie’s patent applications, IPRs and subsequent infringement lawsuits were, on the whole, successful, thereby “self-proving [their] reasonableness” and disqualifying them as plausible acts of sham petitioning. Still, the court did find AbbVie’s conduct during BPCIA-regulated “patent dance” exchanges with biosimilar sponsors to constitute a “kernel” of objectively baseless petitioning unprotected by the Noerr-Pennington doctrine. But the court summarily dismissed this nonimmunized conduct as far outweighed by the conduct immunized by Noerr-Pennington and constituting little more than “a few sharp elbows thrown at sophisticated competitors participating in regulated patent and biologic-drug regimes.” The court concluded by finding that even if AbbVie’s nonimmunized conduct (objectively baseless assertions during patent dance exchanges) rose to the level of a standalone scheme of monopolization, the allegations still failed for lack of pleading an antitrust injury because it was not plausible that such conduct intimidated the biosimilar manufacturers into delaying launch of their biosimilars.
As for plaintiffs’ second theory, the court held that AbbVie’s settlement agreements, which did not involve cash payments, and which permitted biosimilar adalimumab entry into both European and US markets before the expiration dates of AbbVie’s last-expiring patents, did not constitute reverse payments that trigger antitrust scrutiny under the Supreme Court’s FTC v. Actavis decision. Because this package of global settlement agreements allowed adalimumab to enter the market in both geographical regions prior to the nominal end of the patent enforcement period, the court found they were not Actavis-like reverse payments presenting risk of significant anticompetitive effects.
Finally, the court held that the plaintiffs failed to plead an actionable antitrust injury (a requirement applicable to both of plaintiffs’ theories described above). The court explained that there could be no but-for cause of antitrust harm unless it was proven that AbbVie lacked any valid and infringed patent within its “patent thicket,” and noted that plaintiffs never alleged that all of AbbVie’s patents were invalid or not infringed. From this, the court postulated that “all it would have taken was one valid and infringed patent to preclude market entry until that patent’s expiration.” Ultimately, the complaint’s allegations regarding AbbVie’s baseless assertion of the thicket as a whole—as opposed to assertions of invalid or unenforceable patents individually—were insufficient to plead an injury in restraint of competition.
The plaintiffs filed a notice of appeal of the court’s judgment dismissing the complaint to the Seventh Circuit Court of Appeals on July 28, 2020.
The court’s decision left unresolved several issues relating to the well-pleaded antitrust complaint. The outcome of the defendants’ motion to dismiss may have been different had the pleadings, and the opposition to the motion, included additional discussion of the reference product sponsor’s state of mind. The complaint may not have placed sufficient emphasis on documentary evidence suggesting an intent to assert patents without much regard to likelihood of infringement. Of course, this is a tough ask to make of a litigant before it has a chance to conduct discovery. For example, the complaint identified AbbVie documents from the two years preceding the expiration date of the first patents on Humira® to support an allegation that the company intended to forestall competition by placing a thumb on the IP scales. For instance, as pointed out in the complaint, in a 2013 internal meeting, AbbVie CEO Rick Gonzalez stated, “[Y]ou’re going to be walking your way through an absolute minefield of IP, thousands of patents around all of these products. And you have to make sure that you don’t step on any one of them along the way because that’s going to create a big problem for you.” And at a 2014 conference, CFO William Chase stated that AbbVie' s intellectual property strategy was “designed to make it more difficult for a biosimilar to follow behind you and come up with a very, very similar biosimilar.” Yet none of these statements were discussed in the court’s opinion, indicating the plaintiffs may have missed an opportunity in briefing to underscore their importance in revealing state of mind about the use of an immense patent thicket to block competition.
A second unresolved issue is the likelihood of success of placing more emphasis in the complaint on anticompetitive behavior relating to insurance plan “monopolization” than patent thicket generation. For instance, in the In re Remicade Antitrust Litigation, No. 18-cv-2357-JCJ (E.D. Pa. 2017), indirect purchasers of Janssen Biotech’s Remicade® sued Janssen under the Sherman Act alleging anticompetitive bundling and coercive rebate policies designed to block insurers from reimbursing, and hospitals and clinics from purchasing, biosimilar versions of the drug. Their complaint survived a motion to dismiss, before the litigation was paused due to COVID-19. Similarly, Humira’s dominant position in the market for biologic treatments of RA may be due in large part to AbbVie’s longstanding practices of offering substantial rebates to direct purchasers and lobbying for Humira’s classification as a “preferred” treatment in insurer formularies.
Finally, future antitrust litigants may consider limiting the scope of allegations in the complaint to individual instances of unlawful conduct, such as an assertion of claims that do not have a reasonable basis for infringement during patent dance exchanges, rather than an unlawful scheme in totality. The In re Humira plaintiffs’ attempt to sweep “a disparate set of aggressive” patent enforcement activities seemed to draw disdain from the court, distracting from and even casting a negative light on the complaint’s more plausible allegations, and likely hurting the merits of plaintiffs’ case overall.