Purchasers of Takeda Pharmaceuticals Company's branded diabetes drug, ACTOS, filed an antitrust suit alleging that Takeda falsely described two patents to the US Food and Drug Association (FDA) and, as a result, delayed competitors from introducing generic versions of the drug and caused the purchasers to pay monopoly prices for ACTOS during this period. In re Actos End-Payor Antitrust Litigation, Case No. 15-3364 (2d Cir. 2017) (Rakoff, J.).

Under the Hatch-Waxman Act, how a brand holder classifies its patents affects the manner in which an applicant seeking to market a generic version of the drug must assure the FDA that the generic drug will not infringe the brand's patents. Many generic suppliers file a "Paragraph IV certification" stating that the brand's patents are invalid or will not be infringed and the first generic supplier to file a Paragraph IV certification receives a 180-day period of generic exclusivity. This filing typically results in the brand holder launching a patent infringement suit, which triggers a 30-month waiting period before the FDA can approve the generic drug supplier's application. When a brand's patents cover a method of using the drug, however, a generic supplier can instead submit a "Section viii statement" that carves out the patented uses from its label. Unlike a Paragraph IV certification, a Section viii statement is not a justiciable act of infringement and, therefore, a generic supplier is not immediately subject to a patent infringement suit. Furthermore, a successful Section viii application is not subject to the 180-day bottleneck caused by the Paragraph IV exclusivity provision.

The plaintiffs alleged that Takeda falsely described its patents to the FDA as being both drug product patents and method patents and thus caused the suppliers of the generic versions of ACTOS to have to file Paragraph IV certifications, which created significant delays for the generic drugs. There were ten generic applicants and nine of them filed Paragraph IV certifications. One of them, Teva Pharmaceuticals, initially filed a Section viii statement but in response to a citizen petition, the FDA required Teva to take the Paragraph IV route.

The district court dismissed plaintiffs' claims for failing to plausibly allege that Takeda's false patent descriptions caused the delay in generic entry. The district court found that plaintiffs failed to identify a viable regulatory path beyond the Paragraph IV route and even if they had, the generic suppliers would still have faced delays caused by Takeda's patent litigation.

The US Court of Appeals for the Second Circuit affirmed the lower court's ruling with respect to the plaintiffs' theory as it applied to the nine generic applicants that filed a Paragraph IV certification but vacated the lower court's ruling with respect to the plaintiffs' theory as to Teva and its Section viii statement. The 2nd Circuit explained that "because plaintiffs claim that [nine] generic manufacturers filed their Paragraph IV certifications...under duress, their theory presupposes that the generic manufacturers knew that Takeda had described them as drug patents when they filed their ANDAs." But the 2nd Circuit noted that at the time Takeda's patents were added to the FDA's Orange Book, there was a flaw whereby patents submitted could only reflect one description. Thus, even though Takeda identified its patents as both drug product patents and method patents, the Orange Book only reflected the latter. Accordingly, the 2nd Circuit concluded that the Orange Book description was not the cause of the nine generic applicants' decision to file Paragraph IV certifications and the complaint lacked any allegations of other means by which the applicants would have known that Takeda described the patents as drug product patents.

With respect to the plaintiffs' theory as to Teva and its Section viii statement, however, the 2nd Circuit noted that this did not depend on Teva's knowledge of Takeda's description of its patents as drug product patents. Unlike the other applicants, Teva had avoided the Paragraph IV route and filed a Section viii statement and it was only because of the FDA's reliance on Takeda's descriptions that the FDA required Teva to instead proceed through the Paragraph IV route.

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