CVS, Rite Aid Sue Pharma Cos. in Latest Pay-for-Delay Dispute

Plaintiffs CVS Pharmacy, Inc., Rite Aid Corporation, and Rite Aid Hdqtrs. Corp. have filed an antitrust lawsuit against brand defendants Forest and its successors, Allergan and AbbVie together with several of their subsidiaries, and seven generic pharmaceutical manufacturers for violations of Sections 1 and 2 of the Sherman Act. The claims hinge on the delayed market entry of generic versions of the drug Bystolic, a beta blocker used to treat high blood pressure. 

According to Wednesday’s complaint, filed in the Southern District of New York, the brand defendants manufacture and sell Bystolic, generating more than $500 million in annual domestic sales. The plaintiffs contend that although would-be generic manufacturers filed Abbreviated New Drug Applications (ANDAs) with the U.S. Food and Drug Administration (FDA) to market generic versions of Bystolic as early as December 2011, no generic competitor has entered or will enter until 2021. But for the anticompetitive conduct, the filing contends, “[a]t least six of the seven Generic Defendants would have been ready to launch well before September 17, 2021, as each had final FDA approval.”

The plaintiffs claim that to avoid the risk of competition, the brand defendants engaged in a series of steps to prevent generic drug makers from bringing their biosimilars, only materially different in their name and lower price, to market. The filing alleges that the brand defendants sued the generic defendants for patent infringement once their ANDAs had been filed. In reverse settlements, the filing contends, the brand defendants paid each of the would-be generic competitors at least $15 million to abate the patent suits.

The settlements reportedly included payment, coverage of the generics’ patent litigation fees, and a “contingent launch provision” (CLP), or acceleration clause. The complaint explains that “CLPs ensure a settling generic that it will not be competitively disadvantaged should a later settling generic negotiate an earlier licensed entry date or otherwise come to market earlier: pursuant to CLPs, the entry date may be ‘accelerated’ permitting the settling generic to enter the market at the same time as any of its competitors.”

The filing claims that absent the reverse payments, “Forest and the Generic Defendants would have instead agreed upon an earlier licensed entry date for generic Bystolic.” Further, the plaintiffs allege, because of the insertion of the CLP clauses, “if just one of the Generic Defendants did not take an unlawful payment, and instead insisted on an earlier entry date untainted by a side-deal, every other Generic Defendant would enter on the same earlier date.”

For their alleged antitrust injuries, paying “overcharges on their purchases of branded (and eventually generic) Bystolic,” the plaintiffs seek injunctive relief and treble damages, among other things.

The plaintiffs are represented by Hangley Aronchick Segal Pudlin & Schiller.