FTC v. Actavis, Inc. (In re Androgel Antitrust Litigation (II) (N.D. Ga.)

Case Name: FTC v. Actavis, Inc. (In re: Androgel Antitrust Litigation (II), Case No. 1:09-CV-955-TWT, 2014 U.S. Dist. LEXIS 54808 (N.D. Ga. Apr. 18, 2014) (Thrash, J.)

Drug Product and Patent(s)-in-Suit: Androgel®; U.S. Pat. No. 6,503,894 (“the ’894 patent”) 

Nature of the Case and Issue(s) Presented:  In FTC v. Actavis, Inc., 133 S. Ct. 2223 (2013), the Supreme Court reversed and remanded to the district court to apply a rule of reason analysis to defendants’ reverse payment settlement.  On remand, defendants Solvay and Par/Paddock renewed their motion to dismiss arguing that the reverse payment settlement is protected by the Noerr-Pennington doctrine because the underlying litigation was terminated by a consent judgment. In the underlying litigation, while summary judgment motions were pending, the parties reached a settlement and licensing agreement. Solvay agreed to a consent judgment dismissing the infringement action. Par/Paddock agreed not to market generic AndroGel until the earlier of August 31, 2015 or the date another company launched a generic. Solvay also agreed to share profits with Par and Paddock. Par agreed to promote AndroGel to primary care physicians. Paddock agreed to serve as a backup supplier for AndroGel. The profit sharing and business promotion agreements were not disclosed to the court and not recited in the consent judgment. Despite the agreements not to disclose this information, defendants filed a motion to dismiss the complaint because the settlement agreement was a legitimate petitioning for government action and thus protected by the Noerr-Penningtondoctrine. The court denied defendants’ motion to dismiss.

Why FTC Prevailed:  The court based its decision on the following: (i) the settlement agreement did not involve the court or disclose the full scope of the agreement; (ii) the Supreme Court’s Noerr-Pennington precedent read in light of its Actavis decision counsels against immunizing reverse payment agreements; and (iii) consent judgments of this nature should not generally be afforded Noerr-Pennington immunity. The court analogized the instant case to two reverse payment cases: In re Nexium (Esomeprazole) Antitrust Litigation, No. 12-md-02409-WGY, 2013 U.S. Dist. LEXIS 129696 (D. Mass. Sept. 11, 2013) (“Nexium”) and In re Ciprofloxacin Hydrochloride Antitrust Litigation, 261 F. Supp. 2d 188 (E.D.N.Y. 2003) (“Cipro”). In Cipro, Noerr-Pennington immunity did not apply because the consent judgment itself did not include all the terms of the agreement. Like in Cipro, immunity also did not apply in Nexium because the court did not play an independent role in drafting the terms of the consent judgment. The court entering the consent judgment does not mean that it substantively agreed to the terms.  Moreover, the court stated that “the holding in Actavis indicates that Noerr-Pennington should not protect the reverse payment settlement.” Since the anticompetitive nature of defendants’ settlement must be based on the payment size, its relation to anticipated litigation costs, independence from other services and lack of any other justification, defendants’ agreement is precisely the type of agreement that should have its validity determined by antitrust law. Finally, the court reasoned that the nature of a consent decree counsels against immunity. Consent decrees are voluntary between the parties and do not have preclusive effect against non-parties. Thus, the consent judgment is not the sort of government action that is typically due Noerr-Pennington immunity.