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FWK Holdings LLC v. Shire PLC

United States District Court, D. Massachusetts

October 10, 2017

FWK HOLDINGS LLC, on behalf of itself and all others similarly situated Plaintiffs,



         Plaintiff FWK Holdings LLC brings this putative class action on behalf of direct purchaser plaintiffs (“DPPs”)[1] of the pharmaceutical drug Intuniv, alleging an illegal reverse payment settlement agreement between Defendants Shire PLC, Shire, LLC, and Shire U.S., Inc. (“Shire”), and Actavis Elizabeth LLC, Actavis Holdco US, Inc., and Actavis LLC (“Actavis”) (collectively, “Defendants”). Currently pending before this Court are Shire's and Actavis's separate motions to dismiss for failure to state a claim. [ECF Nos. 49, 52]. For the reasons stated below, the motions are DENIED.


         On December 30, 2016, the DPPs filed the original complaint. [ECF No. 1]. On February 2, 2017, the case was reassigned to this session, given its relation to Picone et al. v. Shire U.S., Inc. et al., No. 16-cv-12396, in which plaintiffs are indirect purchasers of Intuniv. On March 1, 2017, the Court granted a joint motion to consolidate this case with Rochester Drug Cooperative, Inc. v. Shire LLC, et al., No. 17-cv-10050. [ECF No. 19]. On March 13, 2017, Plaintiff filed a consolidated amended class action complaint under seal (“CAC”). [ECF No. 32]. The next day, the plaintiff in Rochester Drug voluntarily dismissed its case without prejudice. [No. 17-cv-10050, ECF No. 27]. On April 10, 2017, Defendants filed separate motions to dismiss [ECF Nos. 49 & 52], which the DPPs opposed [ECF No. 63]. Defendants also filed replies to the opposition. [ECF Nos. 67, 68]. On July 20, 2017, the Court held a hearing on the motions to dismiss in both the instant action and the related action, No. 16-cv-12396. [ECF No. 78].


         A. Regulatory Background

         Under the Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 301, et seq. (“FDCA”), a drug manufacturer must obtain approval from the Food and Drug Administration (“FDA”) to sell a new drug by filing a New Drug Application (“NDA”). 21 U.S.C. § 355(b)(1). The NDA discloses any patents that claim the new drug, and, if approved, the manufacturer must list these patents in the FDA publication known as the “Orange Book.” See In re Loestrin 24 Fe Antitrust Litig., 814 F.3d 538, 542 (1st Cir. 2016). The FDA does not independently assess the validity and enforceability of patents listed in the Orange Book.

         Under the Drug Price Competition and Patent Term Restoration Act of 1984, Pub. L. No. 98-417, 98 Stat. 1585, commonly known as the Hatch-Waxman Act, a generic manufacturer may file an Abbreviated New Drug Application (“ANDA”) to seek approval of a proposed generic version of a brand drug. See 21 U.S.C. § 355(j). Obtaining approval for an ANDA is simpler than obtaining approval for an NDA. In re Loestrin 24 Fe Antitrust Litig., 814 F.3d at 543. As part of the ANDA, a generic manufacturer must certify, in one of four ways provided by statute, that the generic does not infringe any patents listed in the Orange Book. See 21 U.S.C. § 355(j)(2)(A)(vii). In a “Paragraph IV” certification, the ANDA filer certifies that the patent claiming the brand drug “is invalid or will not be infringed by the manufacture, use, or sale of the” proposed generic. 21 U.S.C. § 355(j)(2)(A)(vii)(IV). This constitutes a constructive act of infringement granting the brand company standing to sue the ANDA filer. 35 U.S.C. § 271(e)(2)(A). If a brand company files a patent infringement suit against the ANDA filer within 45 days of receiving notice of the certification, the ANDA is automatically stayed for 30 months or pending an outcome in the lawsuit favorable to the ANDA filer. 21 U.S.C. § 355(j)(5)(B)(iii). The first generic company to file an ANDA before the expiration of all the Orange Book-listed patents, if ultimately successful, is granted a 180-day period of exclusivity from any other generic manufacturers. Id. at § 355(j)(5)(B)(iv). A brand manufacturer may still introduce its own authorized generic (“AG”)[2] during this time period. See In re Loestrin 24 Fe Antitrust Litig., 814 F.3d at 543 (citing Teva Pharm. Indus. Ltd. v. Crawford, 410 F.3d 51, 54-55 (D.C. Cir. 2005)).

         B. Intuniv

         In September 2009, the FDA approved Shire's NDA application to market extended-release guanfacine hydrochloride tablets (in one, two, three, and four mg dosages) as Intuniv for the treatment of attention deficit hyperactivity disorder in children and adolescents. CAC ¶ 98. Shire listed three patents in the Orange Book as covering Intuniv: U.S. Patents Nos. 5, 854, 290 (the ‘290 patent), 6, 287, 599 (the ‘599 patent), and 6, 811, 794 (the ‘794 patent) (collectively, “the Intuniv Patents”).[3] Id. ¶ 99. Shire's patents do not directly claim Intuniv's active ingredient, guanfacine hydrochloride, but instead consist of one method-of-use patent and two patents covering the coating that enables a gradual release mechanism. Id. ¶ 102. Shire manufactured, distributed, and sold brand Intuniv during the class period. FWK Holdings LLC (as the assignee of the claims of Frank W. Kerr Co.) and the DPPs purchased brand Intuniv directly from Shire and/or generic Intuniv directly from Actavis during the class period. Id. ¶¶ 20, 195. Plaintiff claims that Shire knew that the Intuniv Patents were weak, and nonetheless listed them in the Orange Book to deter generics. Id. ¶ 103.

         C. Generic Manufacturers Challenge the Intuniv Patents

         On December 29, 2009, Actavis filed the first ANDA with a Paragraph IV certification to market a generic Intuniv, arguing that all three of Shire's Intuniv patents were invalid or not infringed. Id. ¶ 107. Following Actavis's ANDA, other generic manufacturers that are not parties to this suit filed ANDAs to market generic Intuniv: Teva Pharmaceuticals USA, Inc. (“Teva”) on January 25, 2010; Anchen Pharmaceuticals, Inc. ("Anchen")[4] on January 28, 2010; Mylan Pharmaceuticals, Inc. ("Mylan") on November 30, 2010; Sandoz. Inc. ("Sandoz") on December 28, 2010; Impax; and Watson. Id.¶¶9, 108. Teva, Actavis, and Anchen sent Paragraph IV notice letters to Shire in March and April 2010. Id. ¶ 109.

         Shire then initiated patent infringement litigation against the generic manufacturers in the District of Delaware, which triggered the statutory 30-month stay of the FDA's decisions on the pending AND As. Id. ¶¶ 10, 110-1 ll.[5] The cases against Teva, Actavis, and Anchen were consolidated under the Teva docket, hi ¶ 113. See Shire LLC v. Teva Pharmaceuticals USA. Inc.. lO-cv-00329, ECF No. 15 (Aug. 2, 2010). In March 2012, Shire's co-plaintiffs dedicated the '290 Patent to the public, which effectively surrendered it. Id.¶ 117. The DPPs claim that the documents that would have rendered the '290 Patent invalid had already been produced in March 2011. Id

         On September 4, 2012, Shire settled with TWi/Anchen. The settlement agreement provided that:


         Id¶¶ll, 119.

         From September 17 through September 20, 2012, there was a bench trial on Shire's claims against Actavis and Teva. Id. ¶ 120. The DPPs allege that, at the trial, Actavis and Teva presented “compelling evidence” that the ‘599 and ‘794 Patents were invalid as either anticipated or obvious in light of prior art. Moreover, they assert that it appeared likely that Actavis would prevail based on investment banking forecasts, the strength of the evidence at trial, and the statements made by Actavis's ...

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