United States District Court, D. Massachusetts
FWK HOLDINGS LLC, on behalf of itself and all others similarly situated Plaintiffs,
SHIRE PLC, SHIRE, LLC, SHIRE U.S., INC., ACTAVIS ELIZABETH LLC, ACTAVIS HOLDCO US, INC., and ACTAVIS LLC, Defendants.
MEMORANDUM AND ORDER ON MOTIONS TO DISMISS
ALLISON D. BURROUGHS U.S. DISTRICT JUDGE
FWK Holdings LLC brings this putative class action on behalf
of direct purchaser plaintiffs
(“DPPs”) 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
“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.
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
ALLEGATIONS IN THE COMPLAINT
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.
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”) 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)).
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”). 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.
Generic Manufacturers Challenge the Intuniv Patents
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") 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.
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. 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
September 4, 2012, Shire settled with TWi/Anchen. The
settlement agreement provided that:
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