The FTC has submitted an amicus brief in Mylan Pharmaceuticals Inc. v. Celgene Corp., 2:14-CV-2094 (D.N.J.), offering support in favor of Mylan's claims. Mylan sued Celgene in April 2014, bringing claims related to its attempts to develop generic versions of Revlimid and Thalomid, brand drugs used to treat certain forms of cancer. Due to safety concerns, the FDA required Celgene to adopt Risk Evaluation and Mitigation Strategies ("REMS") that limit their distribution. As a result, Mylan claims that it cannot purchase any of the drugs through distributors, and that Celgene has refused to sell any amounts of the drugs directly. Without samples, Mylan cannot perform the bioequivalence testing necessary for Abbreviated New Drug Applications. Mylan alleges that Celgene's use of REMS to deny it access to the drugs is pretextual, and are designed to prevent any generic entrants. Mylan's complaint contains claims for violation of Section 2 of the Sherman Act by Celgene under monopolization and refusal to deal theories, Section 1 of the Sherman Act and Sections 15 and 26 of the Clayton Act for conspiracy between Celgene and its distributors in restraint of trade, and violations of the New Jersey Antitrust Act. Celgene has moved to dismiss.
The FTC, arguing that it has an interest in disputes which concern restrictions on the entry of generic drugs into the market, argues that the antitrust laws are applicable to the dispute. While recognizing that one of the purposes of the Hatch-Waxman Act is to maintain incentives for innovation, it also argues another purpose is to promote generic competition and that "[d]istribution restrictions associated with a REMS can, in fact, raise serious competitive concerns."
With respect to the Section 2 claims, the FTC argues that Mylan's theory fits within the Supreme Court's decision in Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985) and Otter Tail Power Co. v. United States, 410 U.S. 366 (1973), arguing that Celgene's refusal to sell samples of its product to Mylan deprives it of an essential service or product, like Otter Tail's refusal to allow other towns to use its power transmission network or Aspen Skiing Co's refusal to participate in a joint lift ticket (or sell its own tickets to Highlands at retail price). The FTC argues that under this precedent, a refusal to deal can be inappropriate where it impairs the opportunities of rivals or does not further competition on the merits.
Although the FTC acknowledges that the Supreme Court's more recent decision in Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004) reaffirmed that a monopolist is ordinarily free to refuse to deal with a rival, it argues that Mylan's claims are distinguishable from those in Trinko. First, contrary to the way some lower courts have interpreted Trinko, the FTC argues that no prior course of dealing is required to state a refusal to deal claim. Although the FTC acknowledges that a prior course of dealing may be useful for demonstrating that the alleged monopolist is foregoing an otherwise profitable transaction, it is not required, and that the key to a refusal to deal claim is a willingness by the alleged monopolist to sacrifice short term profits in order to maintain a favorable market position in the long term. (The FTC notes that Mylan has alleged that it is willing to pay full retail price for the drugs samples it wants, which it argues supports an inference that the sales would be profitable to Celgene.) Second, the FTC argues that unlike Trinko (where Verizon refused to provide access to a new produce it was required to develop), here Celgene is already in the business of selling the drugs, and that in addition to distributors was also willing to sell the drugs to non-competitor research organizations. The FTC argues that refusal to engage in similar conduct with a competitor can support a viable antitrust theory. Third, the FTC argues that requiring a sale under these circumstances will not undermine brand manufacturers incentives to innovate, as it will merely mirror the general Hatch-Waxman framework that exists for drugs that are not subject to REMS, and that brand manufacturers will remain free to exercise their patent rights. The FTC also argues that FDA requirements like REMS should not be used to undermine the Hatch-Waxman Act by limiting legitimate competition from generics.
With regard to the Section 1 arguments, the FTC briefly argues that a manufacturer's distribution agreements are subject to antitrust scrutiny. The FTC argues that under American Needle, Inc. v. Nat'l Football League, 130 S.Ct. 2201 (2010), Celgene and its distributors are separate economic entities, and thus their conduct should be analyzed under the rule of reason. While a single economic entity cannot be liable under Section 1 (and the distributors themselves have no independent interest in preventing sales to Mylan), the FTC argues the distributors need not be pursuing the same ends as Celgene in order for there to be an agreement in restraint of trade, and that Celgene's argument that its distributors function as its agents should not apply under these circumstances, where those distributors also distribute numerous other drugs.
Lastly, the FTC argues that the fact that Celgene has patents on the two drugs does not end the antitrust inquiry, as conduct that prevents competitors from appropriately challenging the patents (or bringing a product to market after a patent has expired) can still raise antitrust concerns.
The court has not yet issued a decision on the motion to dismiss, and it is not clear which (if any) of the arguments the FTC had made will be accepted. Nonetheless, the FTC's brief appears to be in line with its apparent policy of monitoring any restrictions that it believes may be restricting appropriate generic competition.
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