Pfizer scored a big win on Thursday as a federal judge knocked out a large part of the multidistrict litigation over claims that it schemed to keep generic Lipitor off the market.
But some claims were left standing — namely that Pfizer violated antitrust law by paying off generic competitor Ranbaxy to delay entry under the guise of settling a patent suit, forcing the plaintiffs to pay as much as five times more for the brand-name drug.
U.S. District Judge Peter Sheridan's holding, in Burlington Drug Co. v. Pfizer, came on a motion to dismiss claims by direct purchasers — including Walgreens, Safeway, Kroger and Value Drug Co. — consolidated as In re Lipitor Antitrust Litigation.
The holding might impact other cases in the MDL that were filed on behalf of indirect purchasers. Sheridan has notified them that it "most likely" applies to their claims, too, and requested that the parties "determine which allegations of the indirect purchaser group's complaint are dismissed and which apply to the reverse-payment allegations."
He has given them until Sept. 16 to submit a proposed form of order.
Lipitor, first patented by Warner-Lambert in 1987 and approved by the Food and Drug Administration in 1996 to fight cholesterol, was the best-selling drug in history, with sales of nearly $13 billion in 2006.
With the original patent due to expire on March 24, 2010, Pfizer, which acquired Warner-Lambert in 2000, allegedly obtained a follow-on patent by fraud on the Patent Office to extend its exclusive right to market atorvastatin calcium, Lipitor's active ingredient.
The follow-on patent, one that protects new developments, bought it another 15 months. It was struck down by the Federal Circuit on a technicality in a suit by Ranbaxy, but Pfizer later convinced the Patent Office to reissue it.
The plaintiffs further allege that in August 2005, when the FDA was starting to evaluate Ranbaxy's application to make atorvastatin calcium, Pfizer filed a "sham" petition with the agency, raising questions about whether it would work as well as Lipitor.
The FDA eventually rejected the petition and granted approval, meaning that Ranbaxy would get six months of generic exclusivity on the expiration of the original patent.
Pfizer sued Ranbaxy in March 2008, claiming its manufacture of atorvastatin calcium would infringe other patents covering the Lipitor manufacturing process.
Less than three months into the case, the parties settled. Ranbaxy agreed not to compete with Pfizer, to keep its generic product off the market until Nov. 30, 2011, not to waive its six-month exclusivity and to drop its challenge to reissuing the follow-on patent.
In return, the plaintiffs say, Ranbaxy got forgiveness of outstanding patent judgments for other drugs, the right to market generic Lipitor in at least 11 international markets and resolution of litigation over Ranbaxy's generic versions of Pfizer blood-pressure medications, Caduet and Accupril.
The settlement delayed all generic makers and kept them paying as much as $5 per pill when the generic form would have cost no more than $1, the plaintiffs claim.
Sheridan found that the plaintiffs could not prove Pfizer lied to the Patent Office because another federal judge rejected that position and that Pfizer's petition was not a sham because the FDA did not consider it baseless and took six years to resolve it.
On the issue of alleged reverse payments to Ranbaxy, however, he held that FTC v. Actavis, decided by the U.S. Supreme Court on June 17, had clarified the law on antitrust claims against brand-name drug makers accused of paying off generic ones and that the plaintiffs could amend their complaint in light of Actavis and information obtained in discovery.
As a result of the plaintiffs' inability to prove the follow-on patent invalid, Sheridan moved the starting time for measuring any damages from March 24, 2010, to June 28, 2011, when that patent expired.
Pfizer said in a statement that the lawsuits have no merit and should be dismissed and that "procurement and enforcement of its Lipitor patents was at all times proper and lawful."
Not returning calls were Deborah Corbishley of Kenny Nachwalter in Miami; James Cecchi of Carella, Byrne, Cecchi, Olstein, Brody & Agnello in Roseland; and Peter Pearlman of Cohn, Lifland, Pearlman, Herrmann & Knopf in Saddle Brook, for the direct purchasers; Brendan Woodard of White & Case in New York, for Pfizer; and Andrew Frackman of O'Melveny & Myers in New York, for Ranbaxy.