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Twin Cities Bakery Workers Health and Welfare Fund v. Biovail Corp.

March 31, 2005

TWIN CITIES BAKERY WORKERS HEALTH AND WELFARE FUND, PLAINTIFF,
v.
BIOVAIL CORPORATION, DEFENDANT.
MEIJER, INC. AND MEIJER DISTRIBUTION, INC., PLAINTIFFS,
v.
BIOVAIL CORPORATION, DEFENDANT.



The opinion of the court was delivered by: James Robertson United States District Judge

MEMORANDUM

In these consolidated actions, purchasers of Tiazac, a brand-name drug, have sued its manufacturer, Biovail Corporation, for damages they claim to have suffered because of Biovail's unlawful interference with the attempts of another drug manufacturer (not a party to this action) to bring a cheaper, generic version to market. Biovail has filed a single-issue motion for summary judgment, asserting that none of the plaintiffs can prove that its unlawful acts caused them to be damaged. The motion is well taken and will be granted.

Background

Plaintiffs Twin Cities Bakery Workers Health and Welfare Fund and Meijer, Inc. are, and for all relevant periods have been, purchasers of Tiazac, an extended-release form of diltiazem hydrochloride prescribed for chronic hypertension and angina which has been on the market since September 1995.*fn1 On June 22, 1998, Andrx Pharmaceuticals, Inc. filed an abbreviated new drug application (ANDA) seeking FDA approval to manufacture and distribute Tatzia, which it claimed to be bioequivalent to Tiazac. The Andrx ANDA was not approved until April 10, 2003, nearly five years later, but these plaintiffs allege that, if Biovail had not unlawfully interfered with the approval of Andrx's ANDA, it would have been approved and Tatzia would have been on the market by around February 14, 2001. The compensation plaintiffs seek is for the difference between what they paid for Tiazac and the lower price they would have paid for the generic Tatzia during the period of Biovail's unlawful interference.

The ANDA process was created in 1984 by the Hatch- Waxman Amendments to the Food, Drug and Cosmetics Act, Pub. L. No. 98-417, both to expedite the approval of generic drugs and to protect the rights of pioneer drug manufacturers. Under the Hatch-Waxman Amendments, a manufacturer seeking approval of a generic drug using the ANDA process is not required to prove the safety and efficacy of its drug, but it must demonstrate bioequivalency with the pioneer drug.

The process designed by Hatch-Waxman for protecting the patent rights of pioneer drug manufacturers is quite complex. Patents claimed for pioneer drugs by their manufacturers are listed in an FDA publication titled "Approved Drug Products With Therapeutic Equivalence," commonly referred to as the Orange Book. When a generic manufacturer submits an ANDA, it must deal with the patents listed in the Orange Book. One of the generic manufacturer's options is the so-called Paragraph IV certification, 21 U.S.C. § 355(b)(2)(A)(iv), which is an assertion that the patent claimed by the brand name drug manufacturer is invalid or that the generic version will not infringe it. The pioneer manufacturer has 45 days after the filing of a Paragraph IV certification to sue the ANDA applicant for patent infringement. 21 U.S.C. § 355(j)(5)(iii). If the pioneer manufacturer sues, the FDA must stay its approval of the ANDA for 30 months, or until the issuance of a final-court decision, whichever is sooner. 21 U.S.C. § 355(j)(5)(iii).

On July 3, 1996, some two years before Andrx submitted its ANDA for Tatzia, Biovail certified to the FDA that Tiazac claimed U.S. Patent No. 5,529,791 (the '791 patent). The '791 patent was duly listed in the Orange Book. When Andrx submitted its ANDA for Tatzia on June 22, 1998, it made a Paragraph IV certification that Tatzia did not infringe the '791 patent. On October 7, 1998, Biovail sued Andrx for infringement of the '791 patent, thus triggering the 30-month statutory stay of Andrx's ANDA. A federal district court later found no infringement of the '791 patent, Biovail Corp. Int'l v. Andrx Pharm. Inc., 158 F. Supp. 2d 1318 (S.D. Fla. 2000). That decision was affirmed on February 13, 2001, Andrx Pharm. Inc. v. Biovail Corp. Int'l, 239 F.3d 1297 (Fed. Cir. 2001).

The Federal Circuit's decision would have ended the statutory stay of Andrx's ANDA after about 28 months. Shortly before the Federal Circuit ruled, however, Biovail acquired U.S. Patent No. 6,162,463 (the '463 patent) and certified to the FDA that Tiazac claimed that patent as well. When the '463 patent was listed in the Orange Book, Andrx complained to the FDA that Biovail had listed it unlawfully. Then, on February 16, 2001, Andrx filed a Paragraph IV certification. On April 5, 2001, Biovail sued Andrx again, this time for infringing the '463 patent, thereby triggering a second 30-month stay of Andrx's ANDA.

Throughout this process, Andrx continued to move forward as best it could with its ANDA, particularly during the brief period from February 13, 2001 until April 5, 2001 during which no stay clouded its application. Indeed, the FDA had tentatively approved Andrx's ANDA on September 29, 2000, and it did so again on May 14, 2001. Beginning in May 2001, however, Andrx's generic product experienced stability testing and dissolution failures. Andrx had produced 15 batches for commercial distribution in January 2001, but in May it learned that two of those batches had not met specifications. Ultimately, six of the 15 production lots failed dissolution tests. Andrx produced new batches in September 2001, and, in December 2001, informed the FDA that it was rejecting all 15 of the January 2001 batches. On March 12, 2002, the FDA Division of Bioequivalence informed Andrx that it must perform new bioequivalency studies. On March 22, 2002, having withdrawn the data it had submitted in the fall of 2001, and having filed both a major and a minor amendment to its ANDA, Andrx submitted the required new studies. Further data, amendments, and requests for data were exchanged between Andrx and the FDA over the following months.

On April 23, 2002, the Federal Trade Commission filed a complaint against Biovail for antitrust violations in connection with its listing of the '463 patent. Biovail subsequently entered into a consent decree pursuant to which it withdrew the infringement suit it had filed against Andrx. The second stay of Andrx's ANDA thus expired on August 20, 2002, but the FDA did not approve Andrx's ANDA for Tatzia until April 10, 2003.

Analysis

Causation as an element of antitrust damages Plaintiffs seek treble damages under § 4 of the Clayton Act, 15 U.S.C. § 15. A § 4 plaintiff "must show both an injury in-fact to his 'business or property' and a causal connection between that injury and the defendant's allegedly illegal acts." Hecht v. Pro-Football, Inc., 570 F.2d 982, 987 (D.C. Cir. 1977). The legislative history of the Clayton Act shows Congress's concern to provide "an effective remedy for consumers who were forced to pay excessive prices," Associated Gen. Contractors of Cal. v. Cal. State Council of Carpenters, 459 U.S. 519, 530 (1983), but an antitrust plaintiff is fully subject to common law requirements of proximate cause and certainty of damages. Associated Gen. Contractors, 459 U.S. at 532-33. As stated by one court:

Causation in fact is, of course, a necessary element of any claim for relief under Section 4 of the Clayton Act, 15 U.S.C. § 15.... Discussions of the causal nexus between economic injury and an antitrust violation may also implicate issues such as standing or proximate cause.... However, lack of causation in fact is fatal to the merits of any antitrust claim. Consequently, an essential element of the plaintiffs' claim is that the injuries alleged would not have occurred but for [the defendant's] antitrust violation.

Argus Inc. v. Eastman Kodak Co., 801 F.2d 38, 41 (2d Cir. 1986) (emphasis in original). In order to recover damages in this case, the plaintiffs must show that, but for Biovail's unlawful conduct, Andrx would have entered the market with Tatzia before August 20, 2002, and that they -- the ...


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