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Louisiana Wholesale Drug Co, Inc. v. Biovail Corp.

June 22, 2006

LOUISIANA WHOLESALE DRUG COMPANY, INC., ET AL., PLAINTIFFS,
v.
BIOVAIL CORPORATION, ET AL., DEFENDANTS.



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

MEMORANDUM

Three related antitrust actions have been filed against Biovail Corporation in this court. All three are by purchasers of Biovail's brand-name drug Tiazac. All three demand damages for antitrust injuries that the plaintiffs attribute to Biovail's unlawful (but successful) attempts to keep cheaper generic versions of Tiazac off the market. The first two of these cases, Twin Cities Bakery Workers Health & Welfare Fund v. Biovail Corp., No. 01-2197, and Meijer, Inc. v. Biovail Corp., No. 03-2075, were consolidated. On March 31, 2005, I granted summary judgment in the consolidated cases in favor of Biovail, No. 01-2197 [66, 67], 2005 U.S. Dist. LEXIS 5570, upon a finding that the plaintiffs could not prove that Biovail's unlawful acts caused them injury. The plaintiffs' appeal from that judgment is pending before the Court of Appeals, which has stayed its hand pending my decision on Biovail's motion for summary judgment in this, the third of the three cases.

The background facts of the instant case -- Biovail's marketing of Tiazac after the approval of its NDA in 1995, its acquisition of patents and its invocation of the Hatch-Waxman Act to delay approval of the generic drug developed by Andrx Pharmaceuticals, Inc., the difficulties Andrx encountered in bringing its generic drug to market -- are identical to those of the earlier consolidated cases. Those facts are set forth in the Twin Cities decision and will not be repeated here.*fn1 In one important respect, however, this case is distinguishable from the other two: this plaintiff has identified a new and quite different factual basis for the antitrust injury it claims. In Twin Cities and Meijer, the alleged antitrust injury was loss of the opportunity to purchase the cheaper Andrx generic product that would have been on the market except for Biovail's unlawful acts. Louisiana Wholesale Drug Company makes the same allegation, but it also alleges that, whether or not Andrx would have or could have brought its generic product to market, Biovail itself was preparing to market a generic version of its own drug (a "branded generic") and, had it not succeeded in blocking the Andrx ANDA for a second time in 2001, would have done so.

The present summary judgment motions revisit the questions that were decided in Twin Cities. They also present two new questions: (I) whether Louisiana Wholesale's allegation of loss from Biovail's refusal to market a generic version of its own brand-name drug states a claim under the Clayton Act, and (ii) if so, whether the claim as to Biovail's own generic product (which first appeared in an amended complaint filed two months after the entry of summary judgment in Twin Cities) is time barred.

Factual allegations by Louisiana Wholesale that were not pleaded in Twin Cities

In its amended complaint, Louisiana Wholesale alleges that Biovail and its distributor and co-conspirator Forest Laboratories anticipated that Andrx would prevail in the Federal Circuit patent appeal that was then the only barrier to FDA approval of Andrx's ANDA (see Twin Cities, [66] at 3-4) and planned to beat Andrx to market with a generic form of Tiazac that Biovail itself would produce.*fn2

By March 2000, Biovail and Forest had determined the inventory level they would need in order to supply 100 percent of the anticipated generic demand for four months. By August 2000, Biovail and Forest had agreed that, with some pricing discipline, both would benefit from bringing a Biovail generic to market ahead of Andrx. In October 2000, Biovail's chairman Eugene Melnyk confirmed to investment analysts that Biovail was planning to "pre-emptively" launch its own generic, leveraging Tiazac sales into generic purchase agreements with large Tiazac purchasers. The agreements would provide the purchasers with financial incentives that would make it too costly to switch to Andrx's generic when it entered the market. By the end of October 2000, only a few minor administrative tasks remained before the preemptive generic launch could occur. By mid-November, bottles and caps had been completed, and many lots of the defendants' generic Tiazac capsule had been produced. The stock was ready in mid-December 2000, waiting for the anticipated Federal Circuit decision in the '791 patent case that would trigger Biovail's planned launch of its own generic. [22] at 17-22; [36] at 11-13.

Biovail and Forest, however, never launched the branded generic. They abandoned their plan when Biovail obtained and listed the '463 patent, starting the Hatch-Waxman process all over again and making it unnecessary for Biovail to compete against itself.

Analysis

1. Plaintiff has Neither Added to the Proof of Causation Found Insufficient in Twin Cities nor Demonstrated that the Judgment in Twin Cities was Erroneous

In its opposition to the present motions for summary judgment, Louisiana Wholesale submits, just as the Twin Cities plaintiffs did, that, but for Biovail's improper Orange Book listing of the '463 patent, Andrx would have obtained FDA approval for its generic product on or about February 13, 2001, and that it (Louisiana Wholesale) would have been able to buy Tatzia shortly thereafter. Plaintiff does not augment the factual showing of causation that was made in the Twin Cities cases. Instead, to avoid the application of stare decisis,*fn3 plaintiff essentially seeks reconsideration of Twin Cities, pointing to a factual error in that decision and to what it asserts are the findings of other courts.

The factual error was a statement in Twin Cities that Andrx moved forward as best it could with Tatzia during the '791 and '463 litigation, especially during the period of February 13, 2001 to April 5, 2001, "during which no stay clouded its application." In fact, there was a stay in place with respect to Andrx's ANDA, between February 13, 2001 and April 5, 2001. The FDA could not lawfully have approved Andrx's ANDA during most of that period because of the 45-day stay that took effect after Andrx's second Paragraph IV certification. In the submission of Louisiana Wholesale, this factual error significantly undercuts the validity of the Twin Cities outcome.

The error is acknowledged, but plaintiff has greatly overstated its significance. Even while the statutory stay was in effect, the FDA could have granted tentative approval of Andrx's amended ANDA, as it did with Andrx's original ANDA in September 2000, but it did not grant tentative approval until May 14, 2001 -- only days before Andrx became aware of the massive dissolution failures in its January 2001 lot. The Twin Cities decision turned on the "number of uncertain links in a causal claim." Plaintiff has pointed out that one of the links is stronger than I had thought, but the overall proof of causation remains too weak as a matter of law to support plaintiff's claim.

The asserted findings of other courts were statements made by the United States District Court for the Southern District of Florida and by the United States Court of Appeals for the Federal Circuit in litigation between Andrx and Biovail over the '463 patent and the Hatch-Waxman Act stay. Plaintiff asserts that both courts made findings that, but for the '463 litigation, the FDA would have approved Andrx's ANDA shortly after the termination of the '791 litigation, and that those findings are owed at least deference, if not preclusive effect. [55] at 29. After careful review of the materials plaintiff has submitted, [55] at 30-31, I have concluded that the "findings" -- if they were findings at all -- have no weight in this antitrust litigation. In neither the Florida court nor the Federal Circuit was the question of whether the FDA would have approved the Andrx ANDA in February 2001 at issue. The question before the Florida court was whether the '463 patent should be delisted or the Hatch-Waxman stay shortened. The court's focus was on patent-related legal barriers to the approval of Andrx's application, not on the progress of the FDA's regulatory and scientific review of that application. When the Florida court said that FDA would have approved Andrx's ANDA on or about February 13, 2001, Andrx Pharms., Inc. v. Biovail Corp., 175 F. Supp. ...


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