Drugmaker Can’t Keep Suit in Federal Court

PHILADELPHIA (CN) - Insurance companies won the remand of an antitrust class action against AstraZeneca to the state court after showing no need for patent litigation.

Aetna and Blue Cross and Blue Shield are among several insurance companies accusing the British pharmaceutical company of colluding with generic drugmakers Teva, Ranbaxy and Dr. Reddy's Laboratories to delay the introduction of the generic version of AstraZeneca's heartburn drug Nexium once the patent expired.

The drugmakers brought the case from the Philadelphia Court of Common Pleas to U.S. District Court for the Eastern District of Pennsylvania based on their claim that the case involves a federal question over whether the actual patent was valid at the time of any agreement.

Anticompetitive practices could not have occurred, if so, they claimed.

U.S. District Judge Gerald McHugh found Wednesday, however, that the issue of the patent's validity was relevant but not dispositive.

The plaintiffs need not prove that AstraZeneca's patent for Nexium was invalid or soon to expire at the time of collusion, the court found. "Plaintiffs can conceivably prove the existence of anticompetitive conduct in violation of state antitrust laws without litigating the patent issue, but by instead relying on the nature of settlements themselves," McHugh wrote.

The plaintiffs claim that AstraZeneca's reverse-payment settlements have the generic companies outsized payments for other services not related to Nexium and that canceled unrelated liabilities.

The Supreme Court ruled in the 2013 case FTC v. Actavis that such reverse payments are possibly illegal based on the extent they violate competitive practices in each instance.

That ruling involved the Federal Trade Commission's claims against three drug companies for actions similar to those of AstraZeneca and the generic drumakers are accused of taking.

FTC v. Actavis held that such reverse payments could be unjustifiable in some cases, opening the potential for litigation against a common practice in the pharmaceutical industry, Judge McHugh wrote.

He quoted Justice Stephen Breyer's majority opinion that says large payments "suggest that the payment's object is to maintain supracompetetive prices to be shared among the patentee and the challenger rather than face what might have been a competitive market."

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