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Mayor and City Council of Baltimore v. Actelion Pharmaceuticals Ltd.

United States District Court, D. Maryland

September 30, 2019

MAYOR AND CITY COUNCIL OF BALTIMORE, et al., Plaintiffs,
v.
ACTELION PHARMACEUTICALS, LTD., et al., Defendants.

          MEMORANDUM OPINION

          George L. Russell, III United States District Judge

         THIS MATTER is before the Court on Defendants Actelion Pharmaceuticals Ltd., Actelion Pharmaceuticals US, Inc., and Janssen Research & Development LLC's[1](collectively, “Actelion”) Motion to Dismiss Pursuant to 12(b)(6) for Failure to State a Claim (ECF No. 39). The Motion is ripe for disposition, and no hearing is necessary. See Local Rule 105.6 (D.Md. 2018). For the reasons outlined below, the Court will grant the Motion.

         I. BACKGROUND [2]

         A. Factual Background

         Actelion is a pharmaceutical company that produces and sells Tracleer, the brand name for the drug bosentan, which is used to treat pulmonary artery hypertension (“PAH”). (Pls.' Consol. Class Action Compl. & Demand for Jury Trial [“Am. Compl.”] ¶ 1, ECF No. 34). PAH is a disorder in which elevated blood pressure causes narrowing of the arteries between the heart and lungs, restricting blood flow and causing extra strain on the heart. (Id.). PAH is relatively rare, affecting between 10, 000 and 20, 000 people in the United States, but it is chronic and potentially fatal. (Id.).

         Researchers at Hoffman-LaRoche Inc. (“Roche”) discovered and developed bosentan in the 1990s. (Id. ¶ 92). In 1992, the co-inventors of bosentan submitted a patent application to the U.S. Patent and Trademark Office (“PTO”). (Id. ¶ 93). In 1994, the PTO issued the patent for bosentan (the “Patent”) and assigned it to Roche. (Id. ¶ 94). In 1997, Roche assigned the Patent to Actelion-which was founded by a small group of former Roche scientists and managers-giving Actelion the exclusive right to develop, make, and sell products covered by the Patent. (Id. ¶ 97). Actelion has been the sole licensee of the Patent since 1997. (Id.).

         In 2000, Actelion sought approval from the U.S. Food and Drug Administration (“FDA”) to sell tablets of bosentan under the tradename Tracleer for the treatment of PAH. (Id. ¶¶ 98-99). At the time, there were no approved oral treatments for PAH. (Id. ¶ 101). The FDA approved Tracleer for treatment of PAH on November 20, 2001. (Id. ¶ 107). In approving Tracleer, the FDA granted Actelion two regulatory exclusivities: first, because Tracleer was a new chemical entity, Actelion would have regulatory exclusivity until November 20, 2006; and second, the FDA deemed Tracleer an “orphan drug, ” giving Actelion an additional two years of market exclusivity. (Id. ¶ 108). These regulatory exclusivities guaranteed that Actelion would not face competition to Tracleer from generics until November 20, 2008 at the earliest. (Id. ¶¶ 108, 117). Further, Actelion would have patent exclusivity over Tracleer until the Patent expired on November 20, 2005. (Id. ¶¶ 96, 109).

         After receiving FDA approval, Actelion launched the Tracleer Access Program (“TAP”), which limited sales of Tracleer to purchasers who agreed to certain limitations on the use of the drug. (Id. ¶¶ 111, 124, 126). In 2009, the FDA approved a Risk Evaluation and Mitigation Strategy (“REMS”) for Tracleer. (Id. ¶ 118). The REMS provided that “Tracleer is available only through a special restricted distribution program called [TAP]” and “Tracleer may be dispensed only to patients who are enrolled in and meet all conditions of [TAP].” (Id. ¶ 120). The REMS also explained that only prescribers and pharmacies registered with TAP may prescribe and distribute Tracleer. (Id. ¶ 121).

         Beginning in 2009, various generic drug manufacturers-Zydus Pharmaceuticals (USA) Inc. (“Zydus”) and its partner Cadila Healthcare Ltd. (“Cadila”), Apotex, Inc. (“Apotex”), Actavis, Inc. (“Actavis”), and Roxane Laboratories, Inc. (“Roxane”) (collectively, the “Generics”)-sought to purchase samples of Tracleer from Actelion's certified distributors and wholesalers in order to conduct bioequivalence testing, which is a prerequisite to FDA approval of the generic version of the brand-name drug. (See id. ¶¶ 42-52, 130, 138-58, 161-72). In their requests, the Generics indicated they would be willing to pay market price for Tracleer and comply with any limitations in Tracleer's TAP and REMS. (Id. ¶¶ 140, 143-44, 146, 150, 153, 162, 169). Nonetheless, Actelion and its certified distributors and wholesalers repeatedly denied the Generics' requests to purchase Tracleer. (Id. ¶¶ 138-39, 141, 152, 154-55, 157, 165-66). At the time, Actelion advanced two primary reasons for its refusal to sell Tracleer to the Generics: (1) Actelion sought to protect its intellectual property rights; and (2) providing Tracleer to Generics would violate the REMS' distribution restrictions. (Id. ¶ 170; see also id. ¶¶ 152, 155, 157, 166). Without access to samples of Tracleer, the Generics were unable to conduct bioequivalence studies, and therefore could not seek approval of generic bosentan from the FDA. (See id. ¶ 167- 68).

         In September 2012, Actelion sued Apotex and Roxane in the U.S. District Court for the District of New Jersey, seeking a declaration that Actelion had no duty to supply Tracleer samples to prospective generic competitors and that doing so would be in violation of the REMS for Tracleer. (Id. ¶¶ 173-76). Apotex and Roxane filed counterclaims against Actelion in November 2012, alleging that Actelion's refusal to distribute samples of Tracleer for bioequivalence testing constituted an abuse of monopoly power in violation of federal and state antitrust laws and FDA regulations. (Id. ¶¶ 177-86). The same month, Actavis moved to intervene, complaining that Actelion refused to sell Tracleer in order to block or delay generic competition. (Id. ¶¶ 187-88).

         On January 16, 2013, Actelion moved to dismiss Apotex, Roxane, and Actavis's counterclaims. (Id. ¶ 189). In May 2013, while Actelion's motion to dismiss was still pending, Apotex again requested Tracleer samples from Actelion, this time attaching a recent letter from the FDA approving the safety protocols used in Apotex's bioequivalence testing. (Id. ¶ 199). As it had done before, Actelion refused Apotex's request. (Id.). Zydus and Cadila intervened in the litigation on July 9, 2013 on the grounds that Actelion had also denied them access to Tracleer samples. (Id. ¶ 200).

         The court denied Actelion's motion to dismiss on October 17, 2013. (Id. ¶ 206). On November 1, 2013, Actelion settled with Apotex on undisclosed terms, and Apotex dismissed its claims and counterclaims with prejudice. (Id. ¶ 212). Actelion settled with the remaining Generics on undisclosed terms in February 2014. (Id. ¶ 213).

         The Patent expired on November 20, 2015, ending Actelion's legal exclusivity over bosentan. (Id. ¶¶ 1, 109). To date, there is no generic version of bosentan available on the market. (Id. ¶ 1).

         B. Procedural Background

         Plaintiff Mayor & City Council of Baltimore (the “City”) filed its initial Complaint against Actelion on November 19, 2018. (ECF No. 1). Upon the City and Government Employees Health Association's (“GEHA”) unopposed Motion for Consolidation and Appointment of Interim Class Counsel (ECF No. 32), this Court consolidated Government Employee Health Association v. Actelion Pharmaceuticals, Ltd., et al., No. 1:18-cv-3571-GLR (D.Md. filed Nov. 20, 2018) with the present case on January 18, 2019. (ECF No. 33). On January 25, 2019, the City and GEHA (collectively, the “Named Plaintiffs”) filed a Consolidated Class Action Complaint and Demand for Jury Trial (“Amended Complaint”) on behalf of the Named Plaintiffs and similarly situated individuals in thirty states and U.S. territories.[3] (ECF No. 34). In their forty-six-count Amended Complaint, Plaintiffs allege: unlawful refusals to deal and attempts to monopolize in violation of § 2 of the Sherman Act, 15 U.S.C. § 2 (2018) (Count 1); violations of various state antitrust laws[4] (Counts 2-26); and violations of various state consumer protections laws[5] (Counts 27-46). (Am. Compl. ¶¶ 296-659). Plaintiffs seek declaratory, injunctive, and equitable relief. (Id at 74-124).

         On February 25, 2019, Actelion moved to dismiss Plaintiffs' Amended Complaint for failure to state a claim. (ECF No. 39). Plaintiffs filed an Opposition on March 27, 2019. (ECF No. 44). On April 11, 2019, Actelion filed its Reply. (ECF No. 45).

         II. DISCUSSION

         A. Stand ...


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