Joe Whitcomb
The Zetia (Ezetimibe) Antitrust Litigation was a significant case that unfolded in the United States District Court for the Eastern District of Virginia, Norfolk Division. The litigation involved allegations of antitrust violations concerning the cholesterol-lowering drug Zetia, also known as Ezetimibe.
Background of the Case
The litigation centered around allegations that Merck & Co., Inc. (Merck) and Glenmark Pharmaceuticals Ltd. (Glenmark) engaged in anti-competitive practices by delaying the entry of a generic version of Zetia into the market. This delay allegedly involved a "no-AG" (no authorized generic) agreement, where Merck agreed not to launch its own generic version of Zetia in exchange for Glenmark delaying its entry into the market. The plaintiffs in this case included direct purchasers, end-payors, and retailers who argued that this agreement violated antitrust laws by keeping drug prices artificially high.
On November 27, 2018, the case was referred to United States Magistrate Judge Douglas E. Miller to conduct hearings and provide recommendations for the court's consideration. On February 6, 2019, the Magistrate Judge issued a Report and Recommendation (R&R), advising on various motions to dismiss filed by the defendants.
Objections to the Magistrate Judge’s Report
Following the R&R, multiple objections were filed on February 20, 2019, by different parties involved in the case. The Retailer Plaintiffs objected to the recommendation that their per se claim under Section 1 of the Sherman Act be dismissed. They argued that the Magistrate Judge’s recommendation rested on two untenable legal propositions: that Merck’s existing patent rights precluded the application of the per se rule and that applying a per se rule would preclude the court from examining the defendants' justifications for the settlement.
The Glenmark Defendants also objected to the Magistrate Judge's findings, particularly the conclusion that the plaintiffs had plausibly alleged the existence of a large and unjustified reverse payment. They argued that the Settlement Agreement did not constitute an anti-competitive agreement by Merck not to compete with Glenmark.
Court’s Analysis and Rulings
The court, after reviewing the objections, conducted a de novo review of the portions of the R&R that were specifically objected to by the defendants. The court agreed with the Magistrate Judge’s findings that the no-AG agreement could plausibly be considered an anti-competitive practice, particularly in light of the rule of reason, which requires an analysis of the potential anti-competitive effects of such agreements.
Regarding the Retailer Plaintiffs' objections, the court found that their arguments did not sufficiently challenge the Magistrate Judge’s conclusions. The court emphasized that applying a per se rule to the alleged no-AG agreement would be inappropriate given the complexities involved in such reverse payment settlements. The court reiterated that the Supreme Court’s decision in FTC v. Actavis, Inc. requires reverse payment settlements to be evaluated under the rule of reason rather than a per se rule.
Ultimately, the court overruled the Retailer Plaintiffs' objections and dismissed their per se claim under Section 1 of the Sherman Act with prejudice. The court also denied the Glenmark Defendants' motion to dismiss the allegations of a large and unjustified reverse payment, allowing those claims to proceed.
Parting Thoughts
The Zetia (Ezetimibe) Antitrust Litigation serves as a critical case in understanding the intersection of Patent Law and antitrust regulations. The court's decision to apply the rule of reason in evaluating the alleged no-AG agreement underscores the importance of considering the broader market impacts of such settlements. This case highlights the legal complexities surrounding pharmaceutical patents and the ongoing efforts to balance innovation incentives with consumer protection.