Generic drug makers face antitrust complaint over acne drug Solodyn

The New York-based Rochester Drug Co-Operative has filed a federal antitrust action on

behalf of itself and others similarly situated over allegations that Medicis Pharmaceutical Corp. and other generic drug manufacturers conspired to exclude competition from the market for the acne medication Solodyn.

The suit, filed at the federal court in Philadelphia on July 23, alleges that Medicis orchestrated a multi-faceted scheme along with the other defendants to improperly restrain trade and maintain, extend and abuse Medicis’s monopoly over minocycline hydrochloride extended release tablets.

The medication, which goes by the brand name Solodyn, is designed to treat the skin condition acne.

According to the suit, the drug won FDA approval in 2006 and quickly became Medicis’s largest selling “flagship” product.

The defendant, however, knew that Solodyn, which generated about half of Medicis’s sales by the year 2007, was “especially vulnerable to a rapid, near-complete loss of sales upon the entry into the market of less expensive, generic versions of Solodyn,” the lawsuit states.

“Recognizing the dire threat that generic competition posed to its Solodyn sales in the near-term, Medicis formulated a multi-step plan … to protect Solodyn from generic competition using any means necessary, whether lawful or unlawful,” the complaint reads. “Medicis’s Chief Executive Officer, Jonah Shacknai, even boasted in calls with investors about Medicis’s multi-part strategy to prevent generic competition through every and any conceivable means – a plan that Medicis in fact successfully implemented to impede and delay generic competition to Solodyn.”

According to the lawsuit, Impax Laboratories Inc., which is named as a co-defendant in the suit, notified Medicis in late 2007 that it was seeking FDA approval to market a generic version of Solodyn.

Impax went on to inform Medicis that the plaintiff’s patent was invalid because the company withheld relevant information from the patent examiner.

Impax went on to file suit seeking a declaration that Medicis’s patent was invalid and not infringed by Impax, the current suit states.

Meanwhile, while the declaratory judgment action was pending, Medicis filed what the current suit calls an “objectively and subjectively baseless sham petition” with the FDA solely to delay approval of Impax’s generic version of Solodyn.

In late 2008, the complaint asserts, prior to the FDA’s ruling on Medicis’s petition, and before the FDA approved the generic Solodyn for marketing, Medicis and Impax entered into an unlawful Exclusion Payment Agreement under which Medicis paid Impax at least $55 million to drop the patent challenge and stay out of the market for three  years.

Impax went on to delay market entry of its generic Solodyn until late November 2011.

Impax’s entry by that time was “practically worthless to purchasers,” however, because by then Medicis had effectively destroyed demand for Solodyn as part of its anti-generic strategy, the complaint states.

Medicis soon filed another sham petition to delay FDA approval of any additional generic versions of Solodyn, the suit states, this time arguing that it was entitled to a 30-month stay of FDA approval of any company seeking approval to market a generic version of the acne medication after Medicis sued such generic applicants for patent infringement.

The suit claims that Medicis also orchestrated additional Exclusion Payment Agreements with, between and among potential generic drug competitors, paying three companies in particular sums as the “quid pro quo” for their agreement to drop their patent challenges and further delay market entry of their respective generic versions of the drug.

Those three companies, Teva Pharmaceuticals, Sandoz Inc. and Mylan Inc. are named as additional defendants in the civil action, as are Lupin Pharmaceuticals, Ranbaxy Pharmaceuticals, Matrix Laboratories, Barr Laboratories and Valeant Pharmaceuticals International.

The alleged payments to the companies came in the form of substantial profits from authorized limited sales, and Medicis’s agreement not to distribute an “authorized generic” version of Solodyn to compete against Teva, Sandoz or Mylan during the period of exclusivity, the lawsuit states.

The suit also claims Medicis introduced new dose strengths of Solodyn in yet another move to destroy competition, and that the company also paid off additional competitors down the line.

“But for the Defendants’ anticompetitive scheme (including the agreements), generic Solodyn in legacy strengths would have entered the market far earlier than they did,’ the suit reads. “Other generic versions of Solodyn, including an authorized version marketed directly or indirectly by Medicis, would have also entered the market, driving down generic prices even further.”

The plaintiff brings suit on behalf of all those who purchased Solodyn directly from Medicis in the United States.

The drug cooperative seeks a declaration that Medicis violated certain sections of the federal Sherman Act, which deals with anti-competitiveness.

The lawsuit was filed July 23 at the U.S. District Court in Philadelphia by attorneys from the Philadelphia firm of Berger & Montague, lawyers with Jenkintown, Pa.-based Faruqi & Faruqi, and litigators from New York’s Taus, Cebulash & Landau LLP.

 

The federal case number is 2:13-cv-04270-JCJ.