Pennsylvania Record

Sunday, October 20, 2019

Walgreen, Kroger Co. have antitrust suit over Remicade against Johnson & Johnson dismissed

Lawsuits

By Nicholas Malfitano | Apr 10, 2019


PHILADELPHIA – Two drug store operators who sued pharmaceutical companies Johnson & Johnson and Janssen Biotech - citing alleged antitrust violations, conspiracy and unfair competition - have had their suit dismissed through summary judgment.

U.S. District Court for the Eastern District of Pennsylvania Judge Curtis Joyner issued such a judgment on March 25, throwing out the lawsuit filed by Walgreen Co. and The Kroger Co. last summer.

Walgreen Co. and The Kroger Co. initially filed a complaint June 6, 2018 in the U.S. District Court for the Eastern District of Pennsylvania, for alleged unlawful exclusion of biosimilar competition to the brand-name drug Remicade.

Remicade is an immunosuppresive drug that can be used to treat conditions such as rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis, Crohn's disease, plaque psoriasis and ulcerative colitis.

Per the complaint, in 2016, despite introducing a much cheaper product than the defendants’ Remicade, the products purchased by the plaintiffs from other drug manufacturers have garnered only a minimal share in the infliximab market, because of the defendants’ alleged exclusionary scheme to monopolize power through exclusionary contracts and bundled discounts that have effectively suppressed competition from Pfizer’s and Merck’s biosimilar products.

As a result, the plaintiffs say they and other drug purchasers have been deprived of the benefits of the free and open competition that the antitrust laws are intended to foster.

The plaintiffs claimed Johnson & Johnson and Janssen Biotech were guilty of using an overarching anticompetitive scheme to maintain their monopoly power in the relevant market using restrictive or exclusionary conduct, rather than by competing on the merits of their drug.

The plaintiffs had requested a trial by jury and sought a permanent injunction, award of overcharge damages, costs of suit, attorney’s fees, and other and further relief as the court deems just and proper.

“At the heart of the dispute here is defendants’ argument that plaintiffs lack antitrust standing because wholesalers’ purported assignment of ‘rights’ under the agreements was void pursuant to an anti-assignment provision. Plaintiffs maintain that their antitrust claims are not encompassed by the purported assignments, and may proceed,” Joyner stated.

Johnson & Johnson asserted four arguments for summary judgment: First, the defendants argued that they are parties to the agreements. Second, defendants argued that the anti-assignment provisions in the agreements encompass plaintiffs’ statutory antitrust claims. Third, defendants argued that the anti-assignment provisions are enforceable under New Jersey law. Fourth, defendants argued that wholesalers’ assignments to plaintiffs are void because they were made without defendants’ consent, thereby violating the clear and specific anti-assignment provisions.

In contrast, the plaintiffs opposed summary judgment on three grounds: First, that defendants are not parties to the agreements; Second, that plaintiffs’ antitrust claims are outside the scope of the agreements; And third, that even if the wholesalers’ assignments violated the anti-assignment provisions, federal common law allowing for valid assignment of antitrust claims should preempt state law enforcing anti-assignment provisions.

However, Joyner ruled that New Jersey law took precedence on the subject of applicability to the issue of non-assignment provisions in the distributor agreements in this case.

“We find there is no reasonable dispute that the anti-assignment provisions here encompass plaintiffs’ antitrust claims because their claims exist by virtue of the agreements, and that the assignments of “rights” under the agreements, without consent of defendants, are void. Therefore, there is no genuine dispute that plaintiffs’ antitrust claims, which they assert by virtue of void assignments, are barred,” Joyner said.

“Any claim for overcharges on purchases of Remicade by plaintiffs arose through the unauthorized assignment by wholesalers of rights under their distributor agreements. These assignment-based antitrust claims, grounded in invalid assignments, cannot proceed. For the foregoing reasons, defendants’ motion for summary judgment is granted.”

U.S. District Court for the Eastern District of Pennsylvania case 2:18-cv-02357

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com

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Organizations in this Story

Johnson & Johnson The Kroger Company Walgreen Co.

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