Volume IX, Issue 1,
Cite As: Tim Meade, In re: Buspirone Patent and Antitrust Litigation, 9 RICH. J.L. & TECH. 1 (Fall 2002), at http://law.richmond.edu/jolt/v9i1/article1.html.
{1}
Section 1 of the Sherman Act[1]
criminalizes any conspiracy to restrain trade or commerce within the
{2}
In determining the type of conduct that is
prohibited by the Sherman Act, the United States Supreme Court articulated what
is now known as the Noerr-Pennington doctrine in Eastern Railroad Presidents Conference v.
Noerr Motor Freight, Inc.,[3]
and United Mine Workers v.
Pennington.[4] In Noerr, the Supreme Court held
that “the Sherman Act does not prohibit two or more persons from associating
together in an attempt to persuade the legislature or the executive to take
particular action with respect to a law that would produce a restraint in trade
or a monopoly. [5] In Pennington, the Supreme Court held that
“[j]oint efforts to influence public officials do not
violate the antitrust laws even though intended to eliminate competition. Such conduct is not illegal, either
standing alone or as part of a broader scheme itself violative of the Sherman Act.”[6]
{3} The Supreme Court formulated two exceptions for conduct that is not entitled to Noerr-Pennington protection. In California Motor Transport Co. v. Trucking Unlimited,[7] the Supreme Court stated “that there may be instances where the alleged conspiracy ‘is a mere sham to cover what is actually nothing more than an attempt to interfere directly with the business relationships of a competitor and the application of the Sherman Act would be justified.’”[8] “Sham” litigation is defined as a two-tier process.[9] In the first step of the process, “the lawsuit must be objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits.”[10] The second step is when the “baseless lawsuit conceals ‘an attempt to interfere directly with the business relationships of a competitor’[11] through the ‘use of the governmental process -- as opposed to the outcome of that process -- as an anticompetitive weapon.’”[12] Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp. established a second exception to the Noerr-Pennington doctrine.[13] Here, the Supreme Court held that Noerr-Pennington protection would not apply to conduct that a party knowingly and willfully made false representations to the government.
{4} Before an allegation of a conspiracy to monopolize trade or commerce can be analyzed, an objective inquiry into the merits of the conduct that brought about the antitrust allegation must be made. For example, in a lawsuit brought for patent infringement, it must first be determined if the lawsuit for the patent infringement is itself objectively baseless before inquiring into antitrust consequences in violation of the Sherman Act.
{5} In August 2001, the Judicial Panel on Multidistrict Litigation consolidated before the United States District Court for the Southern District of New York three patent infringement suits brought by Bristol-Myers Squibb Company (“Bristol-Myers”) against Danbury Pharmacal, Inc., and Watson Pharmaceuticals, Inc. (collectively “Watson”), and Mylan Pharmaceuticals, Inc., Mylan Laboratories, Inc., and Mylan Technologies, Inc. (collectively “Mylan”). The Panel also transferred twenty-two antitrust suits brought by various plaintiffs against Bristol-Myers and twelve tag-along cases. These cases all involved disputes arising from the manufacture, use, sale, or allegedly anticompetitive conduct relating to activity concerning the drug buspirone,[15] which treats anxiety.
{6} In 1980, Bristol-Myers obtained a patent (the “’763 Patent”)[16] covering a method for treating anxiety by the use of a non-toxic anxiolytically-effective dose of buspirone. In order to sell new medication, a pioneer drug company must obtain approval of a New Drug Application (“NDA”) from the Food and Drug Administration (“FDA”) and must conduct research establishing that the drug is safe and effective in use.[17] Bristol-Myers obtained approval from the FDA and began selling buspirone tablets under the name Buspar® in 1986.
{7}
On
{8} Two competitors of Bristol-Meyers, Mylan and Watson, sought to sell generic buspirone tablets for use in accordance with the FDA approved labeling instructions for Buspar®. Both Mylan and Watson had filed Abbreviated New Drug Applications (“ANDAs”) with the FDA, seeking approval of their respective products.[20]
{9}
Bristol-Myers asserts in all of the pending patent and
antitrust actions in which it is a party that the “manufacture or sale of
generic buspirone by a competitor for use in
accordance with the FDA-approved labeling instructions for Buspar® violates, or would violate, the new ‘365 Patent.”[21] These lawsuits triggered an automatic
stay of the FDA’s approval of Mylan and Watson’s
products for up to the earlier of thirty months or until the relative patent
disputes were settled.[22] As a result, Mylan and Watson moved for summary judgment on the patent
infringement claims.[23] Both parties sought a finding that the
manufacture, promotion, and sale of generic buspirone
tablets in accordance with the current FDA-approved labeling instructions for
Buspar® would not infringe the ‘365 Patent; or, in the
alternative, that the ‘365 Patent is invalid. Bristol-Myers opposed this motion and
moved for a Markman hearing in which to produce
evidence of claim construction.[24] On
{10} Before the ‘763 Patent expired, Bristol-Myers initiated a series of patent applications resulting in the ‘365 Patent. Bristol-Myers’s prosecution of these applications was triggered by their discovery that the 6-hydroxy metabolite of buspirone has anxiolytic potential of its own and may even be the primary active agent in the causal mechanisms leading to the reduction of anxiety in successful uses of buspirone.[26]
{11}
On
{12}
On
{13} The Patent Examiner subsequently rejected the amended ‘842 Application under 35 U.S.C. § 102(b)[29] and 35 U.S.C. § 103(a)[30] , explaining that the elected prodrug buspirone is admitted prior art, the FDA-approved labeling instructions for Buspar® are clear evidence of an on sale bar to the claims, and use of buspirone to treat anxiety was obvious in light of the prior art.
{14} Pursuant to the Patent Examiner’s indication, Bristol-Myers filed a divisional application[31] (“’161 Divisional Application”),[32] claiming the non-elected 6-hydroxy-metabolite of buspirone. Bristol-Myers also filed four more applications, all of which were continuations-in-part (“CIP Applications”) of the ‘161 Divisional Application. Two of the CIPs used the same language as in the ‘161 Application, claiming the 6-hydroxy-metabolite and neither buspirone nor any prodrug.[33] The remaining two CIPs, on the other hand, claimed the use of the 6-hydroxy-metabolite as well as buspirone.[34] Although the claims of these four patent applications differed, they all used the same specification to describe the invention. Bristol-Myers then proceeded to abandon the ‘842 Divisional Application, leaving five applications pending.
{15}
Bristol-Myers then filed a Preliminary Communication
relating to the validity of the ‘161 Divisional Application. The Preliminary Communication stated
that the subject matter of the ‘161 Divisional Application was not obvious in
light of the prior art, namely the use of buspirone as
an anxiolytic agent.[35] Bristol-Myers claimed that the prior art
teaches away from the use of the 6-hydroxy-metabolite as an anxiolytic agent because one skilled in the art would know
that an effective anxiolytic amount of the
6-hydroxy-metabolite would not result in the bloodstream on every occasion.[36] Bristol-Myers also argued that the term
“systematic administration” of the 6-hydroxy-metabolite included oral
administration of buspirone and the deletion of the
term “prodrug” did not narrow the scope of the claimed
invention.[37]
{16}
The Patent Examiner later rejected two of the
CIPs (the ‘220 Application and the ‘223 Application)
which claimed the 6-hydroxy-metabolite as well as buspirone under 35 U.S.C. § 102(b) and 35 U.S.C. §
103(a). The Patent Examiner
reasoned that a public use and on sale bar existed due to the fact that an
administration of buspirone inherently yields the
6-hydroxy-metabolite.[38]
The Patent Examiner also rejected these two Applications on
provisional double patenting grounds, since the two Applications overlapped in
scope.[39]
{17}
The Patent Examiner then rejected the other two CIPs (the ‘221 Application and the ‘222 Application) that
claimed the 6-hydroxy-metabolite and neither buspirone
nor any prodrug, and the ‘161 Divisional Application
all on provisional double patenting grounds.[40] Bristol-Myers then abandoned the ‘161
Divisional Application and the ‘222 CIP Application to remedy the problem of
provisional double patenting. The
Patent Examiner agreed to make the sole remaining application (the ‘221 CIP
Application) special and have it processed on an expedited basis to have it
issue before the ‘763 Patent was set to expire.[41]
On
{18} Bristol-Myers hand delivered copies of the ‘365 Patent to the FDA only hours before the ‘763 Patent was set to expire.[43] The FDA then suspended approval of Mylan and Watson’s ANDAs for generic buspirone, leading to Mylan and Watson’s current position that patents for metabolites do not cover uses of their prodrugs under established case law.[44]
{19}
In late November 2001, Watson filed suit in the United
States District Court for the District of Maryland against Bristol-Myers and the
FDA seeking preliminary injunctive relief preventing the listing of the ‘365
Patent and seeking approval of their buspirone ANDA.[45]
Mylan filed a similar suit in the United
States District Court for the
{20}
Meanwhile, the Judicial Panel on Multidistrict
Litigation had transferred to the United States District Court for the Southern
District of New York a number of patent infringement suits brought by
Bristol-Myers against Mylan and Watson and a number of
related antitrust suits brought by various plaintiffs against Bristol-Myers.[50]
Mylan and Watson moved for summary
judgment on the ground that their manufacture and sale of generic buspirone does not infringe the ‘365 Patent, or in the
alternative, that the ‘365 Patent is invalid.[51]
{21} United States District Judge John G. Koeltl concluded that the ‘365 Patent does not cover uses of buspirone based on claim construction, the language of the specification, and prosecution history,[52] or in the alternative, based on 35 U.S.C. § 102(b).
{22} The ‘365 Patent does not specifically claim the systematic administration of buspirone or of any prodrug of the 6-hydroxy-metabolite.[53] The ‘365 Patent only refers to the 6-hydroxy-metabolite itself. Bristol-Myers conceded that the definition of “dose” as used in claim 1 of the ‘365 Patent refers to an amount of the 6-hydroxy-metabolite to be taken at one time or in a period of time.[54] Such a construction is limited to an externally measurable amount of the 6-hydroxy-metabolite ingested into body and does not include an externally measurable amount of buspirone.[55]
{23} The language of the specification in the ‘365 Patent does not say that “systematic administration” of a dose of the 6-hydroxy-metabolite includes either a dose of the 6-hydroxy-metabolite or a dose of buspirone.[56] The term “systematic administration” has a technical understanding to those in the field of the invention meaning “administration of medicine throughout the patient’s system, as through introduction into the bloodstream, as opposed to administration only to a local area of the body.”[57] The technical meaning of terms is presumed to be used for reliability and familiarity purposes with those experienced in the area.[58]
{24} The prosecution history also foreclosed the possibility that the ‘365 Patent covers uses of buspirone.[59] Bristol-Myers repeatedly attempted to obtain a patent that covered uses of buspirone and the Patent Examiner consistently rejected this request.
{25} Bristol-Myers first application, the ‘842 Application, on its face claimed both the 6-hydroxy-metabolite and a prodrug thereof.[60] When Bristol-Myers applied to make the ‘842 Application special to expedite its processing, the Patent Examiner required that Bristol-Myers restrict the application to one of two distinctly patentable inventions. Bristol-Myers elected to pursue a patent limited to the prodrug of the 6-hydroxy-metabolite, i.e. buspirone, rather than to the 6-hydroxy-metabolite itself. The Patent Examiner then rejected the narrowed ‘842 Application under 35 U.S.C. § 102(b) and 35 U.S.C. § 103(a) because such uses of buspirone were covered by an on sale bar in view of the prior sales of Buspar® and were obvious in light of the prior art of buspirone uses. The Patent Examiner notified Bristol-Myers that the non-elected subject matter could later be claimed in a divisional application.[61]
{26} Bristol-Myers then filed an application, the ‘161 Divisional Application, claiming the non-elected subject matter of the ‘842 Application,[62] the 6-hydroxy-metabolite. Shortly after the filing of the ‘161 Divisional Application, Bristol-Myers filed four more patent applications, each of which were CIPs of the ‘161 Divisional Application.[63] The Patent Examiner then rejected two of the applications under 35 U.S.C. § 102(b) and 35 U.S.C. § 103(a) for the same reasons set forth in the rejection of the ‘842 Application. Rejection of the remaining three applications was premised on provisional double patenting grounds since identical claim language was used. To remedy this problem, Bristol-Myers abandoned all applications except the ‘211 CIP Application. The ‘211 CIP Application was expedited and eventually led to issuance of the ‘365 Patent claiming the 6-hydroxy-metabolite, but neither buspirone nor any prodrug thereof.[64]
{27} This history indicates Bristol-Myers narrowed its application only to uses of the 6-hydroxy-metabolite of buspirone, and is thereby estopped from extending the scope of the ‘365 Patent to cover uses of buspirone itself.[65] Furthermore, the Federal Circuit Court of Appeals has held that although claims in divisional applications may be amended, “they must not be so amended as to bring them back over the line imposed in the restriction requirement.”[66]
{28}
Mylan and Watson correctly
argued that the ‘365 Patent would be invalid if construed to cover uses of buspirone based on 35 U.S.C. § 102(b). The use of buspirone to treat anxiety was the subject of a previously
issued patent (the ‘763 Patent).
Also, the use of buspirone was described in a
printed publication (the FDA-approved labeling instructions for Buspar®) and was “in public use in [the
{29} Bristol-Myers asserted that in order for a prior invention to raise a statutory bar under this section, the prior invention must disclose each claim limitation of the claimed invention, either explicitly or inherently.[69] The Federal Circuit Court of Appeals explained that a claim is anticipated, regardless of whether it also covers subject matter not in the prior art, if the disputed claim would exclude the public from practicing the prior art.[70] Therefore, Bristol-Myers argument that the ‘365 Patent covers uses of buspirone is misplaced.
{30}
United States District Judge John G. Koeltl granted summary judgment in favor of Mylan and Watson finding that the ‘365 Patent does not cover
uses of buspirone.[71] The court next considered Bristol-Myers
motion to dismiss the antitrust counterclaims brought in response to
Bristol-Myers alleged inequitable conduct.
{31}
Along with the patent disputes discussed above,
the Judicial Panel for Multidistrict Litigation had consolidated twenty-two
antitrust actions brought by various generic drug manufacturers who seek to
enter the buspirone market, direct purchasers of buspirone products, end-payers who have purchased buspirone, consumer protection organizations, and thirty
states.[73]
{32} Some of the complaints allege that Bristol-Myers attempted to extend or extended an unlawful monopoly over buspirone products for use in the treatment of anxiety. Complaints also allege Bristol-Myers entered into a conspiracy to restrain trade in this market, thereby violating sections 1 and 2 of the Sherman Act,[74] by settling a patent infringement suit with Danbury Pharmacal, Inc., and its affiliate Schein Pharmaceuticals, Inc. These plaintiffs also allege that Bristol-Myers’ settlement, in which Schein agreed to stay out of the buspirone market, was a sham to cover the invalidity of the ‘763 Patent.[75]
{33} All of the complaints allege that Bristol-Myers attempted to extend or extended an unlawful monopoly over the buspirone market in violation of section 2 of the Sherman Act,[76] by abusing a number of provisions of the Hatch-Waxman Amendments,[77] known as the Drug Price Competition and Patent Term Restoration Act. These complaints allege: that Bristol-Myers listed a new patent (the ‘365 Patent) in the Orange Book less than one day before the ‘763 Patent was set to expire, that Bristol-Myers fraudulently asserted to the FDA that the ‘365 Patent covered uses of buspirone and that patent infringements suits could be brought against generic producers of buspirone, and that Bristol-Myers immediately brought the patent infringements suits, triggering an automatic stay for up to thirty months of the generic manufacturer’s approval of their respective products.[78] Bristol-Myers moved pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss all of the claims raised by the antitrust plaintiffs.[79]
{34} United States District Judge John G. Koeltl held that Bristol-Myers was not entitled to Noerr-Pennington immunity in its listing of the ‘365 Patent with the FDA,[80] and “if the Noerr-Pennington doctrine were to apply . . . Mylan and Watson have pleaded sufficient facts to warrant an exception to the immunity.”[81] Therefore, Bristol-Myers’ motion to dismiss the antitrust claims was denied.[82]
{35} As mentioned above, Noerr-Pennington immunity shields efforts to influence the legislature or the executive to take particular action from antitrust sanctions.[83] There are two ways to lose Noerr-Pennington immunity: 1) if the patent in issue was obtained through knowing and willful fraud and the plaintiff is aware of the fraud when bringing subsequent patent infringement suits;[84] or, 2) if the subsequent patent infringement suits were a mere sham to interfere with the business of a competitor through use of the governmental process.[85]
{36} Judge Koeltl reasoned that Noerr-Pennington immunity, which protects petitioning activity, does not apply to Bristol-Myers’ Orange Book listing of the ‘365 Patent. Petitioning conduct for Noerr-Pennington purposes applies in situations where the governmental entity renders a decision only after an independent review of the merits of a petition. Since the FDA acts in a ministerial or non-discretionary fashion in its listing of ANDAs in the Orange Book, the Noerr-Pennington doctrine was not applicable to such conduct.[86]
{37} Assuming the Noerr-Pennington doctrine were to apply to Bristol-Myers’ Orange Book listing, Mylan and Watson had pleaded sufficiently to establish the Walker Process exception.[87] Walker Process involved a fraudulent misrepresentation to the patent examiner in prosecuting a patent application.[88] Judge Koeltl, noting that this was a question of first impression under federal circuit law (alleged fraudulent enlargement of the asserted scope of a patent before the FDA), reasoned that since a fraudulent misrepresentation to the patent examiner can effectively extend a monopoly, a fraudulent listing in the Orange Book, which can also effectively extend a monopoly, should be subject to the Walker Process exception as well.[89]
{38}
Further assuming that Noerr-Pennington immunity applies to
Bristol-Myers listing with the FDA, and that the Walker Process exception to this
immunity does not apply, Mylan and Watson pleaded
sufficiently for the Professional Real
Estate Investors exception to apply.[90] Professional Real Estate Investors
formulates an exception to Noerr-Pennington immunity for lawsuits
that are a mere “sham.” “Sham”
lawsuits contain an objective and subjective component. A lawsuit is “objectively baseless if
‘no reasonable litigant could realistically expect success on the merits.’”[91] The subjective component is satisfied
when the "baseless lawsuit conceals 'an attempt to interfere directly with the
business relationships of a competitor' through the 'use of the governmental
process - as opposed to the outcome of that process - as an anticompetitive
weapon'".[92] Based on Bristol-Myers' repeated
attempts to obtain a patent covering uses of buspirone
and the Patent Examiner’s repeated denial of such a patent, Judge Koeltl concluded that Bristol-Myers had no objective basis
for believing that the ‘365 Patent covered uses of buspirone or that the patent would be valid if it did.[93] The antitrust
plaintiffs alleged that Bristol-Myers listed with the FDA solely to stall the
approval of Mylan’s and Watson’s respective ANDAs for up to thirty months, knowing that its claims
lacked merit.[94] This knowledge was sufficient to satisfy
the subjective element of the “sham” exception for purposes of withstanding a
motion to dismiss.[95]
{39} To strike a balance between the interests of pioneer researchers and generic drug manufacturers, the “Hatch-Waxman” amendments to the Federal Food, Drug and Cosmetic Act were added to the Drug Price Competition and Patent Term Restoration Act of 1984.[96] Congress attempted to induce pioneer research and development of new drugs, while simultaneously enabling competitors to bring low cost generic versions of these drugs into the market.[97]
A. The
Hatch-Waxman Amendments
{40} The Hatch-Waxman amendments permit generic drug manufacturers to engage in what would otherwise be considered infringing conduct during the term of a pioneer drug’s patent in order to obtain regulatory approval of their generic drugs without fear of patent infringement actions brought by the pioneer patent holder.[98] In other words, generic drug manufacturers can use the generic drug products to raise capital, obtain foreign patents, and can even ship the generic products to potential commercial partners, all in order to have FDA approval for generic sale obtained prior to the day when the pioneer patent holder’s drug is set to expire.[99]
{41} The generic drug manufacturer submits an ANDA and is required to address each patent previously listed in the Orange Book that claims the drug. The ANDA applicant must certify that no patent information concerning this drug has ever been submitted to the FDA (paragraph I certification). If a patent exists, the applicant must certify that the patent has expired (paragraph II certification), the patent is set to expire on a certain date (paragraph III certification), or that the patent is invalid or will not be infringed by the manufacture, use, or sale of the new generic drug for which the ANDA is submitted (paragraph IV certification).[100]
{42}
When an ANDA contains a paragraph IV certification, the
applicant (generic drug manufacturer) must give notice to the holder of the
alleged invalid patent (pioneer patent holder) describing its belief why
manufacture, use, or sale of the generic version of the drug by the generic drug
manufacturer will not infringe the pioneer patent holder’s issued patent.[101] The pioneer patent holder then has a
forty-five day period in which to bring patent infringement lawsuits against the
generic drug manufacturer. If such
lawsuits are brought, the FDA is required to stay the generic drug manufacturers
ANDA approval for the lesser of thirty months or until the relevant patent
disputes are resolved. The court in
which the suit is pending may order a shorter or longer stay if “either party to
the action fails to reasonably cooperate in expediting the action.”[102]
{43} Prior to this decision, Mylan had brought suit against Bristol-Myers, the FDA, and the Secretary of Health and Human Services attempting to “delist” the ‘365 Patent from the Orange Book.[103] The Court of Appeals for the Federal Circuit held that neither the patent laws nor the Hatch-Waxman amendments permitted a private right of action to “delist” a patent from the Orange Book.[104] In Andrx Pharmaceuticals v. Biovail Corp., the Federal Circuit later stated that they were not holding that the FDA could not be directly be sued to compel them to approve an ANDA if their denial of the ANDA was arbitrary or capricious.[105]
{44}
Applying the Federal Circuit’s interpretation of the
Hatch-Waxman amendments to the case at hand and the case law relating to the
delisting of a patent, several important aspects of the conduct of Bristol-Myers
and Mylan and Watson can be analyzed. First, it can be seen that generic drug
manufacturers and pioneer patent holders each receive benefits and disadvantages
from a practical standpoint from the Hatch-Waxman amendments, and second, the
presence of the Hatch-Waxman amendments is what triggers the antitrust
consequences relating to Bristol-Myers conduct.
{45} The Hatch-Waxman amendments were designed to give generic drug manufacturers (Mylan and Watson) the benefit of engaging in otherwise infringing conduct during the unexpired term of a pioneer patent holders (Bristol-Myers) patent.[106] However, while giving the generic drug manufacturers an opportunity to get a “head-start” on approval for the manufacture, use or sale of generic drugs, the generic drug manufacturer’s head-start can effectively be negated by the pioneer patent holders listing of an existing patent that arguably bars the sale of the generic drug manufacturers drug.
{46} According to Andrx, the generic drug manufacturers would have to meet the almost insurmountable burden of showing that the refusal to issue the ANDA by the FDA was either arbitrary or capricious.[107]