Federal Trade Commission et al v. Watson Pharmaceuticals, Inc. et al

Filing 598

ORDER denying (541) Motion for Summary Judgment in case 1:09-cv-00955-TWT. Signed by Judge Thomas W. Thrash, Jr on 6/1/2017. Associated Cases: 1:09-md-02084-TWT, 1:09-cv-00955-TWT(ss)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
IN RE: ANDROGEL ANTITRUST
LITIGATION (NO. II)

MDL DOCKET NO. 2084
ALL CASES
1:09-MD-2084-TWT

FEDERAL TRADE COMMISSION,
Plaintiff,
v.

CIVIL ACTION FILE
NO. 1:09-CV-955-TWT

ACTAVIS, INC., et al.,
Defendants.

OPINION AND ORDER

This is an antitrust action. It is before the Court on the Defendant Actavis
Holdco U.S., Inc.’s (“Actavis Holdco”) Motion for Summary Judgment [Doc. 541].
For the following reasons, the Defendant Actavis Holdco’s Motion for Summary
Judgment [Doc. 541] is DENIED.

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I. Background
In 2003, Actavis, Inc. (“Actavis”)1 filed an Abbreviated New Drug Application
with the Food and Drug Administration seeking approval for a generic version of a
popular testosterone product, AndroGel. A few years later, Solvay Pharmaceuticals,
Inc.,2 the manufacturer of AndroGel, sued Actavis for patent infringement over
Actavis’ generic version of AndroGel. The parties settled the litigation in September
2006. As part of the settlement agreement, Actavis agreed to delay the launch of its
generic version of AndroGel until 2015. In exchange, Solvay shared some of
AndroGel’s profits with Actavis. The FTC considers this to be a “reverse payment”
that is forbidden by antitrust law.
During this time, Teva Pharmaceutical Industries Ltd., along with its whollyowned subsidiary Teva Pharmaceuticals USA, Inc. (together, “Teva”), had also
engaged in a similar agreement with another company. The FTC brought suit over that
agreement, and the parties settled. As part of the settlement, Teva agreed to be subject
to a permanent injunction. Among other things, the Teva Injunction prohibits Teva
from “entering into any Brand/Generic Settlement that includes: (1) Payment by the

1

Then known as Watson Pharmaceuticals, Inc.

2

Through Solvay’s subsidiary, Unimed Pharmaceuticals, LLC.

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[brand manufacturer] to the [generic manufacturer]...”3 The order defines “payment”
as a “transfer of value by the [brand manufacturer] to the [generic manufacturer]
(including, but not limited to, money, goods or services)...where such transfer is either
(i) expressly contingent on entering a Brand/Generic Settlement Agreement, or (ii)
agreed to during the 60 day period” centered on the execution of the settlement.4
Importantly, however, the Teva Injunction expressly carves out what are commonly
known as “no authorized generic,” or “no-AG agreements.”5 No-AG agreements are
essentially a promise by the brand manufacturer to refrain from marketing a generic
version of its own drug, thereby reducing competition with the generic manufacturer.
In January 2009, the FTC brought suit against Actavis, alleging that the 2006
settlement agreement violated federal antitrust law. The FTC’s Complaint asked for
broad injunctive relief, including: (1) an order requiring Actavis to launch its generic
earlier, (2) an injunction prohibiting Actavis “from engaging in similar and related
conduct in the future,” and (3) “[t]hat the Court grant such other equitable relief as the

3

Stipulated Order for Permanent Injunction and Equitable Relief, FTC v.
Cephalon, No. 2:08-cv-2141 (E.D. Pa. June 17, 2015), at 9 [Doc. 564-7].
4

Id. at 4.

5

Id. at 5 (“c. provisions in a Brand/Generic Settlement Agreement through
which the NDA Holder provides the ANDA Filer an exclusive license to the Subject
Drug Product...”).
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Court finds necessary to redress and prevent recurrence of Defendants’ violations.”6
In August 2016, during the pendency of this litigation, Teva acquired the movant,
Actavis Holdco, from Allergan plc, Actavis’ corporate parent. In connection with the
acquisition, Allergan reassigned certain assets and liabilities related to its generics
business, including liability for this litigation, to Actavis Holdco. As a result, when
Teva acquired Actavis Holdco, it also acquired a significant portion of Allergan’s
generics business. Also as a result, Actavis Holdco became subject to the Teva
Injunction. Actavis Holdco argues that because it is now subject to the Teva
Injunction, which prohibits most forms of reverse payment agreements, and because
a generic version of AndroGel has since entered the market, there is no more relief to
be granted to the FTC. Consequently, Actavis Holdco now moves for summary
judgment on the grounds that the action is moot.
II. Legal Standard
Summary judgment is appropriate only when the pleadings, depositions, and
affidavits submitted by the parties show no genuine issue of material fact exists and
that the movant is entitled to judgment as a matter of law.7 The court should view the

6

FTC’s Second Amended Compl., Prayer for Relief ¶¶ 4-5 at 44 [Doc.

7

FED. R. CIV. P. 56(a).

114].

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evidence and any inferences that may be drawn in the light most favorable to the
nonmovant.8 The party seeking summary judgment must first identify grounds to show
the absence of a genuine issue of material fact.9 The burden then shifts to the
nonmovant, who must go beyond the pleadings and present affirmative evidence to
show that a genuine issue of material fact does exist.10 “A mere ‘scintilla’ of evidence
supporting the opposing party’s position will not suffice; there must be a sufficient
showing that the jury could reasonably find for that party.”11
III. Discussion
Federal judicial power is restricted by the Constitution to actual cases or
controversies.12

“The

doctrine

of

mootness

derives

directly

from the

case-or-controversy limitation because an action that is moot cannot be characterized
as an active case or controversy.”13 A case becomes moot when “ it no longer presents

8

Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59 (1970).

9

Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).

10

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257 (1986).

11

Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir. 1990).

12

Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016).

13

Al Najjar v. Ashcroft, 273 F.3d 1330, 1335 (11th Cir. 2001) (quotations

omitted).
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a live controversy with respect to which the court can give meaningful relief.”14
However, the mootness doctrine inquires into a court’s authority to order a remedy,
not the likelihood or appropriateness of that remedy under particular circumstances.15
Therefore, as long as a court has the ability to fashion some form of meaningful relief,
a case is not moot.16
Federal courts have broad authority to order equitable relief in antitrust cases.17
The goal of an equitable antitrust suit is not to simply punish past behavior, “nor is it
merely to end specific illegal practices.”18 The goal is to “effectively pry open to
competition a market that has been closed by defendants’ illegal restraints.”19 In other

14

Ethredge v. Hail, 996 F.2d 1173, 1175 (11th Cir. 1993).

15

See Decker v. Nw. Envtl. Def. Ctr., 133 S. Ct. 1326, 1335-36 (2013)
(“The District Court, it is true, might rule that...arguments lack merit, or that the relief
it seeks is not warranted on the facts of these cases. That possibility, however, does
not make the cases moot.”).
16

See Cook v. Bennett, 792 F.3d 1294, 1299 (11th Cir. 2015) (“Generally,
a case becomes moot only when it is impossible for a court to grant any effectual relief
whatever to the prevailing party.”) (quotations omitted) (emphasis added).
17

Int'l Salt Co. v. United States, 332 U.S. 392, 400–01 (1947) abrogated by
Illinois Tool Works Inc. v. Indep. Ink, Inc., 547 U.S. 28 (2006) (District Courts “are
invested with large discretion to model their judgments to fit the exigencies of the
particular case.”).
18

Id. at 401.

19

Id.

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words, the goal is to prevent anti-competitive activity in the future, and the courts
have a wide range of means at their disposal to do so.20 “[I]it is not necessary that all
of the untraveled roads to that end be left open and that only the worn one be
closed.”21 Oftentimes, this may even mean that otherwise legal activity may have to
be enjoined.22 “The standard against which the order must be judged is whether the
relief represents a reasonable method of eliminating the consequences of the illegal
conduct.”23
Turning to the case at hand, the Defendant argues that the case is now moot
because it has since become covered by the Teva Injunction and any additional relief
sought by the FTC is merely redundant. The Court disagrees. The FTC has outlined
three potential types of relief it seeks in addition to the activities enjoined in the Teva
Injunction: (1) a ban on no-AG agreements, (2) an advance notice provision, and (3)
an extended injunction period beyond the expiration of the Teva Injunction. Contrary

20

Fed. Trade Comm'n v. Nat'l Lead Co., 352 U.S. 419, 430 (1957) (Courts
are “obliged not only to suppress the unlawful practice but to take such reasonable
action as is calculated to preclude the revival of the illegal practices.”).
21

Int'l Salt Co., 332 U.S. at 400.

22

Nat’l Lead Co., 352 U.S. at 430 (“...decrees often suppress a lawful
device when it is used to carry out an unlawful purpose.”).
23

Nat'l Soc. of Prof'l Engineers v. United States, 435 U.S. 679, 698 (1978).

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to the Defendant’s argument, none of these remedies are redundant, and all three are
well within the Court’s authority to grant.
The FTC is concerned that any transfers of value between brand name
manufacturers and generic manufacturers in exchange for delayed market entry for
generic competitors is anti-competitive and violates the antitrust statutes. The Teva
Injunction, which Actavis Holdco is now subject to, prohibits these transfers of value.
However, there is an important exception: no-AG agreements are not covered by the
Teva Injunction. There is significant debate about whether no-AG agreements are
unlawful reverse payments under recent Supreme Court jurisprudence, a debate in
which the FTC and Actavis Holdco are squarely opposed.24 But the Court does not
need to take a stance on this issue to enjoin Actavis Holdco from entering into no-AG
agreements. The Court has the power to reasonably restrain lawful conduct if it is
necessary to prevent anti-competitive actions in the future. Because no-AG
agreements clearly hold significant value to the parties involved, and could serve as
an alternative to cash-only reverse payment agreements, an injunction against such

24

See, e.g., Rochester Drug Co-Operative, Inc. v. Warner Chilcott Co. (In
re Loestrin 24 Fe Antitrust Litig.), 814 F.3d 538, 550 (1st Cir. 2016) (“the key word
used throughout the [Supreme Court’s Actavis] opinion is ‘payment,’ which connotes
a much broader category of consideration than cash alone.”); King Drug Co. of
Florence, Inc. v. Smithkline Beecham Corp., 791 F.3d 388, 403 (3d Cir. 2015), (“We
do not believe Actavis's holding can be limited to reverse payments of cash.”).
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behavior in the future is certainly considered to be within the realm of possible
remedies.25
Likewise, modifications of the timing requirements, the length of the injunction,
and the addition of an advance notice requirement are also well within this Court’s
power. The Teva Injunction will likely be nearly halfway through its course by the
time this case is finished. Should this Court feel that more time is needed to prevent
anti-competitive conduct by Actavis Holdco, it is within its power to grant an
injunction that extends past the expiration of the Teva Injunction.26 Alternatively,
should this Court feel it is necessary, it could also impose an advance notice
requirement for all transfers of value, including no-AG agreements. Currently, under
the Teva Injunction, Actavis Holdco is not required to seek the FTC’s approval prior
to entering into patent litigation settlements that involve certain forms of payment

25

Nor is this remedy speculative or designed to address merely hypothetical
behavior, despite the Defendant’s arguments to the contrary. Indeed, a no-AG
settlement was expressly considered by Actavis Holdco as one potential form of
payment. See Brau Decl. Ex. E at 5 [Doc. 564-8] (presentation discussing
“Watson/Par Options - Potential Settlement Features” including “Agreement by
Solvay with Watson to Not Launch an Authorized Generic for Androgel.”).
26

This would not necessarily be a modification of the Teva Injunction. The
Teva Injunction applies to Teva and its subsidiaries. Actavis Holdco could be sold and
cease to be a subsidiary of Teva at any time. Thus, an injunction against Actavis
Holdco would ensure that Actavis Holdco’s anti-competitive conduct would be
prevented no matter its ownership.
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agreements. By requiring Actavis Holdco to seek prior approval for all patent
litigation settlements that involve reverse payment agreements, including no-AG
agreements, the potential anti-competitive consequences of such agreements could be
addressed proactively rather than reactively.27
This is not to say that the Court will eventually grant any of these proposed
remedies. But they are all available to the Court. As stated above, the mootness
doctrine inquires into a court’s authority to order a remedy, not the likelihood or
appropriateness of that remedy under particular circumstances. Because the Court still
has the ability to grant meaningful relief to the Plaintiff, the case is not moot.28

27

Contrary to the Defendant’s contention, an advance notice requirement
would not necessarily be redundant. The advance notice requirement contained in the
Teva Injunction only applies to agreements prohibited by the Teva Injunction. Since
no-AG agreements are not prohibited by the Teva Injunction, a new advance notice
requirement covering such agreements would not be duplicative.
28

As an aside, the Defendant briefly argued that the FTC was
inappropriately seeking a declaratory judgment against conduct that had happened in
the past. Though Actavis Holdco seems to have abandoned this argument in its reply
brief, the Court will briefly address it here. The FTC is not seeking a declaratory
judgment; it is asking the Court to hold that the agreement was unlawful, and therefore
grant an injunction. The Defendant’s argument is inapposite.
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IV. Conclusion
For the reasons stated above, the Defendant Actavis Holdco’s Motion for
Summary Judgment [Doc. 541] is DENIED.
SO ORDERED, this 1 day of June, 2017.

/s/Thomas W. Thrash
THOMAS W. THRASH, JR.
United States District Judge

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