In a recent decision in In Re Humira (Adalimumab) Antitrust Litigation, No. 19-cv-1873, Judge Shah of the Northern District of Illinois dismissed a consolidated class action complaint filed by U.S. purchasers of AbbVie Inc.’s blockbuster biologic drug Humira alleging that AbbVie had prevented manufacturers of competing biosimilar drugs (“biosimilars”) from entering the U.S. market in violation of federal and state antitrust laws. Plaintiffs alleged two novel antitrust theories: (1) AbbVie monopolized the market by creating and asserting a “patent thicket” of invalid and unenforceable patents around Humira, and (2) AbbVie and competing biosimilar manufacturers illegally allocated geographical markets and engaged in illegal pay-for-delay arrangements through settlement agreements in which AbbVie granted licenses for manufacturers that allowed them to sell their Humira biosimilars in Europe in 2018 while prohibiting sales in the U.S. until 2023.
In dismissing these claims on defendants’ motion to dismiss, the Court found that the majority of AbbVie’s conduct relating to its “patent thicket” was immunized from antitrust liability by the Noerr-Pennington doctrine and that the alleged market allocation scheme and pay-for-delay arrangements were not per se illegal and did not meet the Supreme Court’s standard to be considered an anticompetitive “reverse payment.” Furthermore, the court found that Plaintiffs failed to plead antitrust injury, as the existence of even “one valid and infringed patent” would have precluded biosimilar manufacturers from entering the U.S. market prior to 2023.
Plaintiffs have the option to file an amended complaint or to dismiss the case with prejudice to seek appellate review. Given the novel nature of the antitrust claims at issue, the likelihood for one or both to occur is high so this area is still unsettled law. This case bears close watching -- especially for innovator biopharma companies seeking to leverage and enforce their IP portfolios under the Biologics Price Competition and Innovation Act (BPCIA) to prevent biosimilars from entering the market. With that context in mind, there are three main takeaways from the Court’s opinion:
- Patent holders who have amassed a “patent thicket” and aggressively enforce those patents in litigation are likely to receive Noerr-Pennington immunity, provided that all or most of the petitioning of the government (e.g., the filing and prosecution of patent applications, the FDA approval process, and litigation in the courts) is “objectively reasonable”;
- Patent holders have wide discretion to grant licenses with terms allowing for “early entry” in settlement agreements with competitors, even when those terms may allocate geographic markets; and
- Plaintiffs cannot allege antitrust injury resulting from assertion of a patent thicket as a whole, as the existence of even one valid and infringed patent in a patent thicket is sufficient to keep a competitor off the market.
AbbVie’s “patent thicket”
According to Plaintiff’s complaint, before the 2016 expiration of the original ’382 patent for the Humira antibody (adalimumab), AbbVie applied for and obtained 132 patents relating to the formulation and methods of manufacture for Humira with expiration dates extending well past 2016. Within this “patent thicket,” 90% of the patents were issued in 2014 or later (despite Humira first being marketed in 2002), with large swaths of these later-obtained patents alleged to be invalid over applicable prior art and/or unenforceable for alleged misconduct before the Patent and Trademark Office, allegations that the Court must accept as true in ruling on a motion to dismiss the complaint.
AbbVie / Biosimilar Settlements
Beginning in 2015, biosimilar manufacturers began submitting Abbreviated Biologic License Applications to the FDA for production of biosimilar antibodies to Humira. This triggered pre-litigation exchanges under the BPCIA—referred to as the “patent dance”—between AbbVie and the biosimilar manufacturers during which AbbVie identified potentially infringed patents. At the conclusion of the “patent dance,” AbbVie was required to initiate lawsuits to determine the validity of the patents at issue. Following litigation, AbbVie entered into several settlements in which AbbVie granted licenses to each manufacturer allowing them to enter the European market as early as 2018 and prohibiting entry to the U.S. market until 2023.
The Plaintiffs’ Claims
Plaintiffs raised two novel antitrust theories in their complaint:
- AbbVie monopolized the market in violation of Section 2 of the Sherman Act by acquiring and asserting a “patent thicket” of over a hundred patents relating to Humira in order to prevent market entry by biosimilars manufacturers; and
- AbbVie and biosimilar manufacturers allocated geographical markets and engaged in pay-for-delay arrangements in violation of Section 1 of the Sherman Act through settlement agreements in which AbbVie granted licenses allowing those manufacturers to sell in Europe in 2018 and prohibiting entry into the U.S. market until 2023.
The Humira court appeared critical of AbbVie’s conduct but still found that the plaintiffs failed to state a claim under any of their antitrust theories.
The Court’s Opinion
“Patent Thicket” Monopolization Claim
The Court held that AbbVie’s “patent thicket” IP strategy was not illegal monopolization in violation of Section 2 of the Sherman Act. Under the Noerr–Pennington doctrine, AbbVie’s “petitioning” activities were immunized from federal antitrust liability unless those petitions were “objectively baseless.” Judge Shah found that AbbVie’s patent applications, the inter partes review, and subsequent infringement litigation were generally successful, thereby “self-proving [their] reasonableness.” The only conduct found not protected by Noerr-Pennington was AbbVie’s conduct during the patent dances in listing and asserting patents it allegedly knew to be non-infringed or invalid. However, Judge Shah did not find this to be dispositive, noting that Plaintiffs’ theory depended on all components of AbbVie’s conduct and that it was not plausible that the non-immunized conduct intimidated the biosimilar manufacturers into delaying entry in the U.S. market.
Market Allocation and Pay-for-Delay Claims
With respect to the market allocation claim, the Court found that the settlements allowing competition in Europe before in the United States were not per se illegal because they were not facially anticompetitive and because the nature of the patent grant, as acknowledged by the Supreme Court, supported the finding that an agreement to permit entry into a geographic market previously protected by a patent is not market allocation that would otherwise be per se illegal. In dismissing the pay-for-delay claims arising from the same settlements, the Court observed that under FTC v. Actavis, Inc., 570 U.S. 136 (2013), parties are free to agree to settlement terms allowing for early entry prior to the expiration of a patent. Thus, Supreme Court precedent dictated that the AbbVie settlements, allowing entry to the European market and U.S. markets before the nominal expiration date of AbbVie’s patents, were not reverse payment agreements subject to antitrust scrutiny because the nominal period of non-competition between AbbVie and biosimilar manufacturers was decreased relative to the expiration date of AbbVie’s patents. The court also noted that the patent right itself was intrinsically an entitlement to a territorial monopoly: allowing licenses for patent rights did not implicate the same territorial allocation concerns that the Sherman Act was intended to deter involving extralegal business collusion and territory allocation.
Failure to Plead Antitrust Injury
Finally, the Court found that Plaintiffs had failed to plead antitrust injury because they did not allege that all of AbbVie’s asserted patents were invalid or unenforceable. Specifically, there could be no but-for cause of antitrust harm in restraint of competition unless AbbVie lacked any valid and infringed patent within its thicket, as “all it would have taken was one valid and infringed patent to preclude market entry until that patent’s expiration.” Slip op. at 57. In other words, because the biosimilar manufacturers would have risked liability or injunction and been unable to compete with AbbVie on the basis of even a single valid and infringed patent within the asserted “thicket,” Plaintiffs’ claims regarding the assertion of the thicket at large—as opposed to all patents within the thicket—was insufficient to plausibly plead antitrust harm.
Noting that Plaintiffs may re-file an amended complaint or appeal the district court’s opinion, innovator biopharmaceutical companies should view Humira as a validation of “patent thicket” enforcement strategies under the BPCIA to create settlement pressure on competitors, so long as the petitioning and enforcement relating to the patents are not “objectively baseless.” While some language in Humira suggests that maintaining a high-quality portfolio (e.g., one with a high percentage of issued patents to filed applications, and one that is reasonably resistant to challenge in an IPR) is important to receive Noerr-Pennington immunity, on net Humira significantly attenuates the strength of antitrust litigation as a possible avenue of attack against enforcement of patent thickets so long as the thicket itself contains at least one valid and enforceable claim against an accused competitive product. Furthermore, Humira may provide guidance for assessing the antitrust risk associated with settlements between biopharmaceutical companies and their biosimilar competitors. The opinion suggests allocating geographic markets between competitors through patent licensing agreements does not merit the same per se treatment as traditional market allocation agreements and does not violate antitrust laws provided they are conformant with Actavis in permitting early entry into otherwise patent-protected markets. Biopharmaceutical companies may view this development as helpful insight for determining how to wield their patent rights in settlements going forward.