AAI Pushes Back Against Heightened Pleading Standards in Pay-for-Delay Cases (In re Effexor XR Antitrust Litigation)

In an amicus brief filed with 48 law, economics, and business professors, the American Antitrust Institute (AAI) has asked the Third Circuit Court of Appeals to reverse a district court’s invocation of Twombly and Iqbal to dismiss a direct-purchaser class action challenging a brand drug manufacturer’s payment for delayed generic entry by way of a “no authorized generic” (No-AG) promise.

Class plaintiffs alleged that Defendant Wyeth had unlawfully extended its monopoly on the branded drug Effexor by settling patent litigation with an agreement by generic challenger Teva to delay Teva’s entry into the market in exchange for Wyeth’s agreement not to launch an authorized generic version of Effexor. Because a brand manufacturer is permitted to introduce an “authorized generic” version of its drug during the 180-day generic exclusivity period awarded to a successful generic challenger under the Hatch-Waxman Act, a No-AG promise from the brand to a settling generic conveys tremendous value to the generic.

The district court dismissed the plaintiffs’ complaint on grounds that it did not provide evidence through which the court could determine the monetary value of the No-AG promise.

The amicus brief argues that the district court erred in requiring plaintiffs, at the motion-to-dismiss stage, to provide evidentiary support typically considered at summary judgment or even trial. Just as problematic, the court assigned plaintiffs a burden to introduce evidence that the Supreme Court in Actavis determined defendants must bear in justifying payment. The professors and the AAI contend that these developments fly in the face of Actavis and binding Third Circuit precedent, and contravene pleading standards articulated in Twombly, Iqbal, and the Third Circuit’s rulings.

The brief was written by AAI Advisory Board Members Michael Carrier and Steve Shadowen.