In Re Cardizem CD Antitrust Litigation

This antitrust case arises out of an agreement entered into by the defendants, Hoescht Marion Roussel, Inc. ("HMR"), the manufacturer of the prescription drug Cardizem CD, and Andrx Pharmaceuticals, Inc. ("Andrx"), then a potential manufacturer of a generic version of that drug. The agreement provided, in essence, that Andrx, in exchange for quarterly payments of $10 million, would refrain from marketing its generic version of Cardizem C.D. even after it had received FDA approval. The plaintiffs are direct and indirect purchasers of Cardizem C.D. who filed complaints challenging the Agreement as a violation of federal and state antitrust laws.

HMR manufactures and markets Cardizem CD, a brand-name prescription drug which is used for the treatment of angina and hypertension and for the prevention of heart attacks and strokes. The active ingredient in Cardizem C.D. is diltiazem hydrochloride, which is delivered to the user through a controlled-release system that requires only one dose per day. HMR's patent for diltiazem hydrochloride expired in November 1992.

On September 22, 1995, Andrx filed an ANDA with the FDA seeking approval to manufacture and sell a generic form of Cardizem CD. On December 30, 1995, Andrx filed a paragraph IV certification stating that its generic product did not infringe any of the patents listed with the FDA as covering Cardizem CD. Andrx was the first potential generic manufacturer of Cardizem C.D. to file an ANDA with a paragraph IV certification, entitling it to the 180-day exclusivity period once it received FDA approval.

In November 1995, the United States patent office issued Carderm Capital, L.P. ("Carderm") U.S. Patent No. 5,470,584 ("'584 patent"), for Cardizem CD's "dissolution profile," which Carderm licensed to HMR. JA 1796-1810. The dissolution profile claimed by the '584 patent was for 0-45% of the total diltiazem to be released within 18 hours ("45%-18 patent").

In January 1996, HMR and Carderm filed a patent infringement suit against Andrx in the United States District Court for the Southern District of Florida, asserting that the generic version of Cardizem C.D. that Andrx proposed would infringe the '584 patent. See JA 1240-1257 (Complaint, Hoescht Marion Roussel, Inc. v. Andrx Pharmaceuticals, Inc., No. 96-06121 (S.D.Fla. filed Jan. 31, 1996)). The complaint sought neither damages nor a preliminary injunction. Id. However, filing that complaint automatically triggered the thirty-month waiting period during which the FDA could not approve Andrx's ANDA and Andrx could not market its generic product. In February 1996, Andrx brought antitrust and unfair competition counterclaims against HMR. In April 1996, Andrx amended its ANDA to specify that the dissolution profile for its generic product was not less than 55% of total diltiazem released within 18 hours ("55%-18 generic"). HMR nonetheless continued to pursue its patent infringement litigation against Andrx in defense of its 45%-18 patent. On June 2, 1997, Andrx represented to the patent court that it intended to market its generic product as soon as it received FDA approval.

Nine days later, on September 24, 1997, HMR and Andrx entered into the Agreement. It provided that Andrx would not market a bioequivalent or generic version of Cardizem C.D. in the United States until the earliest of: (1) Andrx obtaining a favorable, final and unappealable determination in the patent infringement case; (2) HMR and Andrx entering into a license agreement; or (3) HMR entering into a license agreement with a third party. Andrx also agreed to dismiss its antitrust and unfair competition counterclaims, to diligently prosecute its ANDA, and to not "relinquish or otherwise compromise any right accruing thereunder or pertaining thereto," including its 180-day period of exclusivity. In exchange, HMR agreed to make interim payments to Andrx in the amount of $40 million per year, payable quarterly, beginning on the date Andrx received final FDA approval.

HMR further agreed to pay Andrx $100 million per year, less whatever interim payments had been made, once: (1) there was a final and unappealable determination that the patent was not infringed; (2) HMR dismissed the patent infringement case; or (3) there was a final and unappealable determination that did not determine the issues of the patent's validity, enforcement, or infringement, and HMR failed to refile its patent infringement action. HMR also agreed that it would not seek preliminary injunctive relief in the ongoing patent infringement litigation.

On July 8, 1998, the statutory thirty-month waiting period expired. On July 9, 1998, the FDA issued its final approval of Andrx's ANDA. Pursuant to the Agreement, HMR began making quarterly payments of $10 million to Andrx, and Andrx did not bring its generic product to market.

On September 11, 1998, Andrx, in a supplement to its previously filed ANDA, sought approval for a reformulated generic version of Cardizem CD. Andrx informed HMR that it had reformulated its product; it also urged HMR to reconsider its infringement claims. On February 3, 1999, Andrx certified to HMR that its reformulated product did not infringe the '584 patent.

On June 9, 1999, the FDA approved Andrx's reformulated product. That same day, HMR and Andrx entered into a stipulation settling the patent infringement case and terminating the Agreement. At the time of settlement, HMR paid Andrx a final sum of $50.7 million, bringing its total payments to $89.83 million. On June 23, 1999, Andrx began to market its product under the trademark Cartia XT, and its 180-day period of marketing exclusivity began to run. Since its release, Cartia XT has sold for a much lower price than Cardizem C.D. and has captured a substantial portion of the market.

For all of the plaintiffs, the foundation for their claims is the allegation that but for the Agreement, specifically the payment of $40 million per year, Andrx would have brought its generic product to market once it received FDA approval and at a lower price than the patented Cardizem C.D. sold by HMR. They further allege that the Agreement protected HMR from competition from both Andrx and other potential generic competitors because Andrx's delayed market entry postponed the start of its 180-day exclusivity period, which it had agreed not to relinquish or transfer. The Sherman Act Class Plaintiffs and the Individual Sherman Act Plaintiffs bring claims under the federal antitrust laws, specifically section 1 of the Sherman Act, 15 U.S.C. § 1; they seek treble damages under section 4 of the Clayton Act, 15 U.S.C. § 4. The State Law Class Plaintiffs bring claims under various state antitrust laws.

The defendants, HMR and Andrx, filed various motions to dismiss, all of which were denied.