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Prilosec/Nexium Antitrust Claims Dismissed

Walgreen Co. v. AstraZeneca Pharmaceuticals L.P., 534 F.Supp.2d 146 (D.D.C., Feb. 25, 2008).

This case combined five separate lawsuits in which different drug companies (collectively “Walgreen”) sued AstraZeneca Pharmaceuticals alleging antitrust violations; specifically, each lawsuit alleged that AstraZeneca violated Section 2 of the Sherman Act, 15 U.S.C. 2, by actual or attempted market monopolization in deliberately switching the market from its heartburn prescription drug Prilosec just as that patent was about to expire to its newly approved drug Nexium which had a fresh patent. AstraZeneca filed a motion to dismiss all five cases.

AstraZeneca obtained a patent for Prilosec in 1981 and it expired in October of 2001. In June 2003, the FDA approved an over the counter (“OTC”) version of Prilosec, granting AstraZeneca “exclusivity in that market through June 2006.” In addition, AstraZeneca owns a patent for Nexium, a drug similar to Prilosec in both chemical make up and purpose. The FDA approved Nexium for sale in February 2001, eight months before the Prilosec patent expired. The Nexium patent does not expire until 2014, meaning generic substitutions cannot be made until that time. In February 2001, AstraZeneca changed its marketing plan to cease promotion for Prilosec and began aggressively pushing Nexium to doctors.

Walgreen’s complaints are that AstraZeneca switched, or attempted to switch, the market from Prilosec, which now has generic competition, to a virtually identical drug, Nexium, which has no generic competition. Walgreen asserted that there is almost no difference between Nexium and Prilosec, and that “this switching is exclusionary and violates §2 of the Sherman Act.” In addition, Walgreen argued that AstraZeneca engaged in prohibited exclusionary conduct when it introduced Prilosec OTC and obtained an FDA grant of exclusivity for three years.

The District Court began by distinguishing this case from other cases on which Walgreen relied for precedent. The difference between was that elimination of choice was a critical factor. The Court pointed out that in this case, there was no allegation that AstraZeneca eliminated any consumer choices; rather, it added choices to the market by introducing Prilosec OTC and Nexium.

The Court also pointed out that no antitrust law requires a new product to be superior to existing products. New products are not capable of affecting competitors’ market share unless consumers prefer the new product, regardless of whether that product is superior, equivalent, or inferior to the existing products.

The District Court stressed that Walgreen failed to identify an antitrust injury. Walgreen did not allege facts showing that AstraZeneca interfered with its freedom to compete. Introducing new products to the market, which allows more choices to the consumer, is not a violation of §2 of the Sherman Act. Therefore, the Court granted AstraZeneca’s motion to dismiss all five complaints for failure to state a claim.



Judge(s): Richard W. Roberts
Related Categories: Civil Procedure , Health Care
Plaintiff Lawyer(s) Plaintiff Law Firm(s)
Richard Arnold Kenny Nachwalter PA
Robert Landon, III. Kenny Nachwalter PA
Scott Perwin Kenny Nachwalter PA
Lauren Ravkind Kenny Nachwalter PA
Linda P. Nussbaum Keplan Fox & Kilsheimer LLP

Defendant Lawyer(s) Defendant Law Firm(s)
Joshua E. Anderson Sidley Austin LLP
Alycia A. Degen Sidley Austin LLP
Mark Haddad Sidley Austin LLP
Kristin Graham Koehler Sidley Austin LLP
David Schiffman Sidley Austin LLP
John W. Treece Sidley Austin LLP



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its considerable sales efforts from nexium to prilosec, it used ("fda"). by 1999, prescription prilosec was producing3 integration). at 151. see also id. 706d at 164-66 (advising that 2 behavior." atl. richfield co. v. usa petroleum co., 495 u.s. astrazeneca still manufactures and markets its prescription official grants of exclusivity). co., inc. et al., ) this switching is exclusionary and violates 2 of the sherman 2006). the analogy, however, fails on the facts. in microsoft, astrazeneca pharmceuticals l.p., astrazeneca l.p., zeneca, inc., of the established drugs. -15- that astrazeneca engaged in exclusionary conduct prohibited by 127 s. ct. at 1964-65 (internal citations and quotations omitted) presented in the microsoft case); see id. generally, ch. 7d-4 at reflects little reason for plaintiffs' circumscribed ability to -2- prilosec capsules. in june 2003, the fda approved an otc version submitted safety studies to the fda. l.p. et al., ) prefer the new product, regardless of whether that product is signed this 25th day of february, 2008. 2," it should "at least require the plaintiff to overcome a ______________________________) v. ) civil action no. 06-2089 (rwr) dismiss, all other pending motions will be denied as moot. "switching the market from prilosec, which now has generic does not expire until 2014, and nexium is not subject to generic ) procompetitive albeit to the disadvantage of plaintiffs. "switch[ed] the market from prilosec, which now has generic (1) tends to impair the opportunities of rivals, but also 2002) ("areeda & hovenkamp 2d ed.") (discussing the tying astrazeneca obtained a patent for prilosec in 1981, and began plaintiff can show "cumulative proof that the representations presumption that the effect on competition of such a practice was in an unnecessarily restrictive way." id. 651b at 77. "whether the undesirable "willful acquisition or maintenance" conduct that burlington drug company, ) case 1:06-cv-02084-rwr document 53 filed 02/25/2008 page 10 of 15 2 of the sherman act. without such facts, plaintiffs' by the end of the year 2006. (id. 68.) indeed, plaintiffs here have not identified an antitrust plaintiffs, ) offices to distribute samples and promotional materials and -14- "detailing" in the retail pharmaceutical business refers4 procedure 12(b)(6) for failure to state a claim upon which relief plaintiffs have not pled facts that support a reasonable allege that astrazeneca deliberately switched the market from its the motions to dismiss will be granted and the complaints will be coercion." id. see also areeda & hovenkamp 2d ed., 776b2 these conditions are also known as erosive esophogitis2 professionals that nexium offered advantages to prilosec and in ) furthermore, before a court allows "misrepresentation to buyers rite aid headquarters corp. in civil action no. 06-2089; meijer, (1962). as a threshold matter, then, to obtain antitrust relief merely a form of vigorous competition, can be difficult to section 2 of the sherman act makes it a felony to decision to market and aggressively promote nexium was with eliminating choices available to the consumer. yet, here, need detailed factual allegations, . . . a plaintiff's obligation federal rule of civil procedure 12(b)(6) authorizes united states district court prilosec. aztrazeneca, arguing that its conduct was ) l.p. et al., ) relief can be granted. see fed. r. civ. p. 12(b)(6). a court $4 billion in revenue to astrazeneca. the prilosec patent heartburn and related conditions. (walgreen co. et al. v.2 memorandum opinion consisting of all persons and entities in the united states who /s/ distortion in its efforts to persuade doctors and other medical of an airplane or pipeline [that] excludes others from using susceptible of neutralization or other offset by rivals." areeda dismissal of a complaint for failure to state a claim upon which the plaintiffs in each case are as follows: walgreen1 importance that a judge or jury may later regard them as reasonable reliance, made to buyers without knowledge of the expired in october 2001, and a company not involved in this case "monopolize or attempt to monopolize . . . any part of the trade berkey photo); id. 781e at 271 ("we therefore conclude that all allegations of antitrust injury and exclusionary conduct omeprazole, i.e., prilosec (id. 54), plaintiffs contend that berkey photo, 603 f.2d at 287-88 (footnotes omitted). and zeneca holdings, inc. (collectively, "astrazeneca") have ______________________________ v. ) civil action no. 06-2157 (rwr) ) ) 122.) in addition, plaintiffs contend that astrazeneca engaged v. ) civil action no. 06-2084 (rwr) richard w. roberts the de minimis presumption should be overcome only where the the drug substance esomeprazole, or (s)-omeprazole. (id. 53.) months before the prilosec patent expired. the nexium patent prescriptions written by medical professionals, that is, persons 65.) plaintiffs also project that if nexium had not gone to ______________________________) astrazeneca was not the sole manufacturer in the market3 ______________________________) conditions. (see mot. to dismiss at 12.) astrazeneca pharmaceuticals ) act. they also allege that to effectuate this market switch, ) an antitrust plaintiff must prove an "antitrust injury, which is albertson's, inc., safeway, inc., hy-vee, inc. and american sales in prohibited exclusionary conduct when it introduced otc lp et al., ) the firm violated antitrust laws when it tied a specific internet information. that astrazeneca "interfere[d] with the[ir] freedom to compete." ) l.p. et al., ) astrazeneca pharmaceuticals ) requires a product new on the market with or without a patent constitute no "more than labels and conclusions, and a formulaic inference that astrazeneca's conduct was of the type that is case 1:06-cv-02084-rwr document 53 filed 02/25/2008 page 9 of 15 and then again to a second tablet form and then stopped -5- drug company of florence, inc. in civil action no. 07-41. the the antitrust laws were enacted to protect competition, not at 236 (discussing the basic analytical points the court made in antitrust must tread lightly." areeda & hovenkamp, 704a fraud, or any court that has identified such conduct as6 assertions of exclusionary conduct amount to no more than "labels violated section 2 of the sherman act, 15 u.s.c. 2, which legitimate competition, are myriad. the challenge for an competition, to a virtually identical drug, nexium, which does the reaction of the market." berkey photo, inc. v. eastern kodak product and, in turn, depressed sales of the generic substitutes to provide the grounds of his entitle[ment] to relief requires -12- plaintiffs contend that astrazeneca's conduct is analogous to whether there is sufficient demand for a particular product to browser to a specific operating system on which it had a parietal cells any differently than would an equal dose of labs. v. teva pharms. usa, inc., 432 f. supp. 2d 408 (d. del. -11- case 1:06-cv-02084-rwr document 53 filed 02/25/2008 page 1 of 15 ) company, inc. in civil action no. 06-2084; rite aid corp. and patent and not superior to prilosec, astrazeneca's conduct is latter three actions were filed on behalf of a proposed class first marketed a generic equivalent of prilosec in december 2002. them. . . . further, the patent act creates a federal right to complaint will be made to the complaint in the first-filed case. and symptomatic gastroesophageal reflux disease. products gain acceptance in the market, therefore, it is of no ) inc. et al., ) treatments manufactured by others for the same medical rite aid corporation et al., ) complaints are otherwise virtually identical, all references to a prilosec. at 1965. to the practice of sending company representatives to doctors' need not, however, "accept inferences drawn by plaintiffs if such & hovenkamp 2d ed., 782b at 274. plaintiffs cannot hope to case 1:06-cv-02084-rwr document 53 filed 02/25/2008 page 5 of 15 market, and consumers would have collectively saved $11.5 billion co., 603 f.2d 263, 287 (2d cir. 1979). "if a monopolist's allegations to be true, even if they are doubtful. bell atl. ) there is almost no difference between nexium and prilosec, and new product. this is not an antitrust injury. health servs., inc., 161 f.3d 1334, 1338 (11th cir. 1998). factual allegations." kowal, 16 f.3d at 1276. "while a between exclusionary acts, which reduce social welfare, and that a court must construe the complaint "liberally in the substantively identical complaints, alleging that defendants1 omeprazole, composed of equal parts of two mirror-image molecular any particular act of a monopolist is exclusionary, rather than v. ) civil action no. 06-2155 (rwr) case, is classic exclusionary conduct. see philip r. areeda & possible. advertising that emphasizes a producer's strengths and ) ______________________________) "[a] patent is presumptively not a monopoly . . . [and] is no "the offense of monopolization has two elements: `(1) the recitation of the elements of a cause of action." twombly, 127 communc'ns corp., 16 f.3d 1271, 1276 (d.c. cir. 1994) (noting not alleged facts that support an inference that astrazeneca's defendants. ) injuries include only those injuries that result from -13- structures, (s)-omeprazole and (r)-omeprazole, which are competition, to a virtually identical drug, nexium, which does nexium, which had a patent that would not expire for several respects. they have not, however, asserted a claim for fraud. substitutions before that time. upon the introduction of nexium, prilosec and obtained a grant of exclusivity for three years from walgreen company et al., ) sufficient to support a reasonable inference that astrazeneca's "that which prevents actual or potential rivals from competing or astrazeneca used distortion and misdirection in marketing, product innovation should be lawful in the absence of bundling for the purposes of this motion that yield a reasonable product is `superior' to another. preference is a matter of subject matter, continued for prolonged periods, and not readily meijer, inc. et al., ) its advertising directed to lay persons. plaintiffs have not s. ct. at 1965. accordingly, astrazeneca's motion to dismiss ) exclude others from practicing the patent . . . . as a result, however. prevacid, protonix, and aciphex are prescription choice between . . . formulations. instead, defendants allegedly (alteration in original). element of a section 2 sherman act claim. twombly, 127 s. ct. identified any antitrust law that prohibits market switching markets the brand-name prescription drug nexium. nexium contains formulation of the drug once from capsule form to tablet form louisiana wholesale drug co., inc. in civil action no. 06-2157; lp et al., ) compl. ("fac") 42.) prilosec contains the drug substance tying, which is not alleged against astrazeneca in this5 competition-reducing aspect or effect of the defendant's defendants. ) astrazeneca pharmaceuticals ) determinations are left to the marketplace. new products are not inference that they have been damaged by an antitrust injury, or plaintiffs, ) inc. and meijer distribution, inc. in civil action no. 06-2155; ) more than labels and conclusions, and a formulaic recitation of deception, constitute anticompetitive conduct violative of 2." astrazeneca pharms. et al., civil action no. 06-2084, first am. ) astrazeneca very aggressively promoted and "detailed" nexium to4 ) exclusionary conduct prohibited by section 2 of the sherman act, competitors. brown shoe co. v. united states, 370 u.s. 294, 320 stomach of a person who ingests the substance. (id. 53-54.) competitive acts, which increase it." microsoft, 253 f.3d at 58. assertions that astrazeneca engaged in exclusionary conduct are herbert hovenkamp, 3a antitrust law 776c at 242-53 (2d ed. individual taste. the only question that can be answered is case 1:06-cv-02084-rwr document 53 filed 02/25/2008 page 12 of 15 conduct in switching the market from prilosec to nexium is would have been in had the challenged conduct not occurred. id. co., eckerd corp., maxi drug, inc., the kroger co., new plaintiffs allege that the sales persuasion directed to6 de minimis." id. at 288 n.41. areeda and hovenkamp posit that may be granted. because plaintiffs have not alleged facts prohibited by 2 as exclusionary, or whether plaintiffs' -4- promoting and detailing nexium. (see id. 69, 90-95, 116, 228-67; (discussing various issues involved in vertical allows astrazeneca "to bathe [its] cause in the best light -10- here, then, the issue to be determined is whether plaintiffs' exclusionary. plaintiffs are not able to show that enjoying the was about to expire, to both its newly fda-approved equivalent choices. rather, astrazeneca added choices. it introduced a new make its production worthwhile, and the response, so long as the antitrust remedies should not be applied to monopolists who the elimination of choice was a critical factor in the court's factual background to be superior to existing products. antitrust law holds, and the elements of a cause of action will not do . . . ." twombly, astrazeneca also owns the patent for, manufactures, and defendants. ) obtaining approval from the food and drug administration that a new product siphoned off some of the sales from the old monopoly, and by so doing effectively eliminated the customers' case 1:06-cv-02084-rwr document 53 filed 02/25/2008 page 15 of 15 of prescription prilosec, and granted astrazeneca exclusivity in case 1:06-cv-02084-rwr document 53 filed 02/25/2008 page 6 of 15 plaintiffs in the five above-captioned cases filed (2) either does not further competition on the merits or does so dismissed. because these cases do not survive the motions to johnson, 161 f.3d at 1338. plaintiffs are as free to compete knowledgeable of the subject matter. in short, plaintiffs have there is no allegation that astrazeneca eliminated any consumer inferences are unsupported by the facts set out in the complaint. conduct held unlawful in microsoft, 253 f.3d 34, and in abbott from growth or development as a consequence of a superior -9- ) case 1:06-cv-02084-rwr document 53 filed 02/25/2008 page 11 of 15 case 1:06-cv-02084-rwr document 53 filed 02/25/2008 page 4 of 15 for the old product, does not create an antitrust cause of case 1:06-cv-02084-rwr document 53 filed 02/25/2008 page 7 of 15 prevent and that flows from that which makes defendants' acts inferior, so long as that success was not based on any form of or elimination of consumer choice. introduce new products under patents or, presumably, other the fda approved nexium for sale in february 2001, just eight plaintiffs allege that astrazeneca engaged in exclusionary an appropriate order accompanies this memorandum opinion. any of the defendants after december 18, 2002. because the 2 prohibits is often referred to as "exclusionary." see philip drug to compete with already-established drugs both its own the gravamen of plaintiffs' complaint is that astrazeneca v. ) civil action no. 07-0041 (rwr) different than any other property right . . . [such as] ownership which relief may be granted. plaintiffs argue that because nexium is protected by a prescription heartburn drug prilosec, just as prilosec's patent prilosec would have far more than their current 30% of the impairs their opportunities to do so effectively." id. 651b procompetitive rather than anticompetitive, filed motions to plaintiffs, ) ) astrazeneca pharmaceuticals ) capable of affecting competitors' market share unless consumers antitrust court lies in stating a general rule for distinguishing the fda. (see id. 96-103.) prilosec is a brand-name prescription drug used to treat prevented such a choice by removing the old formulations from the the year after nexium hit the market nexium siphoned off one- united states v. grinell corp., 384 u.s. 563, 570-71 (1966)). plaintiffs, ) considering a rule 12(b)(6) motion to dismiss assumes all factual . . . ."). here, plaintiffs have alleged no coercion, bundling, prilosec if nexium had not been an alternative. (see id. 63, -3- ) ) injury that they have suffered. they complain that astrazeneca's -6- anticompetitive for the purposes of 2, rather than discussion and burlington drug company, inc., dik drug company, and king either by prescription or over-the-counter. the complaint minimizes its weaknesses does not, at least unless it amounts to and conclusions, and a formulaic recitation" of this essential astrazeneca pharmaceuticals ) conduct "by introducing nexium, a drug virtually identical to and introduced. prilosec remains available as a consumer choice third of the prescriptions that would have been written for -7- ______________________________) ) that market through june 2006 after astrazeneca conducted and interference with the freedom to compete." johnson v. univ. case 1:06-cv-02084-rwr document 53 filed 02/25/2008 page 14 of 15 sought to defeat competition from generic substitutes and ) competitive product and successfully competing in marketing the decision to deny teva's motion to dismiss the complaint. id. benefits of patent protection is exclusionary conduct under 2. realize sales other than astrazeneca introducing a new to say injury of the type the antitrust laws were intended to for prescription treatment of heartburn and related conditions, existing prior formulations. teva, 432 f. supp. 2d at 415, 422. years, and to its newly fda-approved over-the-counter ("otc") action. simply stated, plaintiffs have not alleged facts showing nor must [a] court accept legal conclusions cast in the form of that there is no pharmacodynamic reason why a dose of (s)- conduct cost them sales of their generic substitutes. the fact plaintiffs also complain that when astrazeneca transferred deliberately limit rather than expand consumers' choices when it plaintiffs have also not identified any antitrust law that marketing 20 mg prilosec capsules in september 1989 after manufacturing the prior formulations, and repurchased all microsoft and teva, the defendants' offending conduct had to do successively introduced new patented drugs by merely changing the willful acquisition or maintenance of that power as distinguished purchased omeprazole and/or any of its enantiomers directly from with determining which product among several is superior. those prohibits actual or attempted market monopolization. plaintiffs louisiana wholesale drug ) based on sales data, plaintiffs calculate that in 2002 unlawful." brunswick corp. v. pueblo bowl-o-mat, inc., 429 u.s. 477, 489 (1977). antitrust plaintiffs do not suffer antitrust and others' and with the generic substitutes for at least one through sales persuasion short of false representations or ) at 422 ("but here . . . consumers were not presented with a dismiss the complaints under federal rule of civil plaintiff can recover only if the loss stems from a to be the basis of a competitor's treble damage action under transformed into an active drug in the parietal cells of the defendants. ) case 1:06-cv-02084-rwr document 53 filed 02/25/2008 page 3 of 15 market while introducing new formulations."). thus, in both product, business acumen, or historic accident.'" united states defendants. ) supported by factual allegations which must be taken as true at 76. the term encompasses "at most behavior that not only for the district of columbia make such a showing because nexium sales necessarily depended on ) injury merely because they are in a worse position than they plaintiffs, ) (rev. ed. 1996) ("areeda & hovenkamp"). exclusionary conduct is medical professionals and lay persons was distorted in multiple doctors, and at the same time ceased promoting and detailing conclusion inferences that can be derived from the facts alleged"). a court complaint attacked by a rule 12(b)(6) motion to dismiss does not or commerce among the several states . . . ." 15 u.s.c. 2. one can determine with any reasonable assurance whether one exclusionary for purposes of 2 of the sherman act. the law r. areeda & herbert hovenkamp, 3 antitrust law 650a(1) at 67 market, the manufacturers of generic substitutes to prescription ) choice of internet browsers. microsoft, 253 f.3d at 64-65. in5 case 1:06-cv-02084-rwr document 53 filed 02/25/2008 page 8 of 15 has long held, to the contrary. courts and juries are not tasked were clearly false, clearly material, clearly likely to induce not [have generic competition.]" (id. 1.) asserting that teva, the complaint alleged that teva was a monopolizer that at 486-87. "the antitrust injury requirement ensures that a possession of monopoly power in the relevant market and (2) the ) ______________________________ with prilosec as they would have been had nexium never been case 1:06-cv-02084-rwr document 53 filed 02/25/2008 page 2 of 15 not [have generic competition.]" (id. 1.) to make their case, v. microsoft corp., 253 f.3d 34, 50 (d.c. cir. 2002) (quoting corp. v. twombly, 127 s. ct. 1955, 1965 (2007); kowal v. mci free choice of consumers is preserved, can only be inferred from plaintiffs' favor" and "grant plaintiffs the benefit of all united states district judge superior, equivalent, or inferior to existing products. "[n]o 328, 344 (1990) (emphasis in the original). "thus, antitrust omeprazole, i.e., nexium, would interact with the stomach's case 1:06-cv-02084-rwr document 53 filed 02/25/2008 page 13 of 15 -8- no more effective than prilosec" (fac 116, 122), and discern: the means of illicit exclusion, like the means of will be granted for plaintiffs' failure to state a claim upon

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