Antitrust and Unfair Competition Law

EpiPen Court Finds Tying Arrangement Involving Identical Products and Rejects Noerr-Pennington Defense in Face of Sham Citizen Petition Claims

Mark F. Ram
Cotchett, Pitre & McCarthy, LLP

The EpiPen®[1] is a disposable epinephrine auto-injector (“EAI”) that delivers epinephrine to treat anaphylaxis, a life-threatening allergic reaction[2]. In 2007, Mylan NV acquired the right to market and distribute the EpiPen. Since 2009, Mylan’s share of the EAI market—through the EpiPen—has exceeded 90%; in 2012, Mylan’s market share was almost 100%. As has been widely reported, Mylan increased the EpiPen’s price by more than 600% while the cost of the EpiPen’s dose of epinephrine has remained about $1. In 2007, the EpiPen cost $100; by 2016, Mylan was charging more than $600.

In In re: EpiPen (Epinephrine Injection Sales Practices & Antitrust Litig., No. 17-md-2785-DDC-TJJ (D. Kan.) (“EpiPen”), a putative class of end-payor plaintiffs allege that Mylan was able to achieve this price increase through anticompetitive means. Remarkable about EpiPen is the breadth of plaintiffs’ antitrust claims. Specifically, plaintiffs allege that (1) Mylan’s bundling of EpiPens in packages of two constitutes an unlawful tying arrangement; (2) Mylan entered into unlawful exclusive dealing arrangements with Pharmacy Benefit Managers (PBMs); (3) Mylan entered into unlawful exclusive dealing arrangements with schools; (4) Mylan and Pfizer entered into unlawful “pay-for-delay” settlements; (5) Mylan made a “sham” Citizen Petition to the FDA to delay generic competition; and (6) Mylan made fraudulent statements about competitors.

On August 20, 2018, U.S. District Judge Daniel D. Crabtree of the District of Kansas issued a 128-page order upholding plaintiffs’ claims of anticompetitive practices. EpiPen, 2018 WL 3973153 (D. Kan. Aug. 20, 2018). This note will focus on two of plaintiffs’ antitrust claims.

Tying one EpiPen to another.

From 1987 to 2011, the EpiPen was sold one at a time in the U.S. without incident. Beginning in 2011, Mylan began selling EpiPens two at a time in a package known as a “2-Pak”; EpiPens were no longer available individually in the United States. Plaintiffs allege that nothing changed in 2011 that required Mylan to sell EpiPens in a pair. According to plaintiffs, there is no medical reason to force customers to purchase a 2-Pak instead of a single EpiPen. Indeed, EpiPens are sold individually in every country where EpiPens are sold other than the United States. Id. at *7. Plaintiffs allege that requiring customers to purchase two EpiPens at a time constitutes an unlawful tying arrangement.

Mylan argued that plaintiffs failed to allege a plausible tying claim because they did not allege the existence of two distinct products. Mylan posited that because plaintiffs premised their tying claim on the EpiPen 2-Pak (i.e., selling two EpiPen devices in one package), plaintiffs failed to allege an unlawful tying arrangement because it involves selling two identical products.

In analyzing the parties’ arguments, the EpiPen court explained, “[t]ying is an arrangement involving the sale of ‘two distinct products or services as a package.’” Id. at *10 (quoting Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 33 (1984) (Brennan, J., concurring). The “essential characteristic of an invalid tying arrangement lies in the seller’s exploitation of its control over the tying product to force the buyer into the purchase of a tied product that the buyer either did not want at all, or might have preferred to purchase elsewhere on different terms.” Id. at *10 (quoting Jefferson Parish, 466 U.S. at 12). But “a tying arrangement cannot exist unless two separate product markets have been linked.” Id.(quoting Jefferson Parish, 466 U.S. at 21). And “the question whether one or two products are involved turns not on the functional relation between them, but rather on the character of the demand for the two items.’ Id. at 19”. Id. at *10.

The plaintiffs responded that “they have alleged a tying arrangement involving two separate product markets—one for the primary EAI device, and the other for a ‘spare’ (or ‘back-up’) EAI device.” Id. at *11. This argument was supported by the fact that prior to 2011, there was “sufficient independent demand for some patients to either not purchase a second EpiPen at all or to purchase an EpiPen and a cheaper, alternative back-up.” Id.

The court agreed with plaintiffs’ response, concluding that plaintiffs allege “sufficient consumer demand in the U.S. to purchase a primary EAI device separately from a back-up device or none at all so that it is efficient for a firm to provide one separately from the other.” Id. at *11 (quoting Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 456 (1992) (internal quotation and alteration omitted).

The EpiPen court’s conclusion here is notable because it was a matter of first impression. As the court remarked, “[t]he parties do not cite, and the court’s research has not revealed, any tying cases involving identical products with different and distinct uses—what the class plaintiffs allege here.” Id. at *11.

Sham Citizen Petition.

An FDA Citizen Petition provides the public a means to present safety concerns to the FDA. Plaintiffs allege that Mylan used the FDA Citizen Petition process to (1) delay Teva’s entry into the EAI market and (2) prevent Teva’s EAI product from competing with the EpiPen. Thus, on January 16, 2015, Mylan filed a Citizen Petition “a mere six months before Teva was scheduled (pursuant to [a reverse payment] settlement) to enter the market.” Id. at*6. In other words, even though Mylan and Teva had already agreed through settlement to delay Teva’s generic EAI onto the market, Mylan sought to further delay the entry of Teva’s generic through its Citizen Petition. Id.

In May 2015, five months after the January 2015 Petition and only weeks before the FDA was required to respond, Mylan supplemented its petition with a 48-page independent study purportedly showing that patients would not correctly use Teva’s generic product. Id.

According to the plaintiffs, Mylan’s submissions to the FDA rested on fundamentally flawed studies and the medical opinions of a doctor whom Mylan had paid some $95,000 in fees. Plaintiffs allege that without defendants’ use of the FDA Citizen Petition process, Teva would have entered the market much sooner after it addressed any FDA concerns and secured FDA approval. Id. at *6.

Rejecting Mylan’s assertion otherwise, the court found that these allegations sufficiently alleged that Mylan’s Citizen Petition delayed the FDA approval process. Id. at *27 (citing In re Suboxone (Buprenorphine Hydrochloride and Naloxone) Antitrust Litigation, No. 13-md-2445, 2017 WL 3967911, at *18 (E.D. Pa. Sept. 8, 2017).

Next, the court rejected Mylan’s argument that the Noerr-Penningtondoctrine bars plaintiffs’ claims based on the Citizen Petition. Noerr-Pennington “exempts from antitrust liability any legitimate use of the political process by individuals, even if their intent is to eliminate competition.” Tal v. Hogan, 453 F.3d 1244, 1259 (10th Cir. 2006). But Noerr-Pennington immunity does not apply to “sham” activities. Prof’l Real Estate Inv’rs, Inc. v. Columbia Pictures Indus. Inc., 508 U.S. 49, 60–61 (1993). Petitioning the government is a “sham” activity if: (1) it is “objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits,” and (2) it “uses the governmental process—as opposed to the outcome of that process—as an anticompetitive weapon.” Id. The EpiPen court found that the plaintiffs plausibly alleged that Mylan’s “Citizen Petition was objectively baseless because of its timing and contents.” Id. at *28. The court also found that the plaintiffs plausibly alleged Mylan used the process of filing the Citizen Petition to restrain competition, i.e., delay Teva’s market entry.

The court’s conclusion here—that Mylan could not enjoy Noerr-Pennington immunity—places it in a string of recent cases reaching similar conclusions involving “sham” Citizen Petitions. See In re Suboxone, 2017 WL 3967911, at *17; In re: Lipitor Antitrust Litig., 868 F.3d 231, 273-274 (3d Cir. 2017); In re Restasis (Cyclosporine Ophthalmic) Antitrust Litig., No. 18-md-2819-NG-LB, 2018 WL 4473632 at **12-16 (E.D.N.Y. Sept. 18, 2018.

1. For readability, the ® is omitted hereafter. 

2. Anaphylaxis is a life-threatening allergic reaction that occurs rapidly after exposure to an allergen. Epinephrine (adrenaline) is used to treat anaphylaxis and is available only by prescription. To treat anaphylaxis effectively, epinephrine must be administered immediately; as little as a thirty-minute delay can be deadly. Consequently, people prone to anaphylaxis are advised to carry an epinephrine auto-injector (“EAI”) at all times. 

Forgot Password

Enter the email associated with you account. You will then receive a link in your inbox to reset your password.

Personal Information

Select Section(s)

CLA Membership is $99 and includes one section. Additional sections are $99 each.