INTELLIGENCE

Louisiana Wholesale v. Shire Pharmaceuticals Decision

March 5, 2013

Haug Partners Client Supernus PrevaiFirm Decisions On March 5, 2013, U.S.D.J. Victor Marrero issued a decision in LouisianaWholesale Drug Company, Inc. v. Shire LLC, 12 Civ. 3711 (S.D.N.Y. Mar. 6, 2013), dismissing the action for failure to state a monopolization claim under § 2 of the Sherman Act, 15 U.S.C. § 2. In so doing, the Court noted that “This dispute sits at the intersection of patent law, pharmaceutical regulation, and antitrust law, with principles of contract law thrown in for good measure”. 

Shire holds patents for and manufactures Adderall XR, a drug used in the treatment of attention-deficit-hyperactivity-disorder. Louisiana Wholesale, which brought the action on behalf of itself and all others similarly situated, is a drug wholesaler that purchased Adderall XR and its generic equivalents from Shire and other parties. Louisiana Wholesale alleged that Shire intentionally breached license agreements it had entered into with two generic distributors as part of a settlement of patent infringement litigations by failing to supply them with all the so-called authorized generic Adderall XR they had requested under the agreements, and that Shire did soto keep supplies of the generic drug artificially low and prices artificially high. LouisianaWholesale further alleged that as a result, Adderall XR customers were forced to pay monopolistic prices for branded Adderall XR and inflated prices for the generic products sold by the generic distributors.

Shire disputed the allegations that it had breached its supply obligations under the license agreements and moved to dismiss the action on the grounds that Louisiana Wholesale’s claims did not state an antitrust violation because Shire was acting within the bounds of its lawfully held patents for Adderall XR. Louisiana Wholesale, principally relying on Aspen Skiing Co. v. AspenHighlands Skiing Corp., 472 U.S. 585 (1985), argued that while the terms of the license agreements as written might not constitute an antitrust violation, Shire’s actions under those agreements did because it had a duty to deal with its competitors under the license agreements and it violated that duty by not supplying all the Adderall XR requested by the generic distributors under the agreements.In dismissing the action, Judge Marrero rejected Louisiana Wholesale’s arguments: “The Court is not convinced that where…a patent holder granting multiple licenses that…do not extend the scope of the patents…, would…be subject to antitrust claims based on its conduct under those…licenses where that…patent holder would not face such liability if it refused to issue a license in the first instance.”

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