End-Payor Antitrust Class Action Against Janssen for Zytiga is Dismissed

On October 27, 2021, the U.S. District Court for the District of New Jersey dismissed an antitrust lawsuit brought against Janssen by a class of indirect purchasers of the drug Zytiga, Janssen’s blockbuster prostate cancer drug. The plaintiffs claimed injury from overpaying for Zytiga during the period during which Janssen had sued generic manufacturers for infringement of its combination therapy patent (the ‘438 patent). The plaintiffs maintained that the ‘438 patent was invalid due to fraud on the Patent and Trademark Office and that the infringement action amounted to sham litigation which violated the Sherman Act. The underlying patent action was resolved in favor of the generic manufacturers after an eight-day bench trial, during which the court found the ‘438 patent invalid for obviousness.  

Because the plaintiffs were indirect purchasers of Zytiga, the court found that their federal Sherman Act antitrust claims must be dismissed under the direct purchaser requirement established by Illinois Brick v. Illinois. In doing so, the court rejected the plaintiffs’ argument that the specialty pharmacies from which they purchased Zytiga were Janssen’s agents. This left the plaintiffs with only state law claims.

These claims were then dismissed because of the Noerr-Pennington doctrine.  The Noerr-Pennington doctrine provides that a party that exercises its First Amendment right to petition the government for redress is shielded from antitrust liability based on such petitioning. The court considered whether Janssen’s unsuccessful infringement suit was protected activity under Noerr-Pennington or sham litigation which was so lacking in merit as to amount to nothing more than an attempt to interfere directly with business relationships of a competitor. The court had presided over the underlying patent litigation. It found that the infringement action, though unsuccessful, was not objectively baseless and that Janssen had probable cause to bring the infringement action. Therefore, the plaintiffs’ state law claims were barred by the Noerr-Pennington doctrine.

The court was careful to note that the plaintiffs, although relying on litigation following fraud on the PTO, “specifically disclaim a Walker Process theory that Janssen committed fraud on the PTO.” The claim of fraud on the PTO is supported by the theory pled by a relator in a qui tam case also before Judge McNulty, based on the same patent. See Silbersher et al v. Janssen Biotech Inc. et al., Case No. 2:2019-cv-12107 (D. N.J.).

This litigation presents a substantial recovery opportunity due to the volume of sales of the drug. We will monitor the appeal of this action and report on further developments, as well as continuing to monitor the Silbersher litigation to determine whether a successful ruling on a motion to dismiss there would support antitrust claims under Walker Process, regardless of the outcome of the class appeal. A generic has been available since November 21, 2018 and the relator’s qui tam complaint was unsealed on December 2018, however, so the statute of limitations may become an issue before the appeal is resolved.  

Louisiana Health Svc. & Indem. Co., et al. v. Janssen Biotech, Inc. et al., No. 2:19-cv-14146 (D. N.J.)