New York v. Actavis PLC - 787 F.3d 638 (2d Cir. 2015)

Rule:

Section 16 of the Clayton Act entitles a party to obtain injunctive relief against threatened loss or damage by a violation of the antitrust laws. A party seeking a preliminary injunction must ordinarily establish: (1) irreparable harm; (2) either (a) a likelihood of success on the merits, or (b) sufficiently serious questions going to the merits of its claims to make them fair ground for litigation, plus a balance of the hardships tipping decidedly in favor of the moving party; and (3) that a preliminary injunction is in the public interest. A court holds the movant to a heightened standard where: (i) an injunction is mandatory; or (ii) the injunction will provide the movant with substantially all the relief sought and that relief cannot be undone even if the defendant prevails at a trial on the merits. When either condition is met, the movant must show a clear or substantial likelihood of success on the merits, and make a strong showing of irreparable harm, in addition to showing that the preliminary injunction is in the public interest.

Facts:

The State of New York brought the present antitrust action against Defendant-Appellant Actavis plc and its wholly-owned subsidiary Forest Laboratories, LLC (collectively, "Defendants"), alleging that Defendants introduced a new version of a drug (“Namenda XR”) designed to treat moderate-to-severe Alzheimer's disease as the patent for the original drug (“Namenda IR”) neared the end of its exclusivity period. The patents on XR ensured exclusivity, and thus prohibited generic versions of XR from entering the market, until 2029. Faced with the prospect of competition from generic IR, Defendants decided to withdraw virtually all Namenda IR from the market in order to force Alzheimer's patients who depended on Namenda IR to switch to XR before generic IR would become available. The State alleged that Defendants’ forced-switch scheme would likely impede generic competition for IR. The District Court issued a preliminary injunction barring Defendants from restricting access to Namenda IR prior to generic IR entry. Defendants challenged the decision.

Issue:

Under the circumstances, did the district court err in granting preliminary injunction to bar defendants from restricting access to the original drug?

Answer:

No.

Conclusion:

The Court affirmed the grant of preliminary injunction, holding that there was a substantial likelihood that the Defendants’ withdrawal from the market of the original drug with expiring patent exclusivity and introducing a new drug of the same type under a new patent violated the antitrust laws, since the Defendants sought to perpetuate patent exclusivity through successive products and such conduct had anticompetitive effects of coercing patients to switch to the new drug and impeding competition for the drug which was being withdrawn by generic drugs which could soon be substituted for the withdrawn drug. Moreover, there was also a strong showing that both consumers and competition would suffer irreparable harm from the economic effects of being required to switch to the new drug and the reduction of competition from generic drugs in the market for the type of drug over which the company held monopoly power.