Wyeth v. Levine, a case being heard by the Supreme Court in November, has been in the news a lot lately. The case concerns the injuries suffered by Diana Levine, a professional musician in Vermont who Wyeth [NYSE:WYE] nausea medication called Phenergan in a visit to the emergency room. The drug was given incorrectly, causing her to lose her right arm below the elbow. She sued Wyeth, arguing that Wyeth’s warning in its FDA-approved labelling for the drug was insufficient.

A Vermont state court jury awarded her $6 million, and Wyeth appealed, all the way to the Vermont State Supreme Court, which sided with Levine. Wyeth argued that Levine’s state law personal injury and failure-to-warn claims should be “preempted” by the FDA’s authority to regulate the labels of prescription drugs. Since their argument is based on federal law, on which the U.S. Supreme Court is the ultimate authority, they were able to appeal the decision to the Supreme Court.

We frequently get on our soapbox here at the PAL blog on the topic of preemption - to see our previous posts on this subject, go here.

Earlier this year, the Supreme Court ruled in Riegel v. Medtronic that state law claims concerning medical devices are preempted, by the federal Medical Device Amendments. However, that decision does not mean that the Court will necessarily rule the same way in the Wyeth case, since they concern two different federal laws — and the Medical Device Amendments specifically address preemption, while the Food Drug and Cosmetics Act (FDCA) does not. (PAL joined an amicus brief in that case too, arguing against preemption).

The issue is hardly academic. If Wyeth prevails, injured consumers will be all but precluded from suing drug companies when they are injured by unsafe drugs. The FDA’s authority to approve prescription drugs and their labels will stand as a shield to liability — and therefore to accountability. Given that the drug safety scandals of the past four years have underscored the FDA’s inability and unwillingness to do its job, this should scare the daylights anyone who ever takes a pill. It is part of a larger attack on consumers’ access to the Courts by industries that seek to avoid responsibility when they harm, deceive, injure and even kill consumers through carelessness and greed. Preemption, as some like to say, is the new tort reform.

Prescription Access Litigation has joined an amicus curiae (”friend of the Court”) brief in the case, supporting Diana Levine and arguing against preemption. The brief was written by AARP, and is also joined by the National Women’s Health Network, a member of the PAL coalition.

To read the AARP/PAL/NWHN amicus brief, go here.

And Ed Silverman, of Pharmalot, has helpfully compiled most of the other amicus briefs that have been filed:

“Here are the briefs filed by the 47 state attorneys general; the former FDA commissioners; constitutional scholars; Senior Citizens League; National Conference of State Legislatures; New England Journal of Medicine editors; the California Medical Association; AARP; consumer activists; trial lawyers’ association; members of Congress; various unions; various economists and various tort law professors.

And if this isn’t enough, you can sift through Levine’s brief, an interview with Levine, the Wyeth brief and the brief filed by the US Solicitor General. And if you look here, you can read friend-of-the-court briefs filed earlier by PhRMA, BIO, the General Pharmaceutical Association, the US Chamber of Commerce, the American Enterprise Institute and the Washington Legal Foundation in support of preemption.”

We’ve frequently reported here on the Prescription Access Litigation (PAL) blog about the class action lawsuit brought by PAL coalition member SEIU Health & Welfare Fund and others against Abbott Laboratories [NYSE:ABT], challenging Abbott’s December 2003 price increase of 400% on its HIV/AIDS drug, Norvir. That lawsuit alleged that Abbott’s price-hike was intended to increase the sales and market share of another Abbott HIV/AIDS drug, Kaletra.

We’re pleased to announce that SEIU Health & Welfare Fund, the two individual plaintiffs in the class action and Abbott agreed to a proposed settlement of the case on August 13, 2008. Abbott has agreed to pay between $10 Million and $27.5 Million, depending on court rulings to come, to settle the nationwide claims by consumers who were overcharged for the medicine.

There have been a number of important decisions by the Court to date that have set the stage for this settlement. On June 11, 2007, the Court certified the case as a nationwide class action. On May 16, 2008 the Court issued a ruling that was a partial victory for the plaintiffs and a partial victory for Abbott. The Court held that Abbott could not claim a patent that it holds on Norvir as a defense to the plaintiffs’ claims (the partial win for the plaintiffs). However, the Court also dismissed the plaintiffs’ claims for “unjust enrichment.” These claims alleged that Abbott was “unjustly enriched” by its allegedly illegal Norvir price hike.

What’s important about this dismissal is that these common law unjust enrichment claims were the only nationwide claims for monetary damages (as opposed to claims for “injunctive relief,” that is, for changes in company practices) in the case. When the Court dismissed these claims, the only claims for damages that remained in the case were under California state law. Thus, in a nutshell, after the Court’s May 16 order, the case for monetary damages was narrowed to cover just consumers and health plans in California.

Abbott had asked the Court to allow an “interlocutory appeal.” This means, basically, that Abbott asked the District Court to ask the 9th Circuit Court of Appeals to make a decision on a particular question of antitrust law that Abbott felt could determine the outcome of the case. The Court refused, since the trial was at that point only three months away.

The proposed settlement attempts to get the Court of Appeals to resolve this and several other legal issues, and to tie the amount of the settlement to the decisions of the Court of Appeals. Abbott and the plaintiffs will ask the court hearing the case (the federal District Court for the Northern District of California) to allow them to appeal three legal issues to the 9th Circuit immediately. These legal issues are ones that have been essential to the plaintiff’s success so far, and which Abbott would likely appeal if the plaintiffs were to win at trial.

There are several different forms the settlement could take, depending on how this appeal goes:

• If the District court ”certifies” all three questions up to the Ninth Circuit for appeal, and the Ninth Circuit accepts at least two of them, Abbott will pay a non-refundable $10 Million in to a settlement fund. That $10M (and possibly more – see below) would eventually be distributed to 13 different non-profit organizations that benefit people with HIV/AIDS. (See a list of those organizations here).
• How much Abbott would have to pay beyond the initial $10M depends on how the 9th Circuit rules on the appeals questions:
  • If Abbott wins the appeal of any of the three questions before the Ninth Circuit, then it doesn’t pay anything beyond the initial $10M.
  • If the plaintiffs win on all the questions before the 9th Circuit, then Abbott must contribute another $17.5 Million to the settlement fund.
  • If the 9th Circuit “remands” (sends back) the case to the District Court for any reason (such as asking the District Court to make findings of fact), then Abbott must contribute only $4.375 Million more to the settlement fund.

In a nutshell, Abbott will ultimately pay between $10M and $27.5M. After the attorneys’ fees and expenses are paid (approximately 1/3 of the total), here is how the rest of the settlement will be divided:

• If Abbott wins any one of the questions before the Ninth Circuit, then the $10M, reduced to $6-7 M after costs and attorneys’ fees, will be distributed equally to all the cy pres recipients on the list above.
• If, however, the court remands any question, or if the Plantiffs win all the questions, then the settlement amount ($14.3M or $27.5M respectively, before legal costs and fees, or between $9.6 and $18.4M after) will be divided, with
  • 70% of it (between $6.7M and $12.8M approximately) going to the 13 organizations described above, and
  • 30% (between $2.9M and $5.5M approximately) going to consumers and TPPs in California)

Confusing? Yes. But the settlement is a creative resolution of the lawsuit. It takes into account the different possible outcomes to a trial and inevitable appeal, and essentially adjusts the amount of the settlement accordingly.

The Court has scheduled a hearing for August 19 on whether to grant “preliminary approval” to the Settlement. If it does grant that approval, notice will be published to alert members of the class about the proposed settlement. Consumers and TPPs that paid for Norvir will have the option of opting out of the settlement (if they want to pursue their own individual lawsuits against Abbott), objecting to the terms of the settlement, and, if they are located in California, filing claims forms to receive a portion of the settlement proceeds. The Court will schedule a Final Approval hearing for several months from now. After that hearing, the Court will decide whether to grant Final Approval to the settlement. If it does grant that approval, and after any appeals, the money in the settlement will be distributed as described above.

To see a copy of the settlement, go here.

Other resources:

• A summary of the lawsuit challenging Abbott’s price hike of Norvir
• Earlier PAL blog entries on the plaintiff’s successful class certification, Abbott’s attempt to keep damaging documents from public view, or the plaintiff’s anti-trust claims.

The Prescription Access Litigation blog’s resident Advice Columnist, Ask Pharmie, has been on hiatus for a while — but now he’s back! Ask Pharmie answers readers’ questions about the pharmaceutical industry, drug marketing, drug pricing, and the like. Send him your questions! (Keep in mind, he does not answer medical or treatment questions, or render medical advice.)

So, reaching into Ask Pharmie’s mailbag, here’s our latest question:

Question: I recently switched from a brand name drug to a generic version to save money. Although the generic works just as well, the pill is a different color and shape from the brand-name. This is confusing. Why don’t the generic pills look the same as the brand name pills?

Answer:
Good question! After all, generic drugs are the same medicine as the brand-name – they have the same active ingredient, and the same effectiveness. So it stands to reason that the pill would look the same, right? Not necessarily.

When a brand-name drug first comes on the market, the manufacturer has a patent on the drug that prevents any other companies from making or selling that drug. However, when the patent expires or gets invalidated, generic drug companies can apply for FDA approval to sell identical generic versions of the drug.

Generic drugs are required to have the same active ingredient and to work the same as the brand name. But this does not also mean that generic drug companies can copy the appearance of brand name drugs. If the appearance, shape, name and/or color of the drug is trademarked, it cannot be copied. Trademarks are words, names and symbols used to identify goods from a particular manufacturer. Unlike patents, which last a maximum of 20 years, trademarks never expire. While many brand name drug companies have traditionally only trademarked the names of their drugs, there is a trend towards trademarking the appearance of the drug as well.

For example, Pfizer has trademarked both the name Viagra and the well-known blue diamond shape of the Viagra pill. AstraZeneca has trademarked not just the name Nexium, but also the phrase “Purple Pill” and the characteristic purple-with-yellow-stripes appearance of Nexium.

So why have drug companies started to trademark the appearance of their drugs? In the past several years, brand name drug companies have started to make the appearance of their pills part of their marketing campaigns. By making consumers associate a particular appearance of a pill with the medicine contained in the pill, the drug company builds what’s called a “brand identity.” This helps convince the consumer that the product is superior and builds what’s called “brand loyalty.”

Drug companies use this strategy to stand out from their competitors. They also use it to try to convince patients to keep paying for the more expensive brand-name version of the medicine when a generic version becomes available. They hope that the patient will equate the look of the pill with its effectiveness. A generic pill can look “drab” in comparison, to, say a colorful Nexium pill, with its bright purple and its yellow stripes. It is a testament to how effective drug company marketing has become that consumers even notice the color of their pills!

Unfortunately, this serves to confuse patients. For patients that take many medications, the shape and color of the pill can help them remember what it is and what it’s used for. If drug companies didn’t trademark the appearance of their pills, then generic drug companies could make their pills look the same as the brand-name. This would help patients remember what each of their medications is, and avoid potentially dangerous errors (such as taking a drug at the wrong time, taking too much of the drug, missing a dose, etc).

The main thing to remember is that the appearance of a drug has nothing to do with its effectiveness. By using the color and shape of a drug as a marketing tool, brand-name drug companies are trying to fool you into thinking that these things matter, and to trick you into using an expensive brand-name drug when a less expensive one (generic or a different brand-name drug in the same category) would work just as well.

One last thing to keep in mind: The same generic drug can be made by many different generic drug companies, and each of their pills may look different not just from the brand-name pill, but from each other. If your pharmacy changes which generic drug company it buys your medication from, or if you switch pharmacies, your pills might suddenly look different than they did the last time you filled your prescription. Don’t panic! This doesn’t mean that you got the wrong pills. But, if you are at all uncertain or concerned, talk to your pharmacist. Better safe than sorry.

Here’s links to the past Ask Pharmie columns:

• How do drugs go from being prescription-only to being available Over-the-Counter?
• Why are there drug ads on TV that don’t tell you what the drug is for?
• What is a generic drug? (And other questions about generic drug)
• How can I make sure I am getting a drug that is effective, safe and affordable? How can I help my doctor get unbiased information? (and other related questions)

Got a question for Ask Pharmie? Send it in.

Below is a press release that we here at Prescription Access Litigation (PAL) issued today. Three members of the PAL coalition filed a formal objection to a settlement proposed in the class action lawsuit, Carpenters & Joiners Welfare Fund et. al. v. SmithKline Beecham, (U.S. District Court, Minnesota, Case #04-cv-3500). Details of the settlement are at www.pediatricpaxiltppsettlement.com.

A key component of PAL’s mission is to ensure that settlements of pharmaceutical class action lawsuits genuinely benefit the consumers, health plans and union benefit funds on whose behalf they are brought. When we learn of a settlement that does not benefit them, that makes it harder for them to derive a benefit, or that undermines their rights, we work with our coalition members to object to the settlement. And that is what our members Sergeants Benevolent Association Health and Welfare Fund, AFSCME District Council 37 Health and Security Plan and IUOE Local 4 Health and Welfare Fund did yesterday. Here is the press release:

__________________

FOR IMMEDIATE RELEASE

August 1, 2008

Contact:
Wells Wilkinson
(617) 275-2869
wwilkinson@communitycatalyst.org

Labor Unions File Objection to Paxil Pediatric Class Action Settlement
Union Benefit Funds Criticize Settlement as Unfair, Call on Court to Reject it

Boston, MA – Three labor union benefit funds filed a formal objection yesterday to the proposed $40 million nationwide settlement of a class action lawsuit against GlaxoSmithKline (NYSE:GSK). The lawsuit alleged that Glaxo defrauded health plans, union benefit funds and other “third party payors” by failing to disclose the increased risk of suicidal thoughts and behavior among children and adolescents taking the prescription antidepressants Paxil® and Paxil CR®. The $40M settlement is to reimburse third party payors for payments they made to pharmacies for Paxil prescribed to children and adolescents from 1998 to 2004.

The union benefit funds objected to the settlement because the proposed claims process requires information that many health plan and benefit funds don’t have, or could only get through a burdensome, unreasonable process that would be more work than the potential claim was worth. The objectors are Sergeants Benevolent Association Health and Welfare Fund, AFSCME District Council 37 Health and Security Plan and IUOE Local 4 Health and Welfare Fund. They provide prescription drug coverage for more than 320,000 union members, retirees and their families.

Under the terms of the proposed settlement, TPPs can be reimbursed up to 40% of their costs for Paxil prescribed for Major Depressive Disorder, while all other prescriptions for Paxil for other conditions will only be reimbursed at 15%. This requires TPPs to list a diagnostic code for each and every pediatric prescription for Paxil that they paid for during the seven year period. The objectors challenged this distinction, arguing that almost no one will really get a 40% refund, because almost no TPPs have diagnostic codes for the prescriptions they pay for.

In addition, millions of prescriptions for Paxil were written during the seven years covered by the lawsuit (1998-2004), yet the settlement requires any claim for more than $1,000 in reimbursement to include exhaustive details regarding every individual prescription of Paxil paid for during that seven-year period.

The funds also objected to other requirements, including the way that TPPs are required to calculate the net cost of the payments they made, and to misleading and inaccurate statements in the settlement notice about class members’ rights to object, appear at the hearing, or appeal final approval of the settlement.

“A $40 million settlement may sound very positive, but the devil is very much in the details,” said Gina Alongi, Administrator of IUOE Local 4 Health and Welfare Fund. “The way the settlement is currently structured will prevent many health plans and union benefit funds like ours from getting any real compensation from it.”

The three union funds objecting to the settlement are all members of Prescription Access Litigation (PAL), a national coalition of more than 130 unions and consumer advocacy groups that works to challenge illegal practices by the pharmaceutical industry.

“TPPs will have to comb through mountains of medical records and bury themselves in paperwork before they ever see a penny from this settlement,” said Alex Sugerman-Brozan, director of PAL. “Class action settlements are only as good as their claims process, and this one fails at a very fundamental level.”

Last year, Prescription Access Litigation objected to an earlier Paxil class action settlement (Hoorman et. al. v. SmithKline Beecham). That $63M settlement was of a class action brought on behalf of consumers who paid for Paxil prescriptions for children and adolescents. As a result of that objection, important changes protecting consumers’ rights were made to the settlement.

A settlement of a class action must be approved by the Court where the case is brought. Because class actions affect the rights of people and entities that aren’t even aware of the lawsuit, the Court reviews settlements to make sure they are “fair, reasonable and adequate.” Members of the class may object to the settlement, and request to speak at a hearing before the Court.

The case is Carpenters and Joiners Welfare Fund et. al. v. SmithKline Beecham Corp. (U.S. District Court for Minnesota, Case #04-CV-3500). The Final Approval hearing in the case is scheduled for September 30, 2008 in the U.S. District Court in Minneapolis, Minnesota. The deadline for third party payors to submit claims for payment from the settlement is December 12, 2008. More information about the settlement, including claims forms, can be found at www.pediatricpaxiltppsettlement.com. A full copy of the funds’ objection to the settlement can be found at www.prescriptionaccess.org/docs/pediatric-paxil-objection.pdf

##

About AFSCME District Council 37 Health & Security Plan
AFSCME District Council 37 Health & Security Plan is a union benefit fund that provides supplemental health and welfare benefits, including a prescription drug benefit, to over 300,000 individuals, consisting of active municipal employees, their spouses and dependants, as well as retirees, who work or worked for New York City, the New York State Court System, various authorities, cultural institutions and the NYC Health and Hospital Corporation.

About Sergeants Benevolent Association Health and Welfare Fund
Sergeants Benevolent Association Health and Welfare Fund provides supplemental health and welfare benefits, including a prescription drug benefit, to 10,000 active and retired sergeants of the New York City Police Department.

About IUOE Local 4 Health and Welfare Fund
IUOE (International Union of Operating Engineers) Local 4 Health and Welfare Fund provides a health and welfare plan, including a prescription drug benefit, to 10,000 covered members of IUOE Local 4 and their families. IUOE Local 4 represents heavy equipment operators, apprentices, mechanics, surveyors, equipment house employees, as well as waste water technician and some public sector employees in Eastern Massachusetts, Eastern New Hampshire and Maine.

About Prescription Access Litigation
Prescription Access Litigation (PAL) is a nationwide coalition of over 130 state, local, and national senior, labor and consumer health advocacy groups fighting to make prescription drugs affordable. The organizations in the PAL coalition have a combined membership of over 13 million people. PAL, a project of the national nonprofit health care advocacy group Community Catalyst, works to end illegal drug industry practices that increase the price of prescription drugs beyond the reach of the American consumer, using class action litigation and public education. PAL members have filed more than 30 lawsuits targeting such practices. News about PAL’s cases and public education efforts is published regularly on the PAL Blog.

The Prescription Access Litigation Blog has been on summer vacation recently, sunning itself at the beach, drinking iced tea, and playing volleyball with other blogs at Blog Camp. It’s now back, tanned, rested, and ready to deliver an ice-cold cup of refreshing pharmaceutical news and outrage to you, our thirsty readers.

And its first post-summer-break item is a dispatch straight from the Department of Unbelievably Evil & Greedy Schemes:

Business Week ran a special report yesterday (July 23, 2008), with the frightening title:

“They Know What’s in Your Medicine Cabinet: How insurance companies dig up applicants’ prescriptions—and use them to deny coverage”.

Here’s the rub:

That prescription you just picked up at the drugstore could hurt your chances of getting health insurance.

An untold number of people have been rejected for medical coverage for a reason they never could have guessed: Insurance companies are using huge, commercially available prescription databases to screen out applicants based on their drug purchases.

This is one of the latest revelations concerning the practice of pharmaceutical datamining. There’s a fact that few people know, but that should be printed on huge signs at every pharmacy:

Pharmacies sell information about the prescriptions they fill to companies that then sell that information to health plans, pharmaceutical companies and others that use it for marketing purposes.

The use of this information that’s most widely known is for drug company marketing. Companies like IMS Health and Verispan buy data from pharmacies detailing the prescribing records of doctors. That data is supposed to have any details about individual patients removed, or “scrubbed.” These companies then turn around and sell this information to drug companies. The drug companies give this information to the sales people, who then descend on doctors’ offices, armed with the details of exactly what drugs the doctor has prescribed, and how that’s changed over time. They can then tailor their pitch accordingly.

That practice is bad enough, and a number of states have passed or are trying to pass laws outlawing this “datamining.” (And datamining companies have sued to block these laws in every state in which they’ve been passed — we at PAL joined a “friend of the Court” brief defending Maine’s law. Read more about that here.) It’s an issue that the Prescription Project and the National Legislative Association on Prescription Drug Prices are working very hard on.

But, as the Business Week report describes, an even more nefarious use of this prescribing data is emerging. A few choice excerpts and factoids from that article:

• “Traditionally, applicants have been asked to provide insurers with a description of past illnesses. About 30% are deemed uninsurable because of their histories, according to industry veterans. Prescription profiles could add another hurdle, making it especially difficult for the 47 million Americans who lack insurance to acquire coverage.”
• “Most consumers and even many insurance agents are unaware that Humana, UnitedHealth Group , Aetna (AET), Blue Cross plans, and other insurance giants have ready access to applicants’ prescription histories. These online reports, available in seconds from a pair of little-known intermediary companies at a cost of only about $15 per search, typically include voluminous information going back five years on dosage, refills, and possible medical conditions. The reports also provide a numerical score predicting what a person may cost an insurer in the future.”
• “drugs for depression and other mental health conditions are often red flags to insurers.”

It’s likely that other classes of drugs are red flags as well — anything that suggests a “preexisting condition,” particularly a serious or chronic one, might make an insurer lean towards denying a consumer coverage. So drugs for diabetes, arthritis, HIV/AIDS and any number of conditions might raise similar flags.

What’s particularly troubling about this is that, because of the nature of prescription drugs, there’s no way for consumers to be “anonymous” in the way that they can be in virtually every other product they buy. For instance, let’s say you go to the drug store to buy something that you’d rather not call attention to - be it diarrhea medication, contraceptives, or the latest issue of Us Weekly. You just pay cash and don’t use your store “frequent buyers card” (like the CVS ExtraCare card). Voila - anonymity.

But you can’t do that with a prescription drug. You need a prescription from your doctor, which identifies you, and your information gets entered into the pharmacy’s computer system. What’s ironic about this is that one can argue that there’s a greater interest in having your prescriptions kept private than in having your other purchases kept private.

How can pharmacies disclose my prescription information? Isn’t it private?
This data is private, and is protected from disclosure by HIPAA, the Health Insurance Portability & Accountability Act. UNLESS you give someone PERMISSION to access that information. And that’s exactly what millions of consumers are doing, without realizing it, when they apply for health insurance. As Business Week says:

When applying for insurance, individuals routinely sign paperwork allowing providers to review their medical history. To comply with the privacy provisions of the federal Health Insurance Portability & Accountability Act, most insurers have now added a reference to prescription history in the lengthy fine print consumers are instructed to read.

The FTC forced the industry to begin disclosing the use of prescription information under a different federal statute, the Fair Credit Reporting Act. Insurers now are required to tell applicants the address of the company that assembled the data. Copies of prescription reports are supposed to be available to consumers at no charge under federal law.

But these disclosures are typically buried and never read by the overwhelmingly majority of consumers that are “agreeing” to them by signing that health insurance application. And there’s likely nothing you can do about it either — if you refuse to allow the health insurer access to your medical records, in all likelihood, they can and probably will just turn down your application. I believe that’s what they call a Catch-22, or perhaps being caught between a rock and a hard place.

Now that the practice is coming to light, hopefully privacy advocates and those working to make insurance easier to access will begin raising a hue and cry about this, and get the attention of legislators and regulators. In the meantime, it cant hurt to read the fine print when you apply for health insurance and ask your pharmacy what they do with your prescription records and whether it’s possible for you to “opt out” of whatever programs they have that sell that information.

We’ve written a lot on the past few months about the national class action lawsuit against Abbott Laboratories, targetting Abbott’s December 2003 400% price increase on its HIV/AIDS drug Norvir.

The case has survived Abbott’s numerous attempts to have it dismissed, and the Judge in the case recently forced Abbott to make public some embarrassing documents that Abbott wanted to keep hidden. (See What Abbott Laboratories was Trying to Hide - Court unseals Norvir documents).

A trial is scheduled to begin in the case in August. Given that very few pharmaceutical class actions actually go all the way to trial, this is noteworthy.

Two of the lawyers representing the plaintiffs in the case, including Prescription Access Litigation coalition member SEIU Health and Welfare Fund, recently wrote an analysis of the case in the Bureau of National Affairs publication, Pharmaceutical Law & Industry Report.

With BNA’s permission, we reprint this analysis here. It gives a good overview of the case, and of the Court’s recent rulings invalidating Abbott’s patent defenses. Bear in mind that it was written with a lawyer audience in mind… (A PDF version of this piece is available here)

In a May 16, 2008, ruling, Judge Claudia Wilken of the District Court for the Northern District of California effectively extinguished Abbott Laboratories’ hopes to avoid trial in a nationwide antitrust class action suit arising from its 400 percent price increase on Norvir, a drug that has revolutionized the treatment of HIV (6 PLIR 598, 5/23/08 a0b6n3r1r0 ).1 The Court’s ruling not only offers useful insight into the sometimes-murky issue of inherent anticipation, but also has far-reaching implications for pharmaceutical companies hoping to rely on patents to avoid allegations of anticompetitive conduct.

The Plaintiffs’ Sherman Act claims in In re Abbott Laboratories Antitrust Litigation are inextricably intertwined in the biology of the HIV virus itself. A longstanding challenge to scientists working to create effective treatments for HIV is the fact that the virus reproduces very rapidly, and mutates as it does so. These mutations permit the virus to rapidly gain resistance to new drugs as they are developed. Accordingly, innovation and competition in the marketplace for new HIV treatments is crucial: without it, patients will rapidly succumb to the disease as existing treatments fail.

Beginning in about the mid-1990s, researchers developed a promising new class of treatments for HIV disease called protease inhibitors (”PIs”). The advent of this powerful new class of drugs helped transform HIV disease from a death sentence into a chronic, manageable illness. Physicians used these PIs in combination with other HIV drugs to great effect, halting the disease in its tracks for many patients. However, as soon as PIs became available, the clock began running, as the virus rapidly acquired resistance to the new treatments.

In 1996 Abbott introduced a patented PI called Norvir, the brand name for ritonavir, to be used at a recommended daily dose of 1200 milligrams. Because of the drug’s debilitating side effects at this dose, it was rarely used. However, scientists and physicians soon noticed that Norvir had a striking effect on certain metabolic pathways in the liver, dramatically slowing the metabolism of many types of drugs, including PIs. When Norvir was taken with PIs, therapeutically effective blood levels of the PIs could be consistently maintained, and the PIs could be taken at smaller doses, sparing patients many of the severe side effects associated with the drugs. More importantly, Norvir’s “boosting” effect greatly impaired the virus’ ability to develop resistance to PIs. Norvir is the only commercially available drug known to have this effect.

Indeed, unless a patient takes Norvir together with a PI, the virus can rapidly develop resistance to the entire PI class. Accordingly, Norvir boosting has become part of the standard PI treatment. To enable patients to take these boosted PI regimens, Abbott sells Norvir pills to the public.

In 2000, Abbott capitalized on Norvir’s boosting properties by launching a pill called Kaletra, in which it combined a PI called lopinavir with a boosting dose of Norvir. Kaletra was the only single-pill treatment available that combined Norvir and a PI. While Kaletra was a very effective boosted PI treatment, it was associated with serious side effects, including hyperlipidemia, lipodystrophy, and gastric problems. Notwithstanding these problems, it quickly became the dominant boosted PI prescribed, and one of Abbott’s top primary-care products.

In 2003, however, Abbott’s lucrative Kaletra business was in peril. New PIs were about to be launched by Abbott rivals GlaxoSmithKline and Bristol Myers Squibb that, when boosted with Norvir, were just as effective as Kaletra, but better tolerated and more convenient.

What Abbott did next has become the subject of enormous controversy. In December of 2003, Abbott imposed a 400 percent price increase on the Norvir sold for use with rivals’ PIs, while leaving the price of Kaletra unchanged. Overnight, Kaletra became the cheapest boosted PI regimen on the market. According to Abbott’s rival, GlaxoSmithKline, this price hike has seriously affected sales of Glaxo’s effective new boosted PI, Lexiva.

In 2004, the plaintiffs in In re Abbott Labs Norvir Antitrust Litigation brought suit under Section 2 of the Sherman Act, arguing that Abbott used the Norvir price hike as a means to protect Kaletra from the competitive threat it faced from newer and safer drugs such as Lexiva. Abbott argued in its defense that it raised the price of Norvir in light of the increased clinical importance of the drug, and because it was being used in smaller doses as a booster than it was as a stand-alone PI.2

Abbott also mounted an affirmative defense of patent immunity premised on patents it claimed on the boosting method. In essence, Abbott argued that because it had patents on the method of using Norvir to boost PIs, it was entitled to exclude competitors from the market for Boosted PIs by any means it liked, including a Norvir price hike.

Indeed, Abbott’s boosting patents were a source of substantial revenue for the Company. As Abbott itself explained in documents filed with the Court, “[a]t considerable expense, Abbott’s four major competitors in the Boosted Market have taken a license to these patents for the express purpose of ‘promot[ing] and market[ing] certain of [their] products with Ritonavir for the purpose of co-prescription/co-administration.’”3

After bringing two unsuccessful motions for summary judgment in 2005 and 2006, Abbott filed a third motion in February of 2008, premised in part on its patent immunity defense. The benefits of this tactic seemed obvious. If the Company’s motion were successful, the pending case would be dismissed. If it lost, the complex patent arguments would still have to be resolved at trial, scheduled for Aug. 18.

That there was also substantial risk to Abbott’s strategy became apparent when, in response to the Company’s motion, Plaintiffs filed both an opposition to Abbott’s motion and a cross-motion of their own for partial summary judgment, attacking Abbott’s patents as invalid and asking that the Court bar the Company from asserting its patent immunity affirmative defense.

The validity arguments in Plaintiffs’ opposition and cross-motion turned in large part on the significance to be accorded language in the preambles to Abbott’s patents. Claim 9 of U.S. Patent No. 6,037,157 (the ‘157 patent) states:

A method for increasing human blood levels of a drug which is metabolized by cytochrome P450 monooxygenase comprising administering to a human in need of such treatment a therapeutically effective amount of a combination of said drug or a pharmaceutically acceptable salt thereof and ritonavir or a pharmaceutically acceptable salt thereof.

Similarly, claim 21 of U.S. Patent No. 6,703,403 (the ‘403 patent), which is dependent on claim 22 of the same patent. Claim