Ab­b­Vie’s patent-ag­gres­sive US strat­e­gy for flag­ship Hu­mi­ra pays off, as judge dis­miss­es law­suit al­leg­ing an­ti­com­pet­i­tive ac­tiv­i­ty

Ab­b­Vie has long fierce­ly pro­tect­ed its flag­ship Hu­mi­ra — the world’s best­selling drug — with a patent rain­coat per­haps as durable as a Mack­in­tosh. And while it has made a se­ries of moves for a post-Hu­mi­ra fu­ture, no­tably the $63 bil­lion ac­qui­si­tion of Al­ler­gan, a US judge has ruled in fa­vor of the com­pa­ny against al­le­ga­tions that it en­gaged in an­ti­com­pet­i­tive con­duct to el­bow out ri­vals in the Unit­ed States.

The al­le­ga­tion is hard­ly nov­el. A host of crit­ics, in­clud­ing US law­mak­ers, have long ad­mon­ished the com­pa­ny’s patent-ag­gres­sive ap­proach to in­su­late Hu­mi­ra from US biosim­i­lar com­pe­ti­tion. Ab­b­Vie cur­rent­ly holds more than 100 patents for Hu­mi­ra and through deals it has eked out with ri­vals, the first US biosim­i­lar isn’t ex­pect­ed to hit the mar­ket un­til 2023 — two decades since the drug was first in­tro­duced.

In 2018 alone, the an­ti-in­flam­ma­to­ry bi­o­log­ic raked in peak sales of $20 bil­lion — or the cur­rent mar­ket cap­i­tal­iza­tion of In­cyte. Be­tween 2012 and 2018, it gen­er­at­ed US sales of more than $56 bil­lion.

When Ab­b­Vie’s main patent for Hu­mi­ra ran out in 2016, Ab­b­Vie ap­plied for a raft of new patents — sole­ly for the pur­pose of shield­ing the drug from any biosim­i­lar com­pe­ti­tion in the Unit­ed States, the com­plaint al­leged, adding that the move was fur­ther strength­ened by Ab­b­Vie’s agree­ments with ri­vals Am­gen, Sam­sung Bioepis, and No­var­tis’ San­doz to keep biosim­i­lars off the US mar­ket un­til 2023.

“Ab­b­Vie has ex­ploit­ed ad­van­tages con­ferred on it through law­ful prac­tices and to the ex­tent this has kept prices high for Hu­mi­ra, ex­ist­ing an­titrust doc­trine does not pro­hib­it it, US Dis­trict Judge Man­ish Shah wrote in an or­der dis­miss­ing the law­suit on Mon­day.

The plain­tiffs in the law­suit are in­di­rect pur­chasers of Hu­mi­ra, in­clud­ing the City of Bal­ti­more, an in­sur­ance trust fund for Mi­a­mi po­lice of­fi­cers and a ben­e­fit plan for pipe trade work­ers in Min­neso­ta.

Their al­le­ga­tions, that Hu­mi­ra com­pe­ti­tion was blocked in the Unit­ed States via a so-called “patent thick­et,” al­so high­light­ed that Ab­b­Vie has worked out deals with biosim­i­lar com­pa­nies to launch in Eu­rope de­spite ex­ist­ing patents there. In the first full year af­ter Eu­ro­pean biosim­i­lars launched, Hu­mi­ra’s in­ter­na­tion­al sales fell by 28% to $4.3 bil­lion.

Richard Gon­za­lez Ab­b­Vie

When grilled about Ab­b­Vie’s con­duct at a Con­gres­sion­al drug price hear­ing last year, Ab­b­Vie chief Richard Gon­za­lez said that while some Eu­ro­pean na­tions have bagged an 80% dis­count on Hu­mi­ra, the US price (about $4,500) of the drug and the sales it gen­er­ates is what keeps the com­pa­ny’s R&D en­gine hot.

Ab­b­Vie’s con­duct con­sti­tut­ed a “dis­parate set of ag­gres­sive but most­ly pro­tect­ed ac­tions to al­lege a scheme to harm com­pe­ti­tion and main­tain high prices,” the judge ac­knowl­edged on Mon­day.

But even when the al­le­ga­tions are “con­sid­ered broad­ly and to­geth­er for their po­ten­tial to re­strain trade, they “fall short of al­leg­ing the kind of com­pet­i­tive harm reme­died by an­titrust law,” he said.

His rea­sons for dis­miss­ing the law­suit were twofold — that the plain­tiffs’ the­o­ry of an­titrust in­jury was too spec­u­la­tive, and that Ab­b­Vie is large­ly pro­tect­ed by the No­err–Pen­ning­ton doc­trine.

The doc­trine, which de­vel­oped in the con­text of two US Supreme Court cas­es de­cid­ed dur­ing the 1960s, is a de­fense root­ed in the First Amend­ment. In essence, the doc­trine ren­ders a com­pa­ny or in­di­vid­ual im­mune from an­ti­com­pet­i­tive li­a­bil­i­ty if their ac­tiv­i­ty is a good-faith at­tempt to seek gov­ern­ment ac­tion, even if that ac­tion is in­ju­ri­ous to a com­peti­tor.

In Ab­b­Vie’s case, the com­pa­ny has as­sert­ed there is noth­ing il­le­gal about amass­ing a broad port­fo­lio of le­git­i­mate patents and that, even if a few were is­sued er­ro­neous­ly, the No­err–Pen­ning­ton doc­trine im­mu­nizes it from li­a­bil­i­ty.

The judge agreed.

“Here, the vast ma­jor­i­ty of the al­leged scheme is im­mu­nized from an­titrust scruti­ny, and what’s left are a few sharp el­bows thrown at so­phis­ti­cat­ed com­peti­tors par­tic­i­pat­ing in reg­u­lat­ed patent and bi­o­log­ic-drug regimes,” he said. “Some of Ab­b­Vie’s con­duct was not im­mu­nized by the No­err–Pen­ning­ton doc­trine—in­clud­ing what plain­tiffs al­lege to be the heart of their mo­nop­o­liza­tion claim—but much of what pre­ced­ed and fol­lowed that con­duct was im­mu­nized, which makes the en­tire­ty of al­leged mo­nop­o­liza­tion scheme im­mune, be­cause plain­tiffs’ the­o­ry de­pends on all the com­po­nents of Ab­b­Vie’s con­duct as the means to sup­press com­pe­ti­tion.”

Mean­while, Ab­b­Vie’s plan to fill the Hu­mi­ra-sized hole in its port­fo­lio is in full swing. The Al­ler­gan buy­out, which was con­sum­mat­ed in May, will rel­e­gate Hu­mi­ra to a 36% share of prod­uct sales and 40% of gross prof­it by the end of 2022, com­pared to 58% of rev­enue and 63% of gross prof­it last year, ac­cord­ing to cal­cu­la­tions by SVB Leerink an­a­lyst Ge­of­frey Porges.

The com­pa­ny has al­so se­cured the ap­proval of two fol­low-up an­ti-in­flam­ma­to­ry drugs that have been tapped as po­ten­tial block­busters: Rin­voq and Skyrizi. On Wednes­day, it al­so forked over $750 mil­lion in cash and up to $3.15 bil­lion more in mile­stones to al­ly with Gen­mab on a slate of 7 de­vel­op­ment and dis­cov­ery can­cer pro­grams.

5AM Ven­tures: Fu­el­ing the Next Gen­er­a­tion of In­no­va­tors

By RBC Capital Markets
With Andy Schwab, Co-Founder and Managing Partner at 5AM Ventures

Key Points

Prescription Digital Therapeutics, cell therapy technologies, and in silico medicines will be a vital part of future treatment modalities.
Unlocking the potential of the microbiome could be the missing link to better disease diagnosis.
Growing links between academia, industry, and venture capital are spinning out more innovative biotech companies.
Biotech is now seen by investors as a growth space as well as a safe haven, fuelling the recent IPO boom.

Hal Barron, GSK via YouTube

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Janet Woodcock (AP Images)

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Charlie Fuchs, Roche and Genentech global head of product development for oncology and hematology (Yale Cancer Center)

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Jonathan Weissman (MIT)

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Michelle McMurry-Heath, BIO CEO (BIO via YouTube)

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Janet Woodcock and Joshua Sharfstein (AP, Images)

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