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4th Circuit revives Baltimore’s lawsuit against drug maker

A federal appeals court has revived Baltimore’s lawsuit to recover the hundreds of thousands of dollars the city claims to have overpaid for blood-pressure pills because the drug’s manufacturer illegally cornered the market.

Baltimore claims Actelion Pharmaceuticals Ltd.’s failure to cooperate with would-be generic makers of its drug Tracleer violated federal antitrust law by blocking the manufacture of a less expensive version of the drug for which the city was paying more than $100,000 annually as administrator of a self-funded health plan for its employees.

U.S. District Judge George L. Russell III dismissed the case in 2019.

Russell, who sits in Baltimore, said the city failed to sue Actelion within four years of the date when the city knew or should have known of the company’s alleged, anticompetitive behavior. Russell set that date at February 2014, when Actelion settled claims by generic manufacturers that it had denied them access to the drug in advance of the expiration of the company’s Tracleer patent, as required by law.

Baltimore filed suit in November 2018, which Russell said was beyond the four-year statute of limitations.

But the 4th U.S. Circuit Court of Appeals said Tuesday that Baltimore’s cause to sue Actelion based on its alleged abuse of monopoly power did not arise until the patent expired in November 2015 at the earliest.

The city had no reason to know at the time of the 2014 settlement that Actelion would illegally preserve a monopoly after its patent expired, as alleged in Baltimore’s lawsuit, the 4th Circuit added in its published 3-0 decision.

As a result, Baltimore’s filing was well within the four-year statutory deadline, the 4th Circuit ruled in sending the case back for trial in district court.

Baltimore “did not allege that Actelion’s refusals to provide samples to the generic manufacturers caused (the city) injury,” Judge Paul V. Niemeyer wrote for the 4th Circuit.

“Rather, that was the means by which Actelion was able to extend illegally its patent monopoly following the patent’s expiration,” Niemeyer added. “Stated differently, the complaint alleged that Actelion began its anticompetitive scheme before the expiration of its patent, when it still had legal monopoly power over sales of Tracleer, but that the scheme had no illegal effect until it exercised monopoly power beyond November 2015, when the patent expired and it was yet able to charge monopoly prices.”

Baltimore Solicitor James L. Shea, the city’s chief lawyer, said Wednesday that “we are pleased with the 4th Circuit’s decision that enables the city to pursue this important claim as part of an effort to reduce the high cost of pharmaceuticals.”

Baltimore is being represented in the lawsuit by outside counsel from the New York law firm Cohen Milstein Sellers & Toll PLLC.

Actelion, which became part of the Janssen Pharmaceutical Companies of Johnson & Johnson in 2017, issued a statement Thursday.

“At Janssen, we cooperate with generic manufacturers so they have access to our medicines at reasonable, market-based prices,” the company stated. “We will remain focused on advancing the science around our treatments for PAH (pulmonary arterial hypertension) and our long-standing commitment to the PAH community. We remain confident we acted appropriately and intend to defend our position in court.”

According to Baltimore’s lawsuit, Actelion’s anti-competitive practices prevented a generic form of Tracleer, bosentan, from coming to market for at least three years after the patent expired. The drug is used to treat PAH, a relatively rare form of high blood pressure.

Tracleer was very expensive, costing between $100,000 and $200,000 annually, Baltimore alleges. The city claims it could have saved much of that money if generic competition had been available rather than suppressed by Actelion.

Actelion has denied Baltimore’s allegations.

Niemeyer was joined in the opinion by Judges James A. Wynn Jr. and Henry F. Floyd.

The 4th Circuit rendered its decision in Mayor and City Council of Baltimore et al. v. Actelion Pharmaceuticals Ltd. et al., No. 19-2233.

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