Jacksonville Police Officers and Fire Fighters Health Insurance Trust v…

Background

The Jacksonville Police Officers and Fire Fighters Health Insurance Trust alleged that Gilead Sciences, Inc., Cipla, Ltd., and Cipla USA, Inc. violated federal and state antitrust laws through settlements of patent litigation involving generic versions of Gilead’s HIV drugs. The Trust asserted claims under Section 1 of the Sherman Act, California’s Cartwright Act, and California’s Unfair Competition Law. It also asserted an equitable monetary-relief claim and 27 claims under the laws of other states, excepting Florida from the latter group.

The Trust’s theory was that the settlements were “reverse payment settlements”—arrangements in which a brand-name drug company allegedly provides value to a generic manufacturer in exchange for delaying competition. The Trust alleged that Gilead and Cipla settled patent litigation in 2014 and that Cipla received benefits including licenses, manufacturing rights, or other valuable opportunities.

Legal standard

Gilead and Cipla moved to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). At this stage, the court accepted the complaint’s factual allegations as true and asked whether they plausibly suggested an entitlement to relief. The court also considered requests for judicial notice, which allow a court to recognize the existence or contents of certain public documents without treating them as disputed evidence.

Federal antitrust claim

The court held that the Trust plausibly alleged a reverse payment. Although some allegations were speculative, the court concluded that the Trust did not need to describe the settlement’s exact terms or calculate the payment precisely at the pleading stage. The court relied on allegations about Gilead’s history of patent litigation and settlements, the timing and circumstances of the Cipla settlement, the treatment of the Atripla market, and Gilead’s later announcement that it was licensing generic manufacturers and offering potentially valuable manufacturing opportunities.

The court also found that the Trust plausibly alleged the payment was “large and unjustified.” The Trust alleged that the settlement occurred shortly before trial, after alleged weaknesses in Gilead’s patents had been exposed and after expected litigation costs had diminished. It also alleged that Cipla’s first-filer exclusivity, hepatitis C drug manufacturing rights, and potential co-packaged-drug opportunities had substantial value. The court therefore denied the defendants’ motion to dismiss the Sherman Act claim.

California and sister-state claims

The defendants argued that the Trust lacked standing—the legal ability to pursue a particular claim—because it did not allege that it bought Truvada in California or suffered an injury there. The Trust conceded that it had not alleged sufficient California conduct to support the Cartwright Act and Unfair Competition Law claims against Cipla. The court therefore granted Cipla’s motion to dismiss those claims.

The court also found that the Trust lacked standing to pursue claims under the laws of states other than those where it resided or was injured. The complaint did not state where the Trust bought Truvada, but the court inferred from the allegation that its principal place of business was in Jacksonville, Florida, that the purchases occurred in Florida. The court therefore found that the Trust lacked standing for the sister-state claims in Count V, except the Florida claim. The court stated that this ruling was without prejudice to filing an amended complaint with additional class representatives.

Other rulings and disposition

The court granted the defendants’ requests for judicial notice of specified public FDA documents and granted the Trust’s request for judicial notice of an FDA database document. It denied the Trust’s request to file a sur-reply.

The court granted, in part, and denied, in part, the defendants’ motion to dismiss. It allowed the Trust to file an amended complaint or state that it would not amend by September 9, 2022, and set a case-management conference for November 4, 2022. Judge Jeffrey S. White signed the order.