Why was the Humira “patent thicket” antitrust case against AbbVie dismissed?

Zachary Silbersher

When does a pile of sand become a heap?  When is a portfolio of patents too many patents?  Can using too many patents to compel generics to take a later entry date turn into monopolistic conduct?  These questions lurk the heart of the antitrust litigation brought by buyers of the blockbuster drug, Humira®, against its manufacturer, AbbVie ($ABBV).  The case is currently pending within the Northern District of Illinois (In Re: Humira (Adalimumab) Antitrust Litigation, No. 19-cv-1873 (N.D. Ill.)).  We previously blogged about related allegations before the case was filed when Boehringer Ingelheim raised them within its biosimilar litigation against AbbVie.  On June 8, 2020, the Illinois federal court dismissed the antitrust action pursuant to AbbVie’s motion to dismiss.  What are the takeaways from the case?

First, who are the plaintiffs and what are their allegations?  The plaintiffs are indirect purchasers of Humira®.  Humira® is a biologic drug originally approved in 2002.  Humira®’s active protein, adalimumab, was covered by a composition-of-matter patent that expired in December 2016.  Faced with this patent cliff, the plaintiffs argued that AbbVie scrambled to build a wall of patents to protect against biosimilar competition. 

To that end, AbbVie filed more than 200 patent applications, which resulted, by some counts, in more than 100 patents covering Humira®.  (As a point of reference, it is not uncommon for a drug to be covered by a handful of patents.  Twenty patents is considered a lot.  One-hundred patents for a single drug is nearly unprecedented.)  Even though Humira® was on the market since 2002, almost all of these follow-on patents were pursued years after that.  Moreover, the resulting portfolio included numerous overlapping patents—for example, dozens of formulation patents or process patents with only minor distinctions among them.  As an example, one patent application formed the basis for twenty-two derivative continuation patents.  In 2015, we did our own analysis of Humira®’s patent portfolio, and discovered that, at that time, most of the patents fell into a handful of categories.

Given this, the Humira® puchasers’ lawsuit alleged that AbbVie created a veritable “thicket” of patents.  This thicket was insurmountable for biosimilars needing to litigate their way through it towards freedom to operate for biosimilar versions.  Within the resulting BPCIA litigations, AbbVie would put over 60 to 80 patents on the table.  Before nearly any of these cases moved past the preliminary stages, the biosimilars all fell in line and settled for entry dates in 2023. 

The district court’s decision acknowledges as much.  It found that the biosimilar companies who settled with AbbVie, including Amgen, Samsung Bioepis and Sandoz, conceded that “they had to enter into the settlement agreements because their only other choices were years of expensive litigation over an impassable patent thicket or an at-risk launch likely to result in a hefty damages award.”  (Dkt. 170 at 17).  (References to Dkt. 170 are to the court’s opinion granting AbbVie’s motion to dismiss.) 

(The foregoing allegations made in the lawsuit are under § 2 of the Sherman Act.  The plaintiffs also alleged that AbbVie’s settlement agreements with the biosimilars, which gave permission to distribute in Europe, violated § 1 of the Sherman Act.  This post focuses exclusively on the § 2 claim, namely, that AbbVie’s use of its “patent thicket” was unlawful.)

AbbVie’s response to the lawsuit, set forth in its motion to dismiss, included many of the expected arguments.  Pharmaceutical companies leverage the patent system to protect their investments in research and development.  Here, the plaintiffs do not (for the most part) allege that AbbVie’s patents were procured by fraud, and the patents are therefore presumed to be valid.  According to AbbVie, there is no law proscribing how many patents are too many, and the plaintiffs cannot point to any law, rule or regulation that AbbVie purportedly violated in the course of lawfully procuring patents from the Patent Office, asserting them against the biosimilars and reaching the settlements that it did.

The district court agreed with AbbVie.  The court acknowledged that the plaintiffs were asserting a novel theory of antitrust liability.  It framed the plaintiffs’ theory as an allegation that AbbVie used its patents in a way to unlawfully foreclose competition—namely, AbbVie allegedly “gummed up progress” for lower-cost biosimilar competition by obtaining and asserting “swaths of invalid, unenforceable, or noninfringed patents without regard to the patents’ merits.”  (Dkt. 170 at 18). 

But this theory falls apart, according to the district court, because it involves petitioning the government.  The Noerr-Pennington doctrine exempts instances of petitioning the government from antitrust liability, even if doing so has an anticompetitive effect.  Here, AbbVie’s allegedly anticompetitive conduct involved petitioning the government in multiple different ways. 

AbbVie petitioned the government in the course of applying for the patents from the USPTO and defending those patents in numerous IPR proceedings.  Because those petitions essentially met with success, the court found that undermined the allegation that they were a sham.  AbbVie’s success rate with its patent applications was 53.4%, or more than half.  According to the district court, this compelled the conclusion that AbbVie’s petitioning the USPTO for patents could not be a sham.  Similarly, the district court found that AbbVie prevailed in more of the IPR challenges to its patents than not, with a success rate of approximately 72.2%.  That, according to the district court, also compelled the conclusion that AbbVie’s petitioning the PTAB to defend its patents was protected by Noerr-Pennington.

But then there were also the BPCIA litigations.  AbbVie filed numerous patents litigations against prospective biosimilars, but barely any of them went past preliminary stages.  Because of that, AbbVie never actually prevailed on its patent infringement allegations, and therefore, the court could not definitely say that AbbVie’s assertion of its patents was not objectively baseless. 

This is, in many ways, the meat of the plaintiffs’ narrative that AbbVie misused its patents to stifle generic competition.  They alleged that AbbVie attempted to unfairly leverage its wall of patents, without regard to the merits of their infringement allegations, to coerce the biosimilars to capitulate to later entry dates.  For instance, in some of the “patent dances,” which were a BPCIA statutory prelude to those litigations, AbbVie wielded scores of patents without responding to concerns from the biosimilars or elaborating on why they should be in the case.  In other instances, AbbVie injected formulation patents into the dance, even though it was clear that the biosimilar’s formulation did not infringe them.  Despite this, the court found that because all of the Humira® patent cases eventually settled, that forecloses a finding that they were objectively baseless.

Taking a very broad view, the court acknowledged that while many alleged instances of AbbVie’s conduct are protected by Noerr-Pennington, not all of it is.  Likewise, the court acknowledged that it is important to view the plaintiffs’ characterization of the alleged monopolization scheme as a whole.  But the court was still not convinced.  It found that most of the scheme alleged by the plaintiffs is immunized from antitrust liability, and “what’s left are a few sharp elbows thrown at sophisticated competitors participating in regulated patent and biologic-drug regimes.”  (Dkt. 170 at 31).

The district court went a step further.  It emphasized that because this case’s new theory of liability involved the patent system, that created a further wrinkle for the plaintiffs that was difficult to iron out.  According to the district court, patents that are not acquired by fraud are presumed to be valid, and patent Examiners are presumed to be competently examining applications.  The court acknowledged that even if patent Examiners may be “having wool pulled over their eyes more than half the time . . . the proper fix is not to use antitrust doctrine” because “[d]oing so will not revamp the FDA’s biologics application process or the USPTO’s drug patenting process.”  (Dkt. 170 at 32).

Whether or not that may be true, the industry-at-large is watching this suit.  For AbbVie to evade antitrust liability at the motion-to-dismiss stage will have its own consequences.  In fact, to the extent “patent thickets” are the source of high drug prices for biologics—as previously alleged by the former FDA Commissioner, Scott Gottlieb—the problem has just been made worse.  In-house legal departments at branded pharmaceutical companies for both biologic drugs, as well as small-molecule drugs, will be taking note.  AbbVie’s Humira® patent strategy not only worked, but it any residual antitrust liability from pursuing that strategy has just receded farther into the horizon.   

The message is clear—if your drug is facing a patent cliff, get as many patents as possible.  The more the better.  The civil litigation infrastructure is incapable of litigating all of those patents, and just having them, no matter their merit, will act as a bulwark against generic competition.  Moreover, the costs of acquiring patents is negligible compared to the potential profits gained from extending the monopoly prices for drugs by a matter of years.  In the case of Humira®, AbbVie extended its monopoly from December 2016 until 2023, to the tune of billions of dollars.  Assuming AbbVie applied for 200 patents at an average cost of $100k per patent (which may be a conservative number,) it is clear that this was a winning strategy.  Even if the price-per-patent is scaled up considerably more, the numbers still work out.

For those on the consumer-side of drug prices, some elements of the district court’s reasoning may be a bit difficult to swallow.  For instance, the court downplayed the alleged “sharp elbows” of AbbVie’s conduct because they were thrown at supposed “sophisticated competitors,” namely other pharmaceutical companies.  Yet, antitrust laws are not only for the protection of competitors, but also consumers.  Those consumers do not have a seat at the table when these patent litigations are worked out and sharp elbows are thrown.  Yet, those consumers nevertheless bare the brunt of paying increased monopoly costs over the years.  If AbbVie’s wall of patents truly worked to compel the biosimilars to agree to a 2023 entry date, despite the merits of the allegations, then the fact that AbbVie threw sharp elbows at its “sophisticated” competitors is cold comfort for consumers. 

Likewise, the court reasoned that because all of AbbVie’s Humira® patent litigations settled, that forecloses any allegation that those cases were objectively unreasonable.  Yet, on appeal, the plaintiffs are likely to argue this finding is backwards.  The plaintiffs’ allegations do not appear to be just that AbbVie accumulated lots of patents, but rather that AbbVie used that unwieldy heap of patents, regardless of their merits, to force the biosimilars to avoid litigation all together.  All of the biosimilars fell in line and settled for a 2023 entry date, without AbbVie having to go to trial on a single patent.  That fact would appear to be proof of AbbVie’s monopolistic scheme, rather than disproof of it.  

Indeed, that finding by the court may alone create a clear exit plan for any branded pharmaceutical company to avoid antitrust liability for misusing an enormous heap of patents (unless those patents were procured by fraud.)  If the brand and generic can settle to avoid antitrust liability, then they will always do that.  Given that the biosimilars themselves were named in this litigation, they would also have an incentive to reach settlements as often as possible.  Yet, the consumers, who again have no seat at the table when these settlements are brokered, are left picking up the tab. 

All that said, the plaintiffs’ novel theory of antitrust liability is far from put to bed.  The plaintiffs will appeal the decision to the Seventh Circuit.  Given that the case covers a novel legal theory, it cannot be guaranteed whether the appellate court will affirm.  But even then, the district court’s prescription may be the right one—if this is truly is a problem, as leaders at the FDA have suggested, then it may require a legislative fix, not a judicial one.