Another Remicade Antitrust Case is Allowed to Continue

On December 4, 2018, the District Court for the Eastern District of Pennsylvania again denied Johnson & Johnson and Janssen’s (“J&J”) motion to dismiss antitrust claims regarding sales of its blockbuster biologics, Remicade. In this case, retailers Walgreens and Kroger are suing on behalf of themselves and as the assignees of AmerisourceBergen Drug Corporation and Cardinal Health, Inc., respectively, who are pharmaceutical wholesalers that directly purchased Remicade from J&J for resale to Walgreens and Kroger. Walgreens and Kroger allege antitrust injury because they pay higher prices for Remicade as a result of J&J’s “Biosimilar Readiness Plan,” which involves exclusive agreements and rebate bundling with insurers and health care providers and prevents lower-priced biosimilar versions of Remicade to compete.

J&J moved to dismiss the claims on two grounds. First, J&J argued that the retailers lacked antitrust standing because they do not have consent from the distributors to pursue these claims, as may be required under their distributor agreements. To consider whether the retailers have antitrust standing and whether the distributor agreement encompasses their antitrust claims, the Court decided that it will have to interpret the agreements. To this end, the Court converted J&J’s motion to one for summary judgment and agreed to hear additional evidence.

Second, J&J argued that the retailers failed to sufficiently allege antitrust injury.  J&J’s primary argument was that the retailers failed “to plead specific facts showing that Pfizer and Merck were excluded from competing in the infliximab market by Defendants’ Biosimilar Readiness Plan, rather than choosing not to compete.” In this regard, the Court denied the motion, finding that J&J’s Biosimilar Readiness Plan foreclosed lower priced biosimilar infliximab drugs from competing with Remicade and resulted in retailers paying “inflated prices for those products.”

This is the second time that the Pennsylvania Court has denied J&J’s motion to dismiss a lawsuit dealing with Remicade. We previously wrote that on August 10, 2018, the Court denied J&J’s motion to dismiss Pfizer’s antitrust lawsuit relating to its biosimilar, Inflectra. In that case, Pfizer sued J&J alleging that J&J has been conducting “anti-competitive practices,” such as forcing hospitals and insurers to enter exclusive arrangements and bundled rebate programs, to prevent biosimilar competition by preventing health insurers, hospitals, and clinics from offering Pfizer's lower-priced biosimilar product.
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The results of these antitrust cases will be important for companies developing innovator and biosimilar products alike as these cases will likely provide more insights on which pricing practices are permissible under antitrust laws and which are not. We will continue to monitor the case and provide updates as they become available.