Pfizer Sues Johnson & Johnson in First Ever Biosimilar Antitrust Lawsuit Alleging "Anti-Competitive Practices" Over Remicade® Biosimilar
Last Wednesday, Pfizer sued Johnson & Johnson (“J&J”) in the U.S. District Court for the Eastern District of Pennsylvania alleging that J&J has been conducting “anti-competitive practices” to prevent biosimilar competition by effectively preventing health insurers, hospitals, and clinics from offering Pfizer's lower-priced biosimilar product, Inflectra®. This is the first antitrust lawsuit implicating biosimilars and also one of the first looks at some of the challenges faced by a biosimilar when it enters the market.
Inflectra® is a BPCIA-approved biosimilar version of the $7 billion a year autoimmune drug, Remicade® (infliximab), which is approved for treatment of rheumatoid arthritis, plaque psoriasis, and Crohn’s disease, among others, and was developed by Celltrion Inc. of South Korea. Pfizer has the rights to sell Inflectra in the U.S. Pfizer lauched Inflectra® in November 2016 at a fifteen percent discount. The launch was at-risk, meaning that Pfizer decided to launch despite some unresolved patent issues.
In its lawsuit, Pfizer alleges that J&J violated federal antitrust laws by signing “exclusionary contracts” with health insurers to ensure that Remicade® was given preferential treatment over Pfizer’s biosimilar alternative. According to the lawsuit, J&J threatened to withhold significant rebates from insurers if they offered a biosimilar version of Remicade®, amounting to an “Exclusionary Scheme.” Rebates are often provided by drug companies to ensure that drugs are included in the list of medicines that insurers will pay for. In addition, J&J offered Remicade® at discounted prices to health care providers that agreed not to purchase biosimilar alternatives. According to Pfizer, these "exclusionary contracts" have stopped insurers from paying for Inflectra® prescriptions and hospitals and clinics from buying Pfizer’s biosimilar.
To prove a violation of antitrust laws, Pfizer must show that J&J’s activities: (1) exerted substantial monopoly power in the relevant market that is durable (not temporary), and (2) that J&J willfully acquired or maintained that power aside from growth or development resulting merely from marketing a superior product, business acumen, or historic accident. The second factor specifically requires that Pfizer prove that J&J’s activities were accompanied by an element of anticompetitive conduct including, for example, exclusionary or predatory conduct, used to either establish the monopoly or unlawfully maintain the monopoly. Pfizer’s 49-page opening brief of September 20, 2017 alleges numerous instances of J&J behavior that appear to fit within elements (1) and (2).
In response to the lawsuit, J&J dismissed the notion that they were engaging in anti-competitive practices. According to Scott White, president of J&J's Janssen Biotech unit, J&J is “effectively competing on value and price and, to date, Pfizer has failed to demonstrate sufficient value to patients, providers, payers and employers.” In other words, J&J insists that competition is the reason for the overall price reduction of Remicade®.
Companies developing biosimilar products should be aware of potential challenges when it comes to having their products adopted by the market. Some of those challenges come from the relative newness of biosimilars and the lack of familiarity with them. Other challenges come from the brand companies. It should be no surprise that the brand company will take steps to protect its market share. The main question will be whether those steps violate federal antitrust laws or whether they are merely the result of market competition. The outcome of this lawsuit may be important to biosimilar companies since a ruling against Pfizer could signal that in addition to the uphill battle biosimilars already face in gaining traction in the marketplace, they may also have to battle exclusionary tactics from brand companies. As more biosimilars enter the market, the competitive balance between brand companies and biosimilar companies will have to be closely monitored.
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