The opinion of the court was delivered by: Barry, District Judge
Biovail Corporation International ("Biovail" or "plaintiff") filed a five-count complaint with this court on April 27, 1998. This matter comes before the court on a motion to dismiss the complaint for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6) filed by defendants Hoechst Aktiengesellschaft ("Hoechst AG"), Hoechst Marion Roussel, Inc. ("HMRI"), Hoechst Marion Roussel North America, Inc., and Carderm Capital L.P. ("Carderm")(collectively as "Hoechst defendants"). Defendants Horst Waesche ("Waesche"), Daniel Camus ("Camus"), Richard J. Markham ("Markham"), Peter W. Ladell ("Ladell"), Gerald P. Belle ("Belle"), and Jurgen Dormann ("Dormann") (collectively as "Individual Defendants") join in the motion to dismiss (thus, all defendants will be referred to collectively as "defendants" or "Hoechst") and have also filed a separate motion to dismiss stating independent grounds for dismissal of the claims levied against them. For the following reasons, this court will deny the motions.
Biovail is a Canadian pharmaceutical company involved in the manufacture and development of drugs that treat chronic conditions such as high blood pressure. See Compl. ¶ 4. Defendants are also engaged in the production and sale of pharmaceutical products. Id. ¶¶ 5-10.
Marion Merrell Dow initially introduced the pioneer drug which used diltiazem, a calcium channel blocker, as an active ingredient to treat high blood pressure and angina. Id. ¶¶ 21-22. The brand name of the drug was Cardizem. Id. In June of 1993, Hoechst-Roussel Pharmaceuticals, Inc. ("HRP"), a subsidiary of Hoechst AG and a company associated with Hoechst-USA, entered into a Rights Agreement with Biovail under which the companies would jointly develop diltiazem-based drugs that would compete with Cardizem. Id. ¶ 29. The first such product developed was a once-daily form of diltiazem to be sold under the name of Tiazac. Id. HRP filed a New Drug Application ("NDA") for Tiazac with the FDA certifying its safety and effectiveness. Id.
Much to Biovail's chagrin, in late 1994, Hoechst AG announced that it planned to acquire Marion Merrell Dow and thereafter HRP terminated its joint venture with Biovail. Id. ¶ 31. Biovail sued Hoechst AG and others for contract and antitrust violations and, on April 28, 1995, the parties entered into a settlement agreement and release ("Settlement Agreement"). Id. ¶¶ 32-33; see also Spears Decl., Exh. C. The Settlement Agreement provided, among other things, that Biovail was to be assigned the rights to the Tiazac NDA, see Compl. ¶ 35, and Hoechst AG, Hoescht-USA, and Carderm covenanted
not to sue Biovail . . . , or initiate any regulatory proceedings or legal actions challenging or contesting in any manner whatsoever the Product with respect to any claim of patent infringement relating to the Product or regulatory approvals of the Product now or in the future. Id. ¶ 34; Spears Decl., Exh. C at 14-15.
"The Product" was defined in the Settlement Agreement as:
certain formulations for a once daily, extended release medicine containing diltiazem hydrochloride as further defined in Section 1.01.32 of the Rights Agreement and any improvements thereto or any formulation thereof alone or in combination with at least one other active ingredient. Compl. ¶ 34; Spears Decl., Exh. C at 1.
The Federal Trade Commission ("FTC") then initiated an investigation into the proposed acquisition of Marion Merrell Dow by Hoechst AG. Id. ¶ 36. This investigation was settled by a consent decree that became final on April 17, 1996 ("FTC Decree"). Id.; see also Compl., Exh. A; Spears Decl., Exh. D. In order to rectify the potential anticompetitive effects of the acquisition, the FTC ordered, inter alia, that Hoechst and Marion Merrell Dow give Biovail a right of reference to the pharmacology and toxicology data filed with the FDA in support of Marion Merrell Dow's NDA for Cardizem. More specifically, the FTC Decree provided that Hoechst AG:
shall grant to Biovail the right of reference to the pharmacology, toxicology and animal reproductive toxicology data contained in [Marion Merrell Dow's] NDA No. 18-602 for Diltiazem on file with the FDA. [Hoechst AG] shall make the necessary filings with the FDA authorizing the FDA to refer to the appropriate section(s) of [Marion Merrell Dow's] NDA No. 18-602 for such data (including, but not limited to, pharmacology and toxicology data) in support of Biovail's NDA No. 20-401 for the Biovail Diltiazem Products, including any supplemental NDAs or related NDAs. Spears Decl., Exh. D. at 3; see also Compl. ¶ 37.
A right of reference is useful because it allows the referenced party to refer to and adopt data already filed with the FDA by a previous filer rather than submit independent data. See Compl. ¶ 37.
On December 18, 1995, a representative of Hoechst-USA, using Marion Merrell Dow letterhead, sent the FTC mandated "right of reference" letter to the FDA. See Compl. ¶ 55. It stated in part:
Hoechst Marion Roussel, Inc. (formerly Marion Merrell Dow Inc.)("HMR") hereby authorizes Biovail Corporation International ("Biovail") to reference the pharmacology, toxicology and animal reproductive toxicology data contained in HMR's NDA 18-602 for diltiazem hydrochloride in support of Biovail's NDA No.20-401 for a once-a-day dosage form of diltiazem hydrochloride, including any supplemental NDAs or NDAs related to that product. Spears Decl., Exh. E ("reference letter").
On February 5, 1996, Biovail sought the FDA's opinion as to the scope of the reference letter. See Compl. ¶ 56. On April 8, 1996, the FDA replied:
Specifically, you asked whether FDA believed that the authorization language in [the reference letter] is broad enough to encompass all future diltiazem submissions that Biovail might file.
We have examined the language in the letter and believe that it is sufficiently broad to allow us to recognize a right of reference to the pharmacology, toxicology, and animal reproductive toxicology data contained in HMR's NDA 18-602 in any diltiazem hydrochloride new drug application or supplement that Biovail submits. Golden Aff., Exh. H; *fn1 see also Compl. ¶¶ 56-57.
HMR, however, wrote to the FDA on July 11, 1996 and informed it that "the right of reference previously granted [to Biovail] pertains only to the formulation originally submitted in NDA 20-401. No other formulations are allowed." Spears Aff., Exh. F. In addition, by letter of October 28, 1996, HMRI reiterated to the FDA that the right of reference granted to Biovail permitted reference only to obtain approval for the diltiazem formulation submitted in NDA 20-401 [Tiazac] and any NDA or supplement "for this same product." Spears Decl., Exh. G. "[N]o right of reference to the preclinical data on diltiazem contained in NDA 18-602 would be permitted for [Biovail for] any one-a-day formulation of diltiazem not originally submitted in NDA 20-401." Spears Aff., Exh. G at 2. In light of this express limitation by Hoechst, on November 8, 1996, the FDA retracted its broader interpretation of the possible scope of the right of reference set forth in its letter of April 8, 1996. See Golden Aff., Exh. I at 3; see also Compl. ¶ 59.
Thus, in November 1997, when Biovail filed an NDA (No. 20-939) with the FDA for a generic version of Cardizem CD, the once-daily dosage form of Cardizem, the NDA was rejected. The FDA refused to file Biovail's NDA 20-939 for the following reasons:
NDA 20-939 contains no nonclinical pharmacology or toxicology data. It is your intent to rely on the right of reference for those data that was granted to you by Hoechst Marion Roussel ("HMR") to support the approval of your NDA 20-401. As we had informed you in our letter dated November 8, 1996 (enclosed), the right of reference that was granted to you by HMR for NDA 20-401 does not permit reference to HMR's NDA 18-602 for any once-daily diltiazem product that was not originally submitted to NDA 20- 401. The diltiazem product covered by NDA 20-939 is different from the product covered by NDA 20-401. We therefore consider NDA 20-939 to be incomplete and can not be filed according to 21 C.F.R. 314.101(d)(3). Golden Aff., Exh. I at 1.
Biovail also sought to have Tiazac approved in Canada by Canada's Health Protection Branch ("HPB"). See Compl. ¶ 41. Biovail states that on February 16, 1996 it was orally informed by a representative of the HPB that the efficacy and safety review had been successfully completed on Tiazac and that the review of the product monograph, or product labeling, would be completed within the next eight weeks. See Compl. ¶ 42. On March 11, 1996, Hoechst Marion Roussel Canada ("Hoechst-Canada") sent a letter to the HPB expressing what Biovail asserts were "specious safety concerns about the non-bioequivalence of Tiazac to Cardizem CD." Compl. ¶ 47; see also Spears Decl., Exh. A. On April 12, 1996, Hoechst- Canada again wrote to the HPB, and Biovail alleges that Hoechst-Canada again raised "the same bogus safety concerns and intimat[ed] that HPB, inter alia, should delay or deny approval to Tiazac altogether on the ground that it was not bioequivalent to Cardizem CD." Compl. ¶ 47; see also Spears Decl., Exh. B.
On May 22, 1996, the HPB decided not to approve Tiazac. See Compl. ¶ 45. The HPB decision was eventually overturned and Tiazac was ultimately approved for use in Canada. See Compl. ¶¶ 51-52.
On June 19, 1997, Biovail filed an Abbreviated Drug Application ("ANDA") (No. 75-1169) with the FDA for a generic form of Cardizem CD and an accompanying Paragraph IV Certification. Id. ¶ 61. Filing an ANDA, as opposed to a NDA, is an alternative means of obtaining FDA approval. The Hatch-Waxman Amendments to the Food, Drug & Cosmetics Act state that a party seeking approval of a generic drug may file an ANDA with the FDA and rely upon the findings of safety and effectiveness set forth in the pioneer drug owner's NDA. See Compl. ¶ 16; see also 21 U.S.C. § 355(j)(1997). In addition to filing the ANDA, the applicant must certify either that: (1) no patent for the pioneer drug has been filed; (2) the pioneer drug patent has expired; (3) the pioneer drug patent will expire on a certain date; or (4) the pioneer drug patent is invalid or will not be infringed by the proposed generic drug. See 21 U.S.C. § 355(j)(2)(A)(vii). If the applicant files a so-called "Paragraph IV Certification," the owner of the pioneer drug has forty- five days in which to file a patent infringement suit against the applicant. See Compl. ¶ 16; see also 21 U.S.C. § 355(j)(5)(B)(iii). If no action is initiated within forty-five days, the FDA approval proceeds. Id. If, however, an infringement suit is timely filed, final FDA approval is automatically stayed for thirty months ("thirty-month waiting period") or until a final judicial determination of non- infringement, whichever occurs first. Id.
On August 1, 1997, a representative of HMRI met with Biovail to discuss Biovail's ANDA for its generic form of Cardizem CD that it had filed with the FDA. See Compl. ¶ 67. According to Biovail, HMRI "publicly threatened" to initiate a patent infringement suit against it. Id. ¶ 68. During the meeting, the HMRI representative allegedly advanced the following proposal: Hoechst would refrain from initiating a patent infringement suit against Biovail, would license a specially designated product to Biovail, and would advance substantial funds for the development and approval of that product. In return, Biovail would delay the launch of its generic form of Cardizem CD until after July 1999. Id. ¶ 69. According to Biovail, the HMRI representative explained that the delay was desirable because, one, Hoechst had represented to its investors that Hoechst would be able to take advantage of its United States monopoly over Cardizem CD until late 1999, and, two, Hoechst was planning to introduce new drug products by the summer of 1999 which would lessen HMRI's dependence on the Cardizem CD revenues. Id. ¶ 70. Biovail rejected the proposal. Id. ¶ 72. Hoechst did not initiate a patent infringement suit against Biovail. Id.
Finally, Biovail alleges that Hoechst was also negotiating with another pharmaceutical company, Andrx Pharmaceuticals, Inc. ("Andrx"), regarding its introduction of a generic form of Cardizem CD. Id. ¶ 73. Andrx had filed its ANDA for a generic version of Cardizem CD ("Andrx's generic") along with its Paragraph IV Certification before Biovail filed its ANDA. Id. ¶ 75. Under the law, a previous party who files an ANDA and a Paragraph IV Certification for its generic drug -- here, Andrx -- is granted a 180-day exclusivity period within which to market its drug without competition from subsequent ANDA applicants. See 21 U.S.C. § 355(j)(5)(B)(iv); Mova Pharmaceutical Corp. v. Shalala, 140 F.3d 1060, 1064 (D.C. Cir. 1998). This 180-day exclusivity period commences when either (1) the previous applicant begins to commercially market the drug or (2) a court decides that the pioneer drug patent that is subject to the Paragraph IV Certification is either invalid or not infringed, whichever is earlier. See U.S.C. § 355(j)(5)(B)(iv); Mova, 140 F.3d at 1065.
On January 31, 1996, within the appropriate time period -- namely, forty-five days from the time Hoechst received Andrx's Paragraph IV Certification -- Hoechst-USA and Carderm filed a patent infringement suit against Andrx in the Southern District of Florida. Id. ¶ 76. On September 15, 1997, while the suit was, and still presumably is, pending, the FDA gave tentative approval to Andrx's generic. Id. ¶ 76. Because Andrx's generic was tentatively approved by the FDA, meaning that it was approved in terms of efficacy and safety, Andrx was entitled to introduce its generic into the market after the thirty-month waiting period expired, or on July 3, 1998. Id. On September 26, 1997, Hoechst-USA and Andrx announced a partial settlement agreement ("Andrx Agreement") whereby Hoechst-USA would make quarterly payments of ten million dollars to Andrx beginning July 3, 1998 and until the patent case, including appeals, was over. Id. ¶ 79. In exchange, Andrx agreed to forestall introduction of its generic Cardizem CD until that time. Id.
On March 27, 1998, Biovail filed this action alleging that all defendants (1) violated Section 1 of the Sherman Act by unreasonably restraining trade in the distribution and sale of sustained release diltiazem prescription drugs and the generic forms of those drugs, which included the Andrx Agreement (Count One); (2) violated Section 2 of the Sherman Act by monopolizing and attempting to monopolize the market for sustained release diltiazem prescription drugs and the sub-market for the generic versions of those drugs in the United States (Count Two); (3) violated the New Jersey Consumer Fraud Act by engaging in deceptive and unconscionable commercial practices such as, inter alia, breaching the Settlement Agreement and violating the FTC Decree (Count Four); and (4) engaged in unfair competition by their actions (Count Five). In addition, Biovail alleges that defendants Hoechst-AG, Hoechst-USA and Carderm breached the Settlement Agreement by taking legal action before the Canadian HPB and the FDA to delay the regulatory approvals needed for Biovail's diltiazem products (Count Three).
Defendants move to dismiss Biovail's entire complaint for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6). Biovail has voluntarily dismissed Count Four. See Pl. Opp. Br. at 5, n.8.
A motion to dismiss for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6) will be granted if the court finds "beyond doubt that the plaintiff can prove no set of facts in support of [its] claim which would entitle [it] to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). All well-pleaded allegations in the complaint must be accepted as true and all reasonable inferences must be drawn in favor of the non-moving party. See Cruz v. Beto, 405 U.S. 319, 322 (1972); Schrob v. Catterson, 948 F.2d 1402, 1405 (3d Cir. 1991). With this standard in mind, this court will consider each of the remaining counts of Biovail's complaint before concluding, as it must, that there is little if anything in this extraordinarily complicated case that is "beyond doubt."
In Counts One and Two, Biovail alleges that defendants violated Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2 (1997). Although the complaint is not a model of clarity, it appears as though Biovail's antitrust claims are premised on essentially five sets of factual allegations.
First, Biovail asserts that defendants improperly interfered with the FDA approval process for Biovail's generic form of Cardizem CD by repudiating the FTC Decree. See Compl. ¶¶ 55-64. Second, Biovail points to the "collusive and anticompetitive agreement" that defendants made with Andrx whereby defendants agreed to pay Andrx $40 million per year to refrain from marketing its generic version of Cardizem CD until the conclusion of the patent infringement suit filed by defendants against Andrx (including appeals). See Compl. ¶¶ 73-84. Third, Biovail contends that defendants have interfered with the Canadian regulatory process with the intent to derail or substantially delay the approval of Tiazac by the Canadian HPB. See Compl. ¶ 41. Fourth, Biovail alleges that defendants "publicly threatened" to bring a patent infringement suit against Biovail challenging Biovail's ANDA filed for its generic form of Cardizem CD despite the fact that the FTC Decree contained a prohibition against such a suit. Id. ¶ 68. And, finally, Biovail asserts that at a meeting on August 1, 1997, defendants sought Biovail's cooperation to engage in "an illegal restraint of trade" by asking Biovail to agree to delay the launch of its generic Cardizem CD until at least July 1999 in exchange for Hoechst refraining from instituting the patent infringement suit -- a request which Biovail rejected. Id. ¶ 69.
Defendants take issue with each of the factual bases for Biovail's antitrust claims and have set forth separate arguments as to why each allegation must be dismissed. This court is troubled, however, by defendants' approach in light of the Supreme Court's clear mandate in Continental Ore Co. v. Union Carbide and Carbon Corp., 370 U.S. 690, 698 (1962). In Continental Ore, the Court admonished the Court of Appeals for the Ninth Circuit for treating plaintiff's allegations regarding its antitrust claim "as if they were five completely separate and unrelated lawsuits." Id. at 698-99. The Court directed that:
plaintiffs should be given the full benefit of their proof without tightly compartmentalizing the various factual components and wiping the slate clean after scrutiny of each. Id. at 699. In light of this directive, therefore, defendants' behavior will be evaluated, and all inferences will be drawn, in light of the allegations as a whole.
This does not mean, however, that this court will ignore the numerous objections raised by defendants to Biovail's complaint. "[I]t is clear from the facts and reasoning of Continental Ore itself that the Supreme Court never intended [this oft-quoted] language to bar a probing analysis of antitrust . . . claims." Zenith Radio Corp. v. Matsushita Elec. Indus. Co., Ltd., 513 F. Supp. 1100, 1167 (E.D. Pa. 1981), rev'd sub nom. on other grounds, 723 F.2d 238 (1983). Indeed, where numerous claims of anticompetitive conduct are set forth in support of a Sherman Act claim, many courts, including the Supreme Court itself in Continental Ore, have addressed the allegations separately in order to facilitate an orderly evaluation of the objections raised. See Continental Ore, 370 U.S. at 700-708 (carefully analyzing the record with respect to three of the four allegedly improper ventures, and concluding separately with respect to each that there was enough evidence of causation to preclude a directed verdict); Northeastern Tel. Co. v. Am. Tel. & Tel. Co., 651 F.2d 76, 95 n.28 (2d Cir. 1981)("Although the logical presentation of our holding has required us to treat each of Northeastern's claims of anticompetitive conduct separately, we have not ignored Continental Ore's edict. We have found, however, that in numerous critical respects Northeastern's proof was utterly lacking. Under such circumstances, treating Northeastern's claims collectively cannot have any synergistic effect."), cert. denied, 455 U.S. 943 (1982); California Computer Prods., Inc. v. International Business Machines Corp., 613 F.2d 727, 745 (9th Cir. 1979)(noting that "[t]he number of legal and evidentiary issues has required us to consider each instance of IBM's alleged monopolizing conduct separately for purposes of analytical clarity"). This court will, therefore, examine the distinct factual allegations and address defendants' specific objections, keeping in mind the allegations as a whole, as the Supreme Court has directed.
A related point. In its effort to compartamentalize Biovail's factual allegations, defendants contend, at various points in their brief, that one particular allegation or another did not cause Biovail injury and, therefore, must be dismissed. It is, of course, correct that antitrust injury must be shown before a private party has standing to bring an antitrust claim. See Barton & Pittinos, Inc. v. SmithKline Beecham Corp., 118 F.3d 178, 182 (3rd Cir. 1997). The allegations, however, under Continental Ore, should not be so "tightly compartmentaliz[ed]." This court will not, therefore, consider whether each allegation resulted in antitrust injury. Rather, the court will first examine whether an antitrust violation has been alleged; then, if a violation has been alleged, the court will examine whether -- as a result of all of the violations alleged -- Biovail has suffered "injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful." Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977)(defining antitrust injury).
In Count One of its complaint, Biovail alleges that defendants violated Section 1 of the Sherman Act, 15 U.S.C. § 1, by conspiring among themselves and with co-conspirators, including Andrx, to fix artificially high prices and to unreasonably restrain interstate trade and commerce in the distribution of sustained release diltiazem drugs used for hypertension and angina, as well as the generic version of these products by, inter alia, entering into the Andrx Agreement ("Section 1 claim"). See Compl. ¶ 96.
Section 1 of Title 15 of the United States Code provides in part:
Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby ...