Gilead-Teva Pay for Delay Verdict Spotlights Antitrust Challenge

A federal jury’s verdict in favor of Gilead Sciences Inc. and Teva Pharmaceutical Industries Ltd. over an alleged pay-for-delay deal underscores plaintiffs’ long odds in such cases given their burden of proving defendants’ market power.

United HealthCare Services Inc., CVS Pharmacy Inc., Centene Corp. and other plaintiffs accused Gilead and Teva of illegally colluding to delay Teva’s generic HIV treatment so that Gilead’s branded drugs could avoid competition.

Attorneys representing Gilead in the $3.6 billion lawsuit said the jury found the plaintiffs didn’t prove the drugmaker had the requisite market power in the market for HIV treatment drugs.

It’s the first pay-for-delay case that has resulted in a verdict that won on the element of market power, said Ben Greenblum, partner with Williams and Connolly LLP who specializes in such cases. The outcome illustrates the uphill battle antitrust plaintiffs face in alleging that drug companies are breaking the law.

“Market definition is a life or death hurdle for any antitrust case, and it is increasingly difficult for plaintiffs to clear,” Bloomberg Law analyst Eleanor Tyler said. “The requirement that courts have been having for plaintiffs are increasingly high, and if juries are starting to think that way too, then that’s going to be a significant problem for these cases going forward.”

Trial attorneys for both Gilead and Teva Pharmaceuticals convinced the jury June 30 that both drugmakers didn’t engage in an anticompetitive conspiracy. According to attorneys involved in the case, the jury voted no on whether Gilead held market power within the relevant market that included HIV drugs Truvada and Atripla and whether there was an illegal reverse payment that took place between the firms.

In antitrust cases, plaintiffs must often define market power, which is the ability for a company to price goods above competitive levels.

Although most antitrust cases over pay-for-delay allegations end up in settlements, drugmakers can potentially use the market power element to win cases if they go to trial.

“These are bet-the-farm cases—the damages could have been astronomical,” Tyler said. “You prefer not to take that risk, but if you have no choice, you don’t have to go in with a funeral dirge. These are winnable.”

Defining market power has always been “very serious burden” especially for private plaintiffs, as it’s incredibly resource intensive, said William Kovacic, a former Federal Trade Commission chair and current law professor with George Washington University Law School.

“A lot of plaintiffs’ efforts over the last 20 years or so have been ways to circumvent that element of the case—to take shortcuts or find proxies for market power that the court will accept,” Kovacic said.

Market power was a question in two other pay-for-delay cases that went to a full defense verdict involving the heartburn medication AstraZeneca Plc’s heartburn drug Nexium and Endo Pharmaceuticals Inc.'s pain relief drug Opana. In both cases, the juries found that the companies had market power for their drugs. But the final verdicts in those cases didn’t turn on the market power question, said Greenblum, who represented the drugmakers in those cases.

Endo Pharmaceuticals won a verdict in 2022 where the jury determined that an agreement between Endo and generic drugmaker Impax Laboratories was not anticompetitive.

In 2014, a jury found that AstraZeneca has market power for Nexium, but that its deal with Ranbaxy Laboratories Ltd. to delay a generic version of the top-selling heartburn tablet wasn’t unreasonably anticompetitive.

“For Gilead and Teva to persuade a jury, that despite all of the plaintiffs’ complaints about high prices and profits and margins, they faced competition and did not have market power— that’s a very significant win for pharmaceutical defendants in these cases,” Greenblum said.

The verdict is also a reminder that market power is an element that the jury should make a finding on, contrary to arguments plaintiffs have previously made in such cases, Greenblum said.

Reverse payments are deals made between drug patent holders and generic drugmakers that are designed to block generic drug competition. The patent holder pays a generic competitor to hold off on releasing their off-brand version until a certain date.

“In reverse payment cases specifically, plaintiffs have argued that if there was a reverse payment, it must be the case that there was market power,” Greenblum said. “The defense bar has very much disagreed with that, and this is a reminder that it’s an issue that can really matter and should really matter in these types of reverse payment cases.”

Spokespeople for United HealthCare, and Centene Corp. did not immediately respond to requests for comment.

Drugmakers Defense

The jury rejected the plaintiffs’ claims that Gilead had market power in the relevant market in the case— Gilead’s branded HIV treatment drugs Truvada and Atripla, and their generic versions, said Bart Williams, co-lead trial attorney for Gilead and a partner with Proskauer.

“The fact is that there were lots of drugs in this market, both brand and then later generics for each of those brands, that compete with one another for market share,” Williams said. “Our point was this is a market that is characterized by innovation and change to the next good, great drug.”

Devora W. Allon, co-lead trial attorney for Gilead and a litigation partner for Kirkland & Ellis in New York, said Gilead’s defense team was able to show that patients were switching to other medications by looking at millions of prescription records and claims data.

“We highlighted an example of Patient A who essentially switched across multiple products over the course of his or her treatment history,” Allon said. Patients are “making decisions based on what is the best quality product,” Allon said.

Kovacic, the law professor, said other pharmaceutical defense attorneys are likely to follow Gilead’s and Teva’s playbook in attempting to win pay-for-delay cases on market power.

“It would suggest that other firms will study very carefully what kind of evidence they have presented and how the jury reacted to it,” Kovacic said. “When you see a success like that, other people study it carefully and say ‘how can we do the same thing?’”

The Gilead-Teva verdict isn’t likely to deter plaintiffs, however, Kovacic said.

“The size of the money involved provides a motivation to try,” Kovacic said.

The case is In re HIV Antitrust Litigation, N.D. Cal., No. 3:19-cv-02573, 6/30/23.