J&J Defeats Bid to Undo Arbitration Order in Remicade Case

Oct. 21, 2019, 9:35 PM

Johnson & Johnson doesn’t have to face a redo of claims that it delayed competition for its anti-inflammatory Remicade, the Third Circuit held Oct. 21, five weeks after sending the case to arbitration.

The proposed antitrust class action accused the drugmaker and its subsidiary Janssen Biotech Inc. of using product bundling and exclusionary contracts to block insurers from covering “biosimilar” versions of Remicade.

Biosimilars are essentially generic versions of “biologic” drugs like Remicade, which are derived from living organisms or tissues, unlike chemically synthesized pharmaceuticals. Remicade is used to treat rheumatoid arthritis and Crohn’s disease.

The scheme gave J&J an artificial monopoly on the drug, and the ability to overcharge for it, according to Rochester Drug Cooperative, the distributor leading the “direct purchaser” case.

A federal judge rejected the drugmakers’ arbitration bid last year, finding that the antitrust claims didn’t “arise out of” their distribution agreements because they don’t concern the contracts’ meaning or the parties’ obligations.

The U.S. Court of Appeals for the Third Circuit reversed last month. The distributors’ claims are “undeniably intertwined” with the agreements, given that those contracts set the prices they’re suing over, a three-judge panel held. Judges Cheryl Ann Krause, Julio M. Fuentes, and Patty Shwartz joined the ruling.

Rochester then asked the full Third Circuit to rehear the case. It also urged the court to certify a question of New Jersey law to the state’s justices: whether the distributor’s waiver of its litigation rights under the arbitration agreement was sufficiently “knowing” to be effective.

J&J opposed both requests, defending the panel’s decision and calling the certification motion untimely. Allowing litigants to seek clarification of state law issues for the first time after losing would invite gamesmanship and bad faith, the drugmaker argued.

The Third Circuit sided with J&J in a pair of separate one-sentence orders. The rulings didn’t explain the court’s reasoning or state how many judges supported the motions, if any.

The drugmakers were represented by Covington & Burling, Patterson Belknap Webb & Tyler, and Ballard Spahr LLP. The proposed class was represented by Berger Montague and Taus Cebulash & Landau.

The case is In re Remicade (Direct Purchaser) Antitrust Litig., 3d Cir., No. 18-3567, 10/21/19.

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com

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