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Apotex Inc. v. Acorda Therapeutics, Inc.

United States Court of Appeals, Second Circuit

May 16, 2016

APOTEX INC., et al., Plaintiffs-Appellants,

         Argued November 12, 2015

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          This appeal concerns two distinct questions: the circumstances under which the filing of a citizen petition with the Food and Drug Administration provides grounds for an antitrust claim, and the scope of false advertising liability under the Lanham Act. Plaintiffs Apotex Incorporated and Apotex Corporation appeal from the judgment of the United States District Court for the Southern District of New York (Swain, J.) that granted defendant Acorda Therapeutics, Inc.'s motion to dismiss plaintiffs' Sherman Act claim and that granted summary judgment in favor of defendant on the Lanham Act claims (Torres, J.). Because each of these conclusions was sound, we affirm.

         KEITH D. PARR (with Joseph N. Froehlich, Scott B. Feder, Hugh S. Balsam, James T. Peterka, and Andy J. Miller on the brief), Locke Lord LLP, Chicago, Illinois, for Appellants Apotex Incorporated & Apotex Corporation.

         JOHN W. NIELDS, JR. (with Jason C. Raofield and Colin P. Watson on the brief), Covington & Burling LLP, Washington, D.C. for Appellee Acorda Therapeutics, Inc.

         Before: JACOBS, LIVINGSTON and DRONEY, Circuit Judges.


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          DENNIS JACOBS, Circuit Judge:

         The parties are rival manufacturers of tizanidine, a drug for treating spasticity. Plaintiffs Apotex Incorporated and Apotex Corporation (collectively " Apotex" ) allege that defendant Acorda Therapeutics, Inc. (" Acorda" ) (i) filed a sham citizen petition with the Food and Drug Administration (" FDA" ) to hinder approval of Apotex's competing formulation in violation of Section Two of the Sherman Act, and (ii) violated the Lanham Act's proscription on false advertising. As relevant here, the competition between the manufacturers focused on the relative efficacy of tablets or capsules in controlling somnolence, one of the side effects of tizanidine.

         The United States District Court for the Southern District of New York (Swain, J.) ruled that the simultaneous approval by the FDA of Apotex's drug application and its denial of Acorda's citizen petition (raising concerns about the application) was by itself insufficient to support a Sherman Act claim. After discovery, the district court (Torres, J.) granted summary judgment and dismissed all of Apotex's false advertising claims on the grounds that (with the exception of one graph) no representation was literally false or likely to mislead consumers; and that, as to that one graph, Apotex failed to show that the false depiction would meaningfully impact consumers' purchasing decisions.

         Apotex appeals both rulings, arguing that precedent from this Court allows its antitrust claim to survive dismissal and that material issues of fact pertinent to Acorda's representations remain for a jury to decide. We affirm these rulings.

         Although precedent supports an inference that a citizen petition is an anticompetitive weapon if it attacks a rival drug application and is denied the same day that the application is approved, that inference has been undercut by recent FDA

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guidance. As to false advertising, we agree with the district court that no reasonable jury could have found that Acorda made literally false or misleading representations in its advertisements, with the exception of a single representation that Apotex has failed to show affected decisions to purchase.


         Tizanidine tablets are used to treat spasticity, a symptom of multiple sclerosis and Parkinson's disease. One of the tablets' most common side effects is somnolence: sleepiness or drowsiness. Tizanidine tablets were first marketed in the United States by Elan Pharmaceuticals, Inc. (" Elan" ), under the trade name " Zanaflex." (Elan later sold its rights to Acorda.)

         Zanaflex tablets were initially approved for sale by the FDA on November 27, 1996. In October 2001, Elan submitted a New Drug Application (" NDA" ) to the FDA seeking approval to market tizanidine in capsule form. During its review, the FDA concluded that the absorption of the drug was delayed when tizanidine capsules were taken with food (rather than without), and that the delay was associated with a mean 20 percent decrease in Cmax, the peak amount of the drug in a subject's bloodstream. More importantly, the FDA found that " [w]hen bioequivalence of the capsule relative to the tablet is examined under fed conditions [i.e., with food], there is a delay in absorption and the mean Cmax for the capsule is approximately 2/3 of the mean Cmax for the tablet (Figure 1)." Joint Appendix at 2230 (emphasis added). The FDA subsequently approved Elan's NDA on August 29, 2002.

         The significance of this phenomenon, in plain terms, is that the faster the drug is absorbed, the more drowsy the patient may become, whereas the side effect may be reduced if absorption is slowed.

         While the NDA was pending, Elan filed a patent application for methods of administering tizanidine capsules to reduce somnolence and Cmax. Less than a month after the FDA approved the NDA, Elan's patent issued as United States Patent No. 6,455,557 (" the '557 patent" ). Elan then received permission to market its newly approved tizanidine capsules under the trade name " Zanaflex Capsules." In July 2004, Acorda acquired the rights to Zanaflex tablets and Zanaflex Capsules; in April 2005, it launched the sale of Zanaflex Capsules. Apotex had begun selling its generic tizanidine tablet product in 2004, and was one of about ten companies to do so. At the time Acorda began selling Zanaflex Capsules, Apotex's tizanidine tablet product had a five percent market share.

         Zanaflex Capsules on the open market carried an FDA label pertaining both to the Capsules and the tablets. The preamble to this label invites doctors to distinguish between tablets and Capsules, and between the drug when taken with food and without:


Joint Appendix at 643. The Pharmacokinetics section of the label, under the subheading " Pharmacokinetic differences between Zanaflex Capsules[TM] and Zanaflex® Tablets," advises (consistent with the FDA review of the Zanaflex Capsules NDA)

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tat there is a 30 percent increase in Cmax when the tablets are administered with food, but that when the Capsules are administered with food, Cmax decreases by 20 percent. " Consequently, the mean Cmax for the [C]apsule when administered with food is approximately 2/3's the Cmax for the tablet when administered with food." Id.

         The label contains a graph that figures in a number of the false advertising claims. Referred to as " Figure 1," the graph is titled " Mean Tizanidine Concentration vs. Time Profiles for Zanaflex Tablets and Capsules (2 × 4 mg) Under Fasted and Fed Conditions." It displays the mean plasma tizanidine concentration at various hours from dosing. The peak for the curve representing tizanidine capsules (taken with food) is lower, and occurs later than the peak for the curve charting concentration over time for tizanidine tablets (taken with food).

         The label then explains, in the Dosage and Administration section, that pharmacokinetic differences between the fed and fasted state may affect the frequency and onset of certain adverse events. (The text is in the margin.[1]) Somnolence is explicitly identified as one of these adverse events.[2]

         In 2007, Apotex filed an Abbreviated New Drug Application (" ANDA" )--a filing that seeks generic drug approval for an existing licensed medication or approved drug--in order to sell generic tizanidine capsules which would provide competition to Acorda's Zanaflex Capsules. In the ANDA, Apotex certified that it was not encroaching on any validly claimed intellectual property rights because the '557 patent was invalid. In predictable response, Acorda filed a patent-infringement suit in 2007. After a seven-day bench trial, the United States District Court for the District of New Jersey (Brown, J.) ruled in September 2011 that the '557 patent was invalid. See Acorda Therapeutics Inc. v. Apotex Inc., No. 07-4937 (GEB-MCA), 2011 WL 4074116, at *27 (D.N.J. Sept. 6, 2011).

         Soon after that ruling, Acorda filed a citizen petition with the FDA raising problems with Apotex's ANDA. The citizen petition is a means afforded by the FDA for raising concerns about products the FDA reviews; any individual may file such a petition concerning scientific or legal issues before or while the product is on the market. See 21 C.F.R. § 10.30. Conceptually, citizen petitions provide an avenue for public input into the drug approval process; but the process has been abused by pharmaceutical companies that file meritless petitions intended to delay approvals sought by their competitors and inhibit competition. Acorda's citizen petition objected to (1) Apotex's statement that its product was bioequivalent to Reference Listed Drugs (RLDs) in the fed state; and (2) allegedly misleading or untrue statements

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in the proposed label for the Apotex ANDA.

         The FDA denied Acorda's citizen petition on February 3, 2012. That same day, the FDA approved Apotex's ANDA. The Sherman Act claim relies principally on the FDA's simultaneous dispositions.

         With the green light from the FDA, Apotex launched its product. Acorda countered with its own authorized generic version of Zanaflex Capsules. Apotex contends that in the course of Acorda's marketing: (1) its representatives misrepresented to doctors that Zanaflex Capsules reduced Cmax--in comparison with the tablets--and then improperly used reduction in Cmax as a proxy for a corresponding decrease in somnolence; and (2) Acorda distributed written promotional materials to the same effect. In total, Acorda's advertising efforts contributed to sales of more than $240 million attributable to its version of Zanaflex Capsules.

         Apotex commenced this lawsuit in December 2011, amending its complaint in February 2012 to include the FDA's denial of Acorda's citizen petition. Acorda countered with a motion to dismiss, which the district court (Swain, J.) granted with respect to the Sherman Act claim and denied with respect to the Lanham Act claims. The district court observed that Apotex's Sherman Act claim relied purely on temporal proximity--the denial of Acorda's citizen petition on the same day the Apotex ANDA was approved--and concluded that was insufficient to state a claim in view of recent legislation making the requirements for delaying an ANDA application more stringent: " Congress'[s] explicit directive that ANDA processing should not ordinarily be delayed by a citizen petition, coupled with its narrowing for the grounds for any such delay and the statutory notice requirement, strongly undermines any inference that mere simultaneity of ANDA and citizen petition decisions is indicative of the delay of one by reason of ...

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