New York ex rel. Schneiderman v. Actavis PLC

The State of New York (the state) (plaintiff) sued Actavis PLC (defendant), the manufacturer of two memantine Alzheimer’s drugs, Namenda IR (twice-daily immediate release) and Namenda XR (once-daily extended release), for monopolization and attempted-monopolization claims under the Sherman Act, a federal antitrust statute. The state alleged that Actavis engaged in product hopping when Actavis used hard or forced switch tactics by threatening to discontinue manufacturing its Namenda IR, its best-selling drug that generated $1.5 billion in sales, and urged caregivers and healthcare providers to discuss switching to Namenda XR with their patients—before the first generic Namenda IR drugs would launch and thereby impede generic competition because under state drug-substitution laws, pharmacists would not be able to substitute generic Namenda IR for a prescription for Namenda XR. The state alleged that Actavis used the hard switch tactic only after Actavis failed to transition IR patients to XR while IR was still on the market and that this anticompetitive, exclusionary conduct lacked a legitimate business purpose. The parties did not dispute that Namenda IR and XR represented 100 percent of the market for the drug memantine or that Actavis possessed monopoly power. The district court granted the state’s request for a preliminary injunction to prohibit Actavis from withdrawing Namenda IR from the market before generics reached market. Actavis appealed.