On February 25, 2021, the U.S. Court of Appeals for the Seventh Circuit heard oral arguments in UFCW Local 1500 Welfare Fund v. AbbVie Inc. (Case No. 20-2402), a case appealed from the U.S. District Court for the Northern District of Illinois by a group of Humira buyers (including consumer groups, drug wholesalers, and unions) accusing AbbVie of using “patent thicket” around Humira® to block biosimilars from entering the market, in violation of antitrust laws.

The alleged Humira “patent thicket” includes over 130 patents (resulting from about 250 patent applications) covering the adalimumab molecule and other aspects of the technology such as formulations and manufacturing methods. According to the suit, AbbVie also entered into agreements with several biosimilar makers (including Amgen, Samsung Boepsis, and Sandoz) under which the biosimilar makers received access to the European market in October 2018 but will stay out of the U.S. market until 2023. In this case, the Humira buyers are attempting to get a judgement that would allow biosimilars to enter the U.S. market earlier than the date set forth in the agreement.

Humira (adalimumab) is one of world’s most valuable biologic drugs and was approved for treatment of a variety of autoimmune disorders including rheumatoid arthritis, Crohn’s disease, and plaque psoriasis. In 2019, Humira’s sales were $14.9 billion (increased from $13.7 billion in 2018) in the U.S. where no biosimilar was on the market, while sales were $4.3 billion (decreased from $6.3 billion in 2018) in Europe where biosimilars had launched.

In 2019, the group of Humira buyers filed a complaint in the district court alleging, inter alia, that AbbVie “applied for, obtained, and asserted patents to gain the power it needed to elbow its competitors” out of the U.S. market, and “created a thicket of intellectual property protection so dense that it prevented would-be challengers from entering the market with cheaper biosimilar alternatives” in violation of the Sherman Act.

In June 2020, the district court dismissed the complaint without prejudice.  The court evaluated whether AbbVie’s alleged conduct is protected by the Noerr–Pennington doctrine, under which a party’s application for patents before the USPTO is protected against antitrust liability unless the application is “objectively baseless,” i.e., there is no reasonable expectation of success on the merits. The court found that “AbbVie’s rate of success with its patent applications—more than half (53.4%)” supported that AbbVie’s patent applications were not objectively baseless, and thus there was no violation of antitrust law under the Noerr–Pennington doctrine. The court also found that the Humira buyers did not “plausibly allege the existence of an agreement that restrained competition.”

In July 2020, the Humira buyers appealed the decision to the 7th Circuit.  During the oral argument in February 2021 before a panel consisting of Circuit Judges Frank H. Easterbrook, Diane P. Wood, and Thomas L. Kirsch II, the Appellants argued that there was “widespread, objective baselessness in the patent minefield erected by AbbVie.”

Judge Easterbrook asked the Appellants whether they were prepared to prove that each of the patents in the alleged thicket is invalid. The Appellants contended that, instead of showing that all the patents are invalid, they only needed to show that at least one biosimilar maker would have prevailed in a challenge to Humira’s exclusivity if not for the patent thicket. The Appellants further stated that AbbVie only asserted about 60 to 80 patents against would-be biosimilar makers and thus, they only needed to focus on those asserted patents. Judge Easterbrook also questioned the Appellants’ assertions that there was no presumption of the patents’ validity, and noted that the likelihood of proving that all the patents in the entire thicket are invalid is “astoundingly small.”

Judge Wood appeared to agree with the Appellants that it would not matter whether the patents not asserted by AbbVie are invalid. She asked AbbVie why they would agree to the biosimilars’ entry in 2023, years before their patents’ expiration in the 2030s, and whether this agreement is “a signal of tremendous weakness” of the patents.  AbbVie responded that the later-expiring patents in the alleged thicket are generally narrower than earlier-expiring ones, and thus the date set forth in the agreement is a “perfectly appropriate compromise” between AbbVie and the biosimilar makers.

Concerning the consequences of the case’s outcome, Judge Kirsch asked the Appellants how a brand company could enter a global agreement with biosimilar makers without subjecting itself to antitrust lawsuits in the U.S. The Appellants responded that if a company decides to combine settlements in different markets, they need to make sure that they are settling, not trading off one market against another. The Appellants contended that AbbVie’s agreement with the biosimilar makers is a “sweetheart deal in Europe” but “terrible deal” in the U.S.

Overall, the oral arguments provide insights into the court’s views on the antitrust implications of creating a “patent thicket” around a drug, and on global settlement agreements involving entry into different markets.  We will provide additional updates as the case proceeds.