United Therapeutics, Smiths Medical restricted syringe shipments to keep patients on branded lung treatment, court filing alleges
6 November 2019. By Max Fillion and Leah Nylen.
United Therapeutics and Smiths Medical restricted shipments to pharmacies of specialized syringes that deliver a life-saving drug used to treat a serious lung condition, according to allegations in confidential material from a court filing in an antitrust suit.
The filing, a request for a preliminary injunction made by plaintiffs Sandoz and RareGen, claims United Therapeutics and Smiths restricted the shipments until the pharmacies could no longer service pulmonary arterial hypertension patients who used the syringes to administer the drug treprostinil, which UTC sells under the brand name Remodulin.
The shipment restrictions were used to pressure CVS and Accredo to agree to exclusively sell Remodulin and not a rival generic made by Sandoz and marketed by RareGen, the unredacted filing said.
In response to a request for comment, UTC's lawyers said that MLex's publication of the brief violates trade secret law.
"MLex has refused to remove the brief from its website, despite the federal court order sealing it from the public eye, and further has announced its intent to publish an article derived from it," attorneys for UTC said today in a letter referring to this article. "MLex’s defiance is the kind of aggravating conduct that can trigger exemplary damages and attorney’s fees."
Smiths Medical responded with a statement saying it "categorically denies that it has engaged in any conduct that has either restrained competition or harmed patients suffering from pulmonary arterial hypertension (PAH). To the contrary, Smiths Medical has endeavored over the last several years to ensure product supply was available to PAH patients."
Sandoz and RareGen sued on April 16, accusing UTC and Smiths of pressuring the pharmacies and seeking an unspecified amount of damages, along with injunctive relief. In filing for a preliminary injunction on Oct. 4, Sandoz and RareGen disclosed additional details about the alleged pressure tactics of UTC and Smiths, and asked the court to stop them from enforcing the restrictive contracts with CVS and Accredo.
The Oct. 4 filing, however, was later replaced with a redacted version that omitted details of the process by which UTC and Smiths allegedly pressured the pharmacies. The redacted version also left out details about pricing and the customer base for the drug.
UTC and Smiths subsequently sought sanctions against the plaintiffs for filing the original, unredacted version. The unredacted filing was made public inadvertently, according to an e-mail exchange contained in the motion by UTC and Smiths.
Sandoz and RareGen opposed the motion for sanctions. "[N]early all of the information in the brief that Defendants asked Plaintiffs to file under seal is not protected from disclosure, or otherwise poses no threat of competitive injury at all," RareGen said in its response to the motion for sanctions. RareGen said the redactions related to information already public in securities filings or other court documents. "None of that information should have been sealed in the first place."
Sandoz additionally argued that it was not responsible for the unredacted filing, which was made by RareGen’s counsel, Quinn Emanuel.
Treprostinil is administered using a pump about the size of a cellphone called a CADD-MS 3. The pump uses disposable cartridges. CVS and Accredo are the only two pharmacies in the US that sell treprostinil, according to a court document. The generic treprostinil was launched in March and is about 48 percent less expensive than Remodulin, according to the unredacted filing.
As of December 2018, 1,564 US patients were receiving subcutaneous — or below the skin — treatments with UTC's treprostinil, according to the unredacted filing. No patients received subcutaneous generic treprostinil treatments in August 2019, although there were 200 receiving intravenous injections of the generic, the filing said. Plaintiffs allege intravenous injections that don't require the cartridges carry a higher risk of infection and decrease patient mobility.
In 2016, according to plaintiffs, UTC struck an agreement with Smiths prohibiting the syringe manufacturer from selling its products to anyone without UTC approval. In court filings, UTC said the deal was necessary to ensure Smiths continued to manufacture the syringes while UTC developed its own drug-delivery mechanism.
“The arrangement between [United Therapeutics] and Smiths Medical that made additional pump and cartridge production possible benefitted PAH patients who would no longer have any access to these products in the absence of the arrangement,” Smiths said in its written statement to MLex.
UTC asked Smiths in late 2018 to amend its contracts with CVS and Accredo to ensure the pharmacies exclusively sold UTC’s branded drugs with Smiths’ syringes, the plaintiffs allege. The pharmacies initially pushed back, but as Sandoz’s generic came closer to market, UTC pressured Smiths to restrict syringe shipments to CVS and Accredo until they agreed to only sell UTC’s version of the drug, the unredacted filing said.
According to the filing, CVS and Accredo repeatedly asked Smiths for more syringes after the restrictions began, telling the manufacturer they wouldn’t be able to serve their patients.
“We need urgent help,” CVS wrote to Smiths in early March, according to the unredacted filing. “We cannot continue to service patients … We will be completely out of stock across the network by end of week or sometime Monday at the latest. We need some answers please!”
The filing quotes UTC President Michael Benkowitz as saying the restrictions were put in place to gain “negotiating leverage” to force the pharmacies to give in to UTC’s demands.
CVS and Accredo signed the contracts, according to the unredacted filing, but Smiths subsequently agreed to sell all of its cartridges to UTC. That eliminated the need for CVS and Accredo's contract with Smiths and required the pharmacies to buy the products directly from UTC and dispense them to patients using UTC’s version of the drug, the filing said.
“Thus, as it stands today, UTC is the sole supplier of CADD-MS 3 cartridges in the United States,” the filing said.
In court filings, UTC said the contracts with Smiths were necessary to keep the syringes on the market. Smiths announced in 2015 that it would stop manufacturing the syringes, and that's when UTC stepped in and struck a deal for Smiths to continue manufacturing syringes while UTC developed an in-house “next generation” drug-delivery mechanism, the defendants said.
Sandoz “sat on its hands” and didn’t work to ensure it would have a delivery mechanism for the generic it was developing, UTC said. Smiths, in its written statement, said it offered Sandoz “alternative product solutions” and a license to produce the cartridges.
“[T]he antitrust laws do not afford Plaintiffs the right to free ride off UTC’s investments,” the defendants said.
US District Judge Brian R. Martinotti hasn’t yet ruled on the preliminary injunction motion or the request for sanctions.