Settlements Don’t Close the Door: Antitrust Claims Follow IPR Challenges in Life Sciences

In the ongoing case of Carefirst of Maryland Inc. v. Johnson & Johnson[1], the plaintiffs successfully overcame a motion to dismiss. At the heart of the case is J&J’s legal strategy against biosimilar competitors, including Amgen, and the role of settlement agreements in controlling market entry dates for biosimilars. As this case demonstrates, actions taken in patent prosecution, litigation, and inter partes review (IPR) proceedings can have significant downstream consequences, including antitrust scrutiny from insurers and healthcare providers.

The dispute began when Amgen completed Phase 3 clinical trials for its biosimilar to Stelara® (ustekinumab), an autoimmune drug produced by J&J. Following the “patent dance” procedures under the Biologics Price Competition and Innovation Act (BPCIA), J&J initiated patent infringement litigation against Amgen. That litigation asserted several patents, including method-of-use and manufacturing patents acquired through J&J’s prior purchase of Momenta Pharmaceuticals. Various lawsuits resulted in settlements between J&J and multiple biosimilar developers, including Samsung Bioepis, Teva, and Celltrion, all of which agreed to delay biosimilar launches until 2025.

The settlements also terminated proceedings before the Patent Trial and Appeal Board (PTAB), where companies like Samsung Bioepis challenged the validity of certain patents through IPR. Samsung had filed an IPR[2] in June 2023 against U.S. Patent No. 10,961,307, arguing that the claims were invalid in light of prior art, including clinical trial data related to Stelara® that were allegedly mischaracterized or improperly withheld from the patent examiner. Although inequitable conduct cannot be raised in an IPR, these facts could support such claims outside the IPR context. This IPR was terminated by mutual agreement in August 2023, after Samsung and J&J reached a confidential settlement. Even if the issues raised in the IPR have merit, healthcare providers would be unlikely to use IPRs to invalidate a patent. Although any party can file an IPR petition without needing standing at the time of filing, only parties with Article III standing can appeal a PTAB decision to the Federal Circuit. [3] Also, even if the patent were invalidated, healthcare providers’ economic losses stem from negotiated delays in market entry, and depending on the confidential settlement a patent invalidation might not expedite the agreed-upon market entry timeline.

So, while settlements can effectively resolve patent disputes, they also carry antitrust risks, particularly when a settlement delays biosimilar launches and arguably maintains a monopoly based on patents that might not have survived full legal scrutiny. In response to the settlement agreements, Carefirst and other healthcare insurers filed antitrust claims against J&J including allegations of Walker Process fraud, a type of antitrust claim where a party is accused of obtaining or enforcing a patent through intentional fraud on the USPTO, resulting in monopolistic control that violates the Sherman Act. [4] In Carefirst v. Johnson & Johnson, the antitrust claims mirrored many of the issues raised during the IPR proceedings and earlier litigation, including questions of patent validity and inequitable conduct. For example, the plaintiffs argued that J&J misrepresented NCT information and omitted prior art studies during prosecution; in the IPR, these studies were combined with other references to argue obviousness, but they also raise concerns of inequitable conduct that the IPR could not address

The court held that the plaintiffs had adequately alleged Walker Process fraud concerning J&J’s omission of relevant prior art studies but found no basis for fraud in the misrepresentations of NCT information. The court reasoned that while the defendants’ characterization of the clinical trial information skirted the line between zealous advocacy and outright misrepresentation, the defendant’s arguments did not amount to fraud because the patent examiner had access to the same NCT data and was “free to reach his own conclusion.”[5] Therefore, the court permitted the Walker Process claims based on the omitted studies but dismissed claims regarding the NCT statements.

The Carefirst antitrust suit illustrates the importance of crafting thoughtful strategies when engaging in both patent litigation and settlement negotiations. Biosimilar entrants face a complicated path due to the patent portfolios surrounding biologics, which can include interrelated patents covering manufacturing methods, formulations, delivery mechanisms, and methods of use. As a result, biosimilar litigation can often trigger multiple rounds of litigation and settlement negotiations. These plaintiffs often raise arguments that mirror the same issues raised in IPRs, such as patent validity, as well as issues such as failure to disclose prior art and the improper use of settlements to delay competition. Even when an IPR challenge is resolved through a settlement, third parties like healthcare insurers may still pursue the same issues through antitrust claims. The key takeaway for life sciences companies is to proactively address potential antitrust risks just as they would patent litigation risks, by carefully managing prosecution of patent portfolios as well as settlement negotiations.