AbbVie and Besins: A Patent Suit Bought Time for AndroGel

In the AbbVie Besins AndroGel antitrust case, a federal court ordered the companies to give up $448 million in profits in 2018 over sham patent litigation that delayed Perrigo’s generic, but an appeals court later reversed the monetary judgment. For someone inside the drug business, the revealing part is what the lawsuit accomplished before anyone decided it: Perrigo stayed out while AbbVie gained time to move patients to a newer version of AndroGel. Patients and payors lost access to the cheaper alternative.

AndroGel is a testosterone gel used to treat men whose bodies do not produce enough testosterone. Unimed developed the original product with the Besins group, and Unimed and Besins owned the patent. Abbott Laboratories acquired Unimed and its parent, Solvay, in 2010. AbbVie took over Abbott’s proprietary pharmaceutical business, including AndroGel, in 2013.

The Federal Trade Commission brought its civil case in 2014. The trial findings explain how a patent dispute became a way to preserve drug sales, and why the two potential generic entrants, Teva and Perrigo, had very different prospects of reaching customers.

How the AndroGel Patent Could Delay a Generic

The AndroGel patent covered a particular formulation, and filing a patent suit could hold up approval of a competing drug by the Food and Drug Administration. That combination made the filing itself commercially valuable.

A key ingredient was the penetration enhancer, which helps testosterone pass through the skin. The original patent application claimed all penetration enhancers. After the patent examiner rejected that broad claim, Unimed and Besins narrowed it, eventually to one enhancer, isopropyl myristate. Perrigo’s proposed generic used isostearic acid. Teva’s used isopropyl palmitate.

Those differences were central to the competitors’ notices to the patent owners. A paragraph IV notice tells the owner that the proposed generic does not infringe the patent or that the patent is invalid. The patent owner had 45 days to sue. A suit filed within that window triggered an automatic 30-month hold on approval, unless the district court resolved the patent action sooner.

The system also gave a generic manufacturer a less expensive path to approval. Rather than repeat all the original drug’s safety and effectiveness work, it could rely on the brand’s existing data and supply the additional information needed for its own product. A lower-cost rival could then compete for the same prescriptions.

A patent complaint could interrupt that path before the patent owner won anything. In the Perrigo dispute, the court ultimately found that imposing expense and delay was the reason for suing.

Perrigo Had Already Been Told It Would Not Be Sued

The decision to sue Perrigo in 2011 followed an earlier decision to leave the same competitor alone. In 2009, Solvay, Unimed and Besins had reviewed Perrigo’s application, including its use of a different penetration enhancer. Solvay and Unimed publicly announced that they would not bring a patent suit at that time. Their explanation described a product that:

Besins also decided against suing. The formulation difference had been examined and recognized before the later dispute began.

After the Food and Drug Administration required a different approval pathway for testosterone gels with different enhancers, Abbott petitioned the agency to apply that requirement to Perrigo and require new patent notices. The agency agreed. Perrigo resubmitted its application and sent another notice in 2011. It again identified the different enhancer and explained that the patent’s own history defeated an infringement claim. This time, the patent owners sued.

The trial court focused on the people who made that decision. Experienced in-house patent specialists approved the suit after outside specialists had access to Perrigo’s formulation information. The court found that the decision-makers knew the competing products used enhancers outside the narrowed patent and inferred that they understood what the patent applicants had surrendered.

That evidence gave the court a reason for the decision beyond a company’s general desire to protect sales. The patent owners had narrowed their claim to obtain the patent, then used litigation against a competitor whose ingredient they had excluded. The court found that they expected the expense and delay to protect AndroGel’s business, with no expectation of winning the patent fight.

Perrigo Could Substitute at the Pharmacy, Teva Could Not

The trial court found that the lawsuit delayed Perrigo’s launch. It reached a different conclusion about Teva’s failure to launch, because Teva had separate regulatory, manufacturing and commercial obstacles.

The Food and Drug Administration’s therapeutic-equivalence rating explains much of the difference. An AB rating allowed a generic to replace brand-name AndroGel at the pharmacy under state substitution laws. A BX rating meant the agency lacked sufficient evidence to determine therapeutic equivalence, so the product could not use that automatic substitution route.

Perrigo received an AB rating and launched on December 27, 2014, its licensed entry date under the patent settlement. The court found that, without the sham suit, Perrigo would have received the rating and launched in June 2013.

The delay extended beyond the patent suit itself. When Perrigo pressed for its rating, the Food and Drug Administration pointed to Perrigo’s agreement not to market until the settlement date. The trial court found that the agreement removed the urgency of issuing the rating sooner. A date negotiated to end the lawsuit had become a reason for waiting on the regulatory side as well.

Teva received a BX rating. Its generic business depended on pharmacy substitution, and its generic division had no sales force for promoting a product that could not substitute automatically. A commercial plan built around generic substitution now needed a different way to persuade prescribers and payors to buy the drug.

Teva had also withdrawn its pump presentation after the FDA raised packaging concerns, leaving approval for packets only. It would not fund the manufacturing investment without an AB rating. The court found that these obstacles, rather than the patent suit, explained its failure to launch.

Those differences changed the financial calculation. The court based its profit award on Perrigo’s delayed entry and excluded a hypothetical Teva launch.

The Market AbbVie Was Protecting

The court found that AndroGel had monopoly power in the U.S. market for transdermal testosterone replacement therapies. That market included competing gels, patches, solutions and a tablet applied to the gums.

Formulary placement was a major part of that competition. A formulary is an insurer’s list of covered drugs, with different patient copays influencing which prescriptions get filled. AbbVie paid rebates to payors for better placement. Rival products could displace AndroGel from preferred coverage, and they did.

Yet AndroGel’s share remained above 60% through the end of 2014. The court found that AbbVie could maintain its dominant position and raise its wholesale price despite rebates and competition from other brands.

Injectable testosterone was much cheaper, but AbbVie did not price AndroGel against injectables or offer rebates to match their price. The court found that injectables did not constrain AndroGel’s pricing enough to belong in the same market.

Getting a new drug into that market also meant more than obtaining approval. A manufacturer needed production capability, pharmacies willing to stock the product and payors willing to cover it. A brand launch required a sales force to reach prescribers. An AB-rated generic had the commercial advantage of pharmacy substitution. Delaying that particular kind of competitor protected a business that other brands had already struggled to dislodge.

Delay Helped Move Patients to AndroGel 1.62%

The court found that delaying generic AndroGel 1% also increased profits on AndroGel 1.62%. The newer product used the same active ingredient for the same condition but required less gel. It went on sale in May 2011, while the patent disputes were developing.

Patients moved to the newer formulation would not have their prescriptions automatically filled with a generic of the older formulation. More time without generic competition therefore gave AbbVie more time to build sales of the newer drug.

AbbVie’s forecasts showed that the company understood the connection. Around the time of the suits, its internal projections expected generic entry to erode sales of the original product and cause the newer formulation’s sales to flatten or fall. The court relied on those forecasts when it rejected the argument that generic competition would leave the newer product’s sales untouched.

That is why the profit calculation reached beyond the formulation named in the patent dispute. The court found that the delay increased profits on both products. Someone working with sales forecasts or product-transition plans could see a commercial consequence that would be easy to miss by reading only the patent complaint.

The Separate Reverse-Payment Claim

The Federal Trade Commission also challenged the settlement with Teva as an improper restraint on competition. That reverse-payment claim was separate from the finding that the patent suit delayed Perrigo’s launch. The Commission withdrew its remaining claim in July 2021.

Cephalon and Teva’s Provigil settlement shows another way agreements can keep generics off the market. There, the Federal Trade Commission alleged that agreements delayed generic competition. The entered Provigil settlement order set a $1.2 billion fund obligation, with credit for related private payments.

How Much of a Settlement Does a Whistleblower Get?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

If your information connects a delayed generic launch to government drug purchases, our whistleblower experts can examine whether it supports a false-claims case. The formulation information, launch decisions and commercial forecasts can show how the delay worked and what it was worth.

You Know What the Delay Was Worth

If a patent suit affected a generic rival’s entry, explain the business decision behind it to our whistleblower experts.