Johnson and Johnson 2005 Annual Report Download - page 63

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS PAGE 61
On December 20, 2005, Mylan announced that it had
entered into two agreements with Ortho-McNeil Pharmaceuti-
cal, Inc. regarding oxybutynin chloride extended release
tablets. One agreement relates to Ortho-McNeil’s supply of cer-
tain dosages of oxybutynin chloride extended release tablets
and the second relates to a patent license to ALZA intellectual
property regarding DITROPAN XL®
. The terms of the agree-
ments, which are confidential, depend on the outcome of the
appeal of the West Virginia court’s decision and are subject to
review by the Federal Trade Commission.
In the weeks following the adverse ruling in the DITROPAN
XL®ANDA litigation against Mylan in September 2005, Ortho-
McNeil and ALZA received five antitrust class action complaints
filed by indirect purchasers of the product. The complaints
were filed in various federal courts, but all claim damages
based on the laws of over 25 states. They allege that Ortho-
McNeil and ALZA violated the antitrust laws of the various
states by knowingly pursuing baseless patent litigation, and
thereby delaying entry in the market by Mylan and Impax.
In the action against Mylan involving Ortho-McNeil for
LEVAQUIN®(levofloxacin), the trial judge on December 23,
2004 found the patent at issue valid, enforceable and infringed
by Mylan’s ANDA product and issued an injunction precluding
sale of the product until patent expiration in late 2010. On
December 19, 2005, the Court of Appeals for the Federal
Circuit, affirmed the judgment of validity, enforceability and
infringement. Mylan has filed a motion for rehearing by the
Court of Appeals.
In the consolidated actions against Teva, Sicor, Hi-Tech
Pharmacal, and American Pharmaceutical Partners involving
the ANDAs for various Levofloxacin preparations, a trial is
tentatively scheduled to begin in April 2006 on the claim that
the Levaquin patent was obtained by inequitable conduct and
is therefore unenforceable.
In the action against Kali involving Ortho-McNeil’s
ULTRACET®(tramadol hydrochloride/acetaminophen), Kali
moved for summary judgment on the issues of infringement
and invalidity. The briefing on that motion was completed in
October 2004 and a decision is expected anytime. With respect
to claims other than that at issue in the litigation against Kali,
Ortho-McNeil has filed a reissue application in the U.S. Patent
and Trademark Office seeking to narrow the scope of the
claims. Notice of allowance of that patent was received on Octo-
ber 21, 2005. Kali obtained final approval of its ANDA at expi-
ration of the 30-month stay on April 21, 2005, and launched its
generic product the same day. If Ortho-McNeil ultimately pre-
vails in its patent infringement action against Kali, Kali will be
subject to an injunction and damages.
In the action against Teva Pharmaceuticals USA (Teva)
involving Ortho-McNeil’s ULTRACET®(tramadol hydro-
choloride/acetaminophen), Teva has moved for summary judg-
ment on the issues of infringement and validity. The briefing on
that motion was completed in March 2005. A ruling could issue
at any point.
In the action against Caraco involving Ortho-McNeil’s
ULTRACET®(tramadol hydrocholoride/acetaminophen),
Caraco’s motion for summary judgment of non-infringement
was granted on October 20, 2005. Ortho-McNeil has appealed
that decision. Caraco launched its generic ULTRACET®“at risk”
in December 2005.
With respect to all of the above matters, the Johnson &
Johnson subsidiary involved is vigorously defending the
validity and enforceability and asserting the infringement of its
own or its licensor’s patents.
Average Wholesale Price (AWP) Litigation
Johnson & Johnson and its pharmaceutical subsidiaries, along
with numerous other pharmaceutical companies, are defen-
dants in a series of lawsuits in state and federal courts involv-
ing allegations that the pricing and marketing of certain
pharmaceutical products amounted to fraudulent and other-
wise actionable conduct because, among other things, the com-
panies allegedly reported an inflated Average Wholesale Price
(AWP) for the drugs at issue. Most of these cases, both federal
actions and state actions removed to federal court, have been
consolidated for pre-trial purposes in a Multi-District Litigation
(MDL) in federal district court in Boston, Massachusetts. The
plaintiffs in these cases include classes of private persons or
entities that paid for any portion of the purchase of the drugs at
issue based on AWP, and state government entities that made
Medicaid payments for the drugs at issue based on AWP. In the
MDL proceeding in Boston, plaintiffs moved for class certifica-
tion of all or some portion of their claims. On August 16, 2005,
the trial judge certified Massachusetts only classes of private
insurers providing “Medi-gap” insurance coverage and private
payers for physician-administered drugs where payments were
based on AWP. The judge also allowed plaintiffs to file a new
complaint seeking to name proper parties to represent a
national class of individuals who made co-payments for physi-
cian-administered drugs covered by Medicare. The Court of
Appeals declined to allow an appeal of those issues and on
January 19, 2006, at a hearing on class certification issues,
the court indicated its intent to certify the national class as
noted above.
Other
The New York State Attorney General’s office (N.Y. AG) and the
Federal Trade Commission issued subpoenas in January and
February 2003 seeking documents relating to the marketing of
sutures and endoscopic instruments by the Company’s Ethicon
and Ethicon Endo-Surgery subsidiaries. In February 2005,
the N.Y. AG advised that it had closed its investigation. The
Connecticut State Attorney General’s office also issued a sub-
poena for the same documents. These subpoenas focus on the
bundling of sutures and endoscopic instruments in contracts
offered to group purchasing organizations and individual
hospitals in which discounts are predicated on the hospital
achieving specified market share targets for both categories
of products. The operating companies involved have
responded to the subpoenas.
In June 2003, the Company received a request for records
and information from the U.S. House of Representatives’ Com-
mittee on Energy and Commerce in connection with its inves-
tigation into pharmaceutical reimbursements and rebates
under Medicaid. The Committee’s request focuses on the drug
REMICADE®(infliximab), marketed by the Company’s Centocor,
Inc. (Centocor) subsidiary. In July 2003, Centocor received a