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MYLAN ANTITRUST/RICO COMPLAINT AGAINST GENERIC COMPETITORS, FDAers DISMISSED

Executive Summary

MYLAN ANTITRUST/RICO COMPLAINT AGAINST GENERIC COMPETITORS, FDAers DISMISSED with prejudice by Baltimore federal court Judge Frederic Smalkin on Dec. 8. In an opinion accompanying the order, Smalkin wrote that Mylan "failed to allege any factual support for an essential element of its claim," that is, that the defendants' products were not bioequivalent. The case was dismissed before the discovery process was complete. However, the opinion states, "this litigation has gone far enough." The complaint was brought against Par, Quad, Pharmaceutical Basics, Quantum, AHP, Vitarine, American Therapeutics, individual officers of and consultants to those firms, and former FDAers Charles Chang, David Brancato, Walter Kletch, Jan Sturm and Salvatore Pinella. The complaint initially was filed on June 8, 1989 in D.C. federal court ("The Pink Sheet" June 12, 1989, T&G- 1); the venue was changed in March 1990 to Maryland. Mylan had sought $200 mil. in damages, charging that defendants had broken antitrust and racketeering laws in scheming to obtain unfair advantages in FDA's ANDA approval process. Mylan charged the defendants with Lanham Act violations regarding the false promotion of their products, whose approvals were obtained through a defrauding of FDA's ANDA review process. The opinion indicates the plaintiff bears a heavy burden to successfully prosecute such a claim: it must prove that the fraudulent products were bioinequivalent. To "prevail on a Lanham Act claim, a plaintiff must show that a contested statement is in fact false or misleading, not merely that the statement is unsubstantiated," the opinion states. Mylan asserted that "the defendants' claims of bioequivalence are unsubstantiated, but nowhere in the complaint does Mylan allege that the drugs are not bioequivalent," the judge wrote. The opinion notes that Mylan had argued "an affirmative allegation" of bioinequivalence could not be made "because the defendants' records are fraudulent." Nonetheless, Smalkin ruled, "Mylan simply has failed to allege sufficient facts to support its Lanham Act claim," and its complaint "does not allege that the defendants' drugs were not bioequivalent." He said "the failure to allege non- bioequivalence is fatal to Mylan's claim." Noting that Mylan had filed three amended complaints, the opinion reports that the company had been corrected by the court a number of times regarding the framing of allegations that "all defendants" violated the RICO statute through a "global conspiracy" and "a pattern of racketeering activity." Those legal tactics were rejected by the court; however, they were not the basis for dismissal. "Such a result...would be overly harsh and would, perhaps, unduly penalize the client for its attorneys' failure to fully comprehend the meaning of the language" of the amended complaints and the court's instructions. "On the other hand," the court said it could not "and will not permit yet another amendment simply in order to allow Mylan one more opportunity to rectify its flawed complaint." To do so, Smalkin said, "would be in essence to write the complaint for the plaintiff." Both sides "were put on notice that no further motions to amend pleadings would be entertained." Mylan said in a Dec. 11 press statement that it had "no idea why the judge chose to make such a decision" and that it was "very surprised since many of the individuals and companies named in the suit have been charged, convicted and sentenced by the federal government through the criminal court system." The firm said that it "will evaluate [its] options, including appeal."

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