A federal appeals court has given new life to a price-fixing lawsuit brought by Walgreen and Kroger over Johnson & Johnson's drug Remicade.

Friday's precedential ruling from the U.S. Court of Appeals for the Third Circuit overturned a March 2019 decision from the Eastern District of Pennsylvania that granted summary judgment to Johnson & Johnson and its affiliate, Janssen Biotech. The appeals court said contract language can't stop the assignment of federal antitrust claims.

Antitrust claims are a product of federal statute and thus are extrinsic to, and not rights "under" a commercial agreement, the appeals court said.

The Third Circuit ruling represents a victory for the law firms Kenny Nachwalter and Hangley Aronchick Segal Pudlin & Schiller, which represented Walgreen and Kroger. Johnson & Johnson and Janssen had counsel from Patterson Belknap Webb & Tyler, Covington & Burling and Ballard Spahr.

Walgreen and Kroger sell Remicade, which is used to treat autoimmune diseases, after procuring it from wholesalers AmerisourceBergen and Cardinal Health, the appeals court said. The wholesalers buy the drug from a Janssen affiliate, JOM Pharmaceuticals, whose distribution agreement with the wholesalers contains a provision barring the parties from assigning any rights or obligations under the agreement without written consent of the other party.

In 2018, AmerisourceBergen assigned its antitrust rights for Remicade to Walgreen, and Cardinal Health reached a similar agreement with Kroger. The retailers then filed antitrust suits against Janssen. Janssen then moved to dismiss, citing the anti-assignment provision, and  U.S. District Judge J. Curtis Joyner granted.

Third Circuit Judge Kent Jordan. Courtesy photo

On appeal, the panel of Kent Jordan, Anthony Scirica and Marjorie Rendell said facts of the case were the same as a 2016 Third Circuit case, Hartig Drug v. Senju Pharmaceutical. In that case, where an indirect purchaser of medicated eyedrops asserted antitrust claims against the product's manufacturer, the panel vacated a dismissal that was based on an anti-assignment clause.

"Applied to the anti-assignment provision, the scope of which is limited to wholesaler's rights under the distribution agreement, it becomes evident that the provision has no bearing on wholesaler's antitrust claims, which rely only on statutory rights and do not implicate any substantive right under the distribution agreement. Accordingly, the anti-assignment provision does not invalidate wholesaler's assignment of antitrust claims to Walgreen or otherwise present a bar to Walgreen's standing to assert those antitrust claims against Janssen," Jordan wrote for the panel Friday.

Johnson & Johnson and Janssen argued that the Hartig decision's rationale was "eclipsed" by two subsequent Third Circuit decisions, Wallach v. Eaton, from 2016, and American Orthopedic & Sports Medicine v. Independence Blue Cross Blue Shield, from 2018.

But the appeals court said Wallach did not involve a contractual anti-assignment provision. It concerned whether the assignment of antitrust claims must be supported by consideration. The defendants' reliance on American Orthopedic also lacked merit, the panel said. That case did involve an anti-assignment clause in a ERISA benefit plan, but its validity, not its scope, was at issue.

The suit said that from 1998 to 2016, Remicade was the only drug on the market containing the active ingredient infliximab, giving J&J a monopoly that allowed it to sell the drug at high prices and generate U.S. sales of $4.8 billion in 2016. Remicade sells for $4,000 per dose and about $26,000 for a full year of treatment, the suit said.

Johnson & Johnson did not respond to a request for comment on the ruling. Lawyers for Walgreen and Kroger also did not return calls.