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In re Asacol Antitrust Litigation

United States District Court, D. Massachusetts

January 4, 2017

IN RE ASACOL ANTITRUST LITIGATION All Actions

          MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS' MOTION TO COMPEL PLAINTIFFS' SALES, PRICING, AND PREMIUM INFORMATION.

          Judith Gail Dein United States Magistrate Judge.

         I. INTRODUCTION

         This matter is before the court on Defendants' Motion to Compel Discovery of Plaintiffs' Sales, Pricing, and Premium Information. (Docket No. 220). As the defendants have described the scope of their motion:

Here, Defendants seek production by the Direct Purchaser Plaintiffs of certain sales and pricing information, as well as sales contracts and strategy documents. This discovery, which will reflect the relative prices of oral dosage ulcerative colitis treatments sold alongside the drugs at issue in this case - Asacol, Asacol HD and Delzicol - is relevant to defining the product market. It also bears directly on whether the End Purchaser Plaintiffs were injured at all under state law, or instead are simply seeking to reap a windfall duplicative recovery.
Defendants also seek information on End Payor Plaintiffs' premiums and profitability. State laws limit EPPs' recovery to actual damages. To the extent EPPs passed on to enrollees some or all of the alleged overcharges by way of premiums, the amount of that pass-on would reduce their actual damages. Moreover, variations in such pass to members of any alleged overcharge through premiums may demonstrate class treatment is not appropriate here.

Defs. Mem. (Docket No. 221) at 1. While the plaintiffs object to producing any of this information, in an effort at compromise the DPPs have agreed to produce their sales data for the Asacol Products. See DPP Mem. (Docket No. 235) at 2. The parties shall meet and confer to determine if the defendants are prepared to accept this offer, without waiver of the defendants' rights to continue to seek broader discovery. For the reasons detailed herein, the motion to compel is otherwise denied without prejudice.

         II. ANALYSIS

         A. DPP Discovery

         The defendants have requested that the DPPs produce “transaction data showing the Wholesaler DPPs' sales and pricing to indirect purchasers like retailers and pharmacies, and the Retailer DPPs' sales and pricing to their customers[, ]” purchase and sales contracts “reflecting the terms and conditions of the purchase and sale of oral dosage ulcerative colitis treatments between wholesalers and their customers like retailers and pharmacies[, ]” and sales and pricing strategy documents “sufficient to show DPPs' strategies, policies, and practices for setting prices for and selling to their respective customers wholesale and retail.” Defs. Mem. at 2. It is well-established that such “downstream discovery, ” while “not absolutely prohibited, ” “is generally disfavored.” In re Solodyn (Minocycline Hydrochloride) Antitrust Litig., MDL No. 14-2503-DJC, 2016 WL 6897809, at *2 (D. Mass. Sept. 19, 2016) (and cases cited). Nevertheless, the defendants contend that the requested discovery is necessary to (1) define a relevant product market; (2) counter the EPPs' damage claims and prevent “duplicative recoveries” by DPPs and EPPs[1]; and (3) determine the existence of “cost plus” contracting at the wholesaler level. Each of these arguments will be discussed herein.

         1. Information Needed to Define the Product Market

         Defendants have requested sales and pricing information from the DPPs in order to establish that “the relevant product market is broader than Plaintiffs assert and that a variety of pharmaceutical products are therapeutically substitutable, and in practice are substituted, in the market for ulcerative colitis treatments.” Defs. Mem. at 4. Thus, the defendants argue, documents showing “the pricing interaction among Asacol, Asacol HD, Delzicol, and their closest substitutes” “will allow the parties and the Court to determine the relevant market.” Id. For the reasons addressed in this court's Memorandum of Decision and Order on Defendants' Motion to Compel Product Market Discovery, the defendants have failed to establish that the requested information would be useful in defining the relevant market.

         As the DPPs have accurately summarized the record before this court:

[W]holesaler sales data is not useful in defining a relevant product market under the circumstances of this case, and Defendants offer no expert opinion to the contrary. Relevant markets are defined in terms of cross-elasticity at the consumer level, i.e., the extent to which raising the price of one product above the competitive level causes consumers to shift their purchasing choices. The data that Defendants are asking for is not useful in analyzing that issue for the simple reason that Plaintiffs either do not sell to consumers or sell to such a small fraction of the market that their data would be useless for these purposes. If a plaintiff's purchases or sales of Asacol go down after a price increase on Asacol, there is no way to determine whether the lost sales represent patients who stopped taking the drug, began taking a different drug, or started getting their prescriptions filled at a pharmacy served by a different wholesaler. Finally, there are better sources of data available to study market definition. Marketwide data is available from third-party sources like IMS Health; Defendants possess and use such third-party marketwide data for their own business purposes. There is no need for production of Plaintiffs' sales data.

DPP Mem. at 1-2.[2] Nevertheless, the DPPs have agreed to produce their sales data for the Asacol Products. This offer was rejected by the defendants initially, since the defendants wanted information about other products as well. The parties shall meet and confer following this decision to determine whether the defendants want to accept the offer of the sales data for Asacol Products only, without waiver of ...


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