United States District Court, D. Massachusetts
TINA PICONE, et al., individually and on behalf of all others similarly situated, Plaintiffs,
SHIRE PLC, SHIRE, LLC, SHIRE U.S., INC., ACTAVIS ELIZABETH LLC, ACTAVIS HOLDCO US, INC., and ACTAVIS LLC, Defendants.
AMENDED MEMORANDUM AND ORDER ON MOTIONS TO
ALLISON D. BURROUGHS, U.S. DISTRICT JUDGE
Tina Picone, Sherry Cummisford, Carmen Richard, and Shana
Wright, individually and on behalf of all others similarly
situated as consumer indirect purchasers (“IPPs”)
of the pharmaceutical drug Intuniv, allege violations of
federal and state antitrust laws and state consumer
protection statutes against Defendants Shire, LLC and Shire
U.S., Inc. (“Shire”), and Actavis Elizabeth LLC
and Actavis Holdco US, Inc. (“Actavis”)
(collectively, “Defendants”). Currently pending
before the Court are Shire's and Actavis's separate
motions to dismiss for failure to state a claim. [ECF Nos.
51, 54]. For the reasons stated below, the motions are
GRANTED in part and DENIED in part.
November 23, 2016, the IPPs filed their first complaint. [ECF
No. 1]. Following the Court's allowance of a motion for
consolidation [ECF Nos. 26, 32], they filed a Consolidated
and Amended Class Action Complaint (“CAC”). [ECF
No. 39]. On April 10 and April 11, 2017, Defendants moved
separately to dismiss the CAC [ECF Nos. 51, 54]. On July 20,
2017, the Court held a hearing on the motions to dismiss in
both the instant action and the related action, FWK
Holdings LLC v. Shire PLC et al., No. 16-cv-12653. [ECF
ALLEGATIONS IN THE COMPLAINT
is 100 pages long and consists of 508 paragraphs.
Accordingly, the Court provides only an abbreviated overview
here, with additional facts included in the analysis as
manufacturers and sells Intuniv, which is a branded,
once-daily, extended-release formulation of the prescription
medication guanfacine hydrochloride, generally prescribed for
young patients to treat attention deficit hyperactivity
disorder. CAC ¶ 1. On September 2, 2009, the Food and
Drug Administration (“FDA”) approved Shire's
New Drug Application (“NDA”) for Intuniv,
pursuant to 21 U.S.C. § 355, et seq.
Id. ¶ 2. An NDA discloses any patents that
claim the new drug, and, if approved, the manufacturer must
list these patents in the FDA publication known as the
“Orange Book.” See In re Loestrin 24 Fe
Antitrust Litig., 814 F.3d 538, 542 (1st Cir. 2016).
During the relevant time period, Shire held three patents
covering Intuniv: U.S. Patent No. 5, 854, 290 (‘290
Patent), which was a method-of-use patent, and U.S. Patent
Nos. 6, 287, 599 (‘599 Patent) and 6, 811, 794
(‘794 Patent) (collectively, the “Intuniv
Patents”), which covered the sustained release coating
allowing for the extended release of the active ingredients.
CAC ¶¶ 45, 50. The IPPs assert that these sorts of
patents, which do not cover the active pharmaceutical
ingredient, “have a high rate of being found invalid or
not infringed.” Id. ¶ 47. According to
the CAC, Wall Street analysts, generic pharmaceutical
companies, and Shire itself considered the Intuniv Patents to
be “weak.” Id. ¶ 51.
Intuniv Patent Litigation
the Drug Price Competition and Patent Term Restoration Act of
1984, Pub. L. No. 98-417, 98 Stat. 1585, commonly known as
the Hatch-Waxman Act, a generic manufacturer may file an
Abbreviated New Drug Application (“ANDA”) to seek
approval of a proposed generic version of a brand drug.
See 21 U.S.C. § 355(j). Obtaining approval for
an ANDA is simpler than obtaining approval for an NDA.
See In re Loestrin 24 Fe Antitrust Litig., 814 F.3d
at 543. In filing an ANDA to obtain approval for a generic
drug, a generic manufacturer must certify, in one of four
ways specified by statute, that the generic does not infringe
any of the patents that the brand company listed in the
Orange Book. See 21 U.S.C. § 355(j)(2)(A)(vii).
In a “Paragraph IV” certification, the ANDA filer
certifies that the patent claiming the brand drug “is
invalid or will not be infringed by the manufacture, use, or
sale of the” proposed generic. Id. at §
355(j)(2)(A)(vii)(IV). This certification constitutes a
constructive act of infringement, granting the brand company
standing to sue the ANDA filer. See In re Loestrin 24 Fe
Antitrust Litig., 814 F.3d at 543; 35 U.S.C. §
271(e)(2)(A). The brand company may initiate patent
infringement litigation against the ANDA filer within 45 days
after receiving notice of the certification. 21 U.S.C.§
355(j)(5)(B)(iii). See In re Loestrin 24 Fe Antitrust
Litig., 814 F.3d at 543. This litigation also triggers
an automatic 30-month stay of FDA approval of the ANDA.
December 29, 2009, Actavis was the first to file an ANDA to
manufacture and sell a generic version of Intuniv, and
included a Paragraph IV certification as to all three Intuniv
patents. CAC ¶¶ 53-54. The first filer of an ANDA,
if successful, “will receive a 180-day period of
exclusivity during which ‘no other generic can compete
with the brand-name drug.'” In re Loestrin 24
Fe Antitrust Litig., 814 F.3d at 543 (quoting FTC v.
Actavis, 133 S.Ct. 2223, 2229 (2013)). See 21
U.S.C. § 355(j). One relevant exception, however, is
that the brand company itself can market an “authorized
generic” (“AG”) during this 180-day,
first-filer exclusivity period. See Sanofi-Aventis v. Apotex
Inc., 659 F.3d 1171, 1175 (Fed. Cir. 2011) (“[T]he
branded company may still market an authorized generic during
this 180-day exclusivity period.”). See also Mylan
Pharm., Inc. v. U.S. Food And Drug Admin., 454 F.3d 270,
271 (4th Cir. 2006) (holding that Hatch-Waxman Act
“does not grant the FDA the power to prohibit the
marketing of authorized generics during the 180-day
exclusivity period”); Teva Pharm. Indus. Ltd. v.
Crawford, 410 F.3d 51, 52 (D.C. Cir. 2005) (same).
after Actavis filed its ANDA, TWi Phamaceuticals, Inc.
(“TWi”) and Anchen Pharmaceuticals, Inc.
“Twi/Anchen”) each filed ANDAs with Paragraph IV
certifications on January 25, 2010 and January 28, 2010,
respectively. CAC ¶¶ 56-57. Teva Pharmaceuticals,
Inc. (“Teva”), Watson Pharmaceuticals, Impax
Laboratories, Inc. (“Impax”), Mylan
Pharmaceuticals, and Sandoz Inc. also filed ANDAs with
Paragraph IV certifications in 2010 and 2011. Id.
¶¶ 57, 59.
initiated patent infringement litigation against each of the
ANDA filers, which the IPPs contend amounted to sham
litigation. Id. ¶¶ 1, 59. The CAC
emphasizes parts of the litigation that purportedly revealed
Shire's anticompetitive behavior and weak patents. For
instance, on March 22, 2012, Shire dedicated the ‘290
Patent to the public shortly before it would have been
required to make expert disclosures. Id. ¶ 62.
With Actavis's support, Shire then moved to dismiss the
‘290 Patent claims without judgment. Id.
¶ 64. Nevertheless, on July 23, 2012, the court entered
a judgment finding the ‘290 Patent invalid.
Id. ¶ 66. The IPPs claim that Actavis's
support of the motion for dismissal without judgment was the
first step in an anticompetitive scheme, because without a
judgment against the ‘290 patent, even if the second
ANDA filer, TWi/Anchen, “achieved victory against
Shire's ‘599 and ‘794 Patents (triggering
Actavis's exclusivity as to those patents), it still
could not have launched a generic Intuniv until 180 days
after Actavis's launch because the ‘290
Patent's exclusivity would have still been in
effect.” Id. ¶ 64.
IPPs further claim that Shire had a “weak litigation
position” with respect to the ‘599 and ‘794
Patents, which were “formulation” patents that
were generally at a higher risk of invalidation. Id.
¶ 68. In March 2012, in Shire's cases against
TWi/Anchen and Impax, the courts issued claim construction
orders that were unfavorable to Shire. Id. ¶
69. In both instances, Shire moved for reconsideration but
both motions were denied. Id. These examples are
purportedly indicative of Shire's overall strategy to
prolong litigation through “untimely expert
disclosures, motions for discovery, and other litigation
tactics” in order to maintain its monopoly.
Id. ¶ 71.
around September 4, 2012, Shire allegedly took a key step
toward accomplishing its anticompetitive scheme by settling
the Intuniv patent litigation with TWi/Anchen. Id.
¶¶ 72, 79. Upon information and belief, the
settlement agreement made TWi/Anchen an AG distributor of
Intuniv. Id. ¶ 78. On September 6, 2012, Shire
issued a press release regarding the settlement, stating that
Shire may authorize Twi/Anchen to sell an AG version of
Intuniv, in exchange for which Shire would receive a
“significant royalty.” Id. ¶ 77.
TWi/Anchen also could market its own generic version of
Intuniv beginning on July 1, 2016, “or earlier in
certain limited circumstances.” Id. In the
event that the first ANDA filer, Actavis, did not settle its
patent litigation with Shire and released its own generic,
Twi/Anchen could launch a Shire AG to compete with Actavis
during its 180-day exclusivity period. Id. ¶
78. These settlement terms allegedly gave Shire substantial
leverage over Actavis. Id. ¶ 79. In short, even
if Actavis prevailed over Shire in the pending litigation and
began marketing its generic Intuniv, Twi/Anchen could launch
the AG during Actavis's 180-day exclusivity period and
cut into Actavis's profits. Id.
Shire had settled with Twi/Anchen, litigation remained
pending against Actavis and Teva. Id. ¶ 87.
From September 17 through September 20, 2012, a bench trial
was held as to the ‘599 and ‘794 Patents.
Id. The IPPs allege that Wall Street analysts
believed that the generic drug defendants were going to
prevail. Id. ¶¶ 88, 91. However, Shire
delayed the ruling following the bench trial by a
“frivolous and non-substantive post-trial motions
practice.” Id. ¶ 89.
around April 25, 2013, Shire and Actavis accomplished another
key step in implementing the anticompetitive scheme: they
settled the patent litigation between them prior to the entry
of a court decision. Id. ¶ 93. On April 25,
2013, Shire and Actavis entered into a Settlement Agreement,
which also incorporated by reference a related License
Agreement. [ECF No. 53-10]. That same day Shire and Actavis
also issued press releases stating that Actavis could launch
its own generic Intuniv on December 1, 2014 and would pay
Shire 25% royalties on gross profits, which the IPPs assert
was a commercially unreasonably low rate. Id. ¶
96. Additionally, the IPPs claim that Shire agreed as part of
the settlement not to launch an AG during Actavis's
180-day exclusivity period (a so-called “no-AG
agreement”). Id. ¶ 98.
the IPPs assert that the no-AG agreement and the low royalty
rates negotiated with TWi/Anchen and Actavis constitute
unlawful “reverse payments” under FTC v.
Actavis, 133 S.Ct. 2223 (2013). See id. at 2227
(generally describing a “‘reverse payment'
settlement agreement” as one that “requires the
patentee to pay the alleged infringer, rather than the other
way around”). Moreover, absent Shire's assertion of
the Intuniv Patents in sham litigation and the subsequent
settlements, Actavis could have launched its generic starting
on October 5, 2012, the day the FDA approved Actavis's
ANDA (shortly after the 30-month stay expired). Id.
¶ 90. As a result of the anticompetitive scheme,
however, Shire was able to prolong its Intuniv monopoly until
December 1, 2014 and then shared in the monopoly profits with
Actavis during Actavis's statutorily granted 180-day
exclusivity period. Therefore, purchasers of Intuniv paid
artificially inflated prices until at least December 1, 2014,
and likely until July 2015, when other generics entered the
market. Id. ¶ 10.
Causes of Action
asserts 25 causes of action under state law. In Counts 1-4,
the IPPs allege, under Massachusetts law, (1) unreasonable
restraint of trade against Shire and Actavis (premised on
Section 1 of the Sherman Act); (2) unlawful monopoly against
Shire (premised on Section 2 of the Sherman Act); (3)
unlawful attempted monopolization against Shire (premised on
Section 2 of the Sherman Act); and (4) unlawful conspiracy to
monopolize against Shire and Actavis (premised on Section 2
of the Sherman Act). In Count 5, they allege a violation of
the Massachusetts Consumer Protection Statute against Shire
and Actavis (not premised on the Sherman Act).
remaining claims mirror those above, except they are brought
under consumer protection and/or antitrust laws of Florida
(Counts 6-10), Missouri (Counts 11-15), New York (Counts
16-20), and Wisconsin (Counts 21-25).
motion to dismiss for failure to state a claim pursuant to
Federal Rule of Civil Procedure 12(b)(6), the Court must
accept as true all well-pleaded facts, analyze those facts in
the light most hospitable to the plaintiff's theory, and
draw all reasonable inferences from those facts in favor of
the plaintiff. U.S. ex rel. Hutcheson v. Blackstone Med.
Inc., 647 F.3d 377, 383 (1st Cir. 2011). In ruling on a
motion under Rule 12(b)(6), the Court “must consider
the complaint, documents annexed to it, and other materials
fairly incorporated within it, ” which “sometimes
includes documents referred to in the complaint but not
annexed to it” and “matters that are susceptible
to judicial notice.” Rodi v. S. New Eng. Sch. of
Law., 389 F.3d 5, 12 (1st Cir. 2004).
detailed factual allegations are not required, a complaint
must set forth “more than labels and
conclusions.” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007). A “formulaic recitation of the
elements of a cause of action” is not enough.
Id. To avoid dismissal, a complaint must set forth
“factual allegations, either direct or inferential,
respecting each material element necessary to sustain
recovery under some actionable legal theory.”
Gagliardi v. Sullivan, 513 F.3d 301, 305 (1st Cir.
2008) (internal quotations and citation omitted).
the facts alleged, when taken together, must be sufficient to
“state a claim to relief that is plausible on its
face.” A.G. ex rel. Maddox v. Elsevier, Inc.,
732 F.3d 77, 80 (1st Cir. 2013) (quoting Twombly 550
U.S. at 570). “The plausibility standard invites a
two-step pavane.” Id. (quoting Grajales v.
P.R. Ports Auth., 682 F.3d 40, 45 (1st Cir. 2012)).
“At the first step, the court ‘must separate the
complaint's factual allegations (which must be accepted
as true) from its conclusory legal allegations (which need
not be credited).'” Id. (quoting
Morales-Cruz v. Univ. of P.R., 676 F.3d 220, 224
(1st Cir. 2012)). “At the second step, the court must
determine whether the remaining factual content allows a
‘reasonable inference that the defendant is liable for
the misconduct alleged.'” Id. (quoting
Morales-Cruz, 676 F.3d at 224). “Although not
equivalent to a probability requirement, the plausibility
standard asks for more than a sheer possibility that a
defendant has acted unlawfully.” Boroian v.
Mueller, 616 F.3d 60, 65 (1st Cir. 2010) (internal
quotations and citation omitted). See also
Sepulveda-Villarini v. Dep't of Educ. of P.R., 628
F.3d 25, 29 (1st Cir. 2010) (citing Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009)) (“The
make-or-break standard . . . is that the combined
allegations, taken as true, must state a plausible, not a
merely conceivable, case for relief.”).
five of the IPPs' claims rely on two theories of
antitrust liability premised on Sherman Act violations:
first, that Shire engaged in sham litigation, and second,
that Shire entered into illegal reverse payment settlement
agreements with Actavis and non-party
TWi/Anchen. Under federal law, indirect purchasers
cannot bring antitrust claims for damages under the Sherman
Act. See Illinois Brick Co. v. Illinois, 431 U.S.
720 (1977). See also California v. ARC Am. Corp.,
490 U.S. 93, 100 (1989) (“Under federal law, no
indirect purchaser is entitled to sue for damages for a
Sherman Act violation. . . .”). Following Illinois
Brick, various states passed legislation granting
indirect purchasers standing to sue under state antitrust
laws. See Newberg on Class Actions § 20:12 (5th
ed.). The Supreme Court has upheld the validity of such
legislation. See ARC Am. Corp., 490 U.S. at 101. The
remaining five claims (Counts 5, 10, 15, 20, and 25) are not
premised on Sherman Act violations and instead allege
violations of each applicable state's consumer protection
or antitrust laws (Massachusetts, Florida, Missouri, New
York, and Wisconsin, respectively).
argues that the IPPs failed to plausibly allege unlawful
conduct or injury based on Shire's assertion of the
‘290 Patent during litigation. With respect to the
reverse payment claims, the Defendants argue that, in light
of the settlement documents, the IPPs' allegations fail
to plead the existence of a no-AG agreement and that a
royalty payment, whatever the size, is a lawful forward
payment. Shire also asserts that the IPPs fail to adequately
plead the value of the reverse payments in the
Shire-TWi/Anchen settlement agreement.
Elements of Violations of Sections 1 and 2 of the Sherman
1 of the Sherman Act prohibits “[e]very contract,
combination in the form of trust or otherwise, or conspiracy,
in restraint of trade or commerce among the several
States.” See 15 U.S.C. § 1. See also
In re Nexium (Esomeprazole) Antitrust Litig., 309 F.R.D.
107, 140 (D. Mass. 2015), as amended (Aug. 7, 2015),
aff'd, 842 F.3d 34 (1st Cir. 2016). The First
Circuit has explained:
There are two prerequisites for a successful section 1 claim.
First, there must be concerted action. Second, the
actors' agreement must involve either restrictions that
are per se illegal or restraints of trade that fail scrutiny
under the rule of reason.
Euromodas, Inc. v. Zanella, Ltd., 368 F.3d 11, 16
(1st Cir. 2004) (internal citations omitted).
Section 2 of the Sherman Act, it is illegal to
“monopolize, or attempt to monopolize . . . any part of
the trade or commerce among the several States.” 15
U.S.C. § 2. To prove monopolization, a plaintiff must
show “(1) possession of monopoly power in the relevant
market and (2) the willful acquisition or maintenance of that
power as distinguished from growth or development as a
consequence of a superior product, business acumen, or
historic accident.” Diaz Aviation Corp. v. Airport
Aviation Servs., Inc., 716 F.3d 256, 265 (1st Cir. 2013)
(quoting United States v. Grinnell Corp., 384 U.S.
563, 570-71 (1966)). To prove attempted monopolization, a
plaintiff must show “(1) that the defendant has engaged
in predatory or anticompetitive conduct with (2) a specific
intent to monopolize and (3) a dangerous probability of
achieving monopoly power.” Id. (quoting
Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447,
456 (1993)). To prove conspiracy to monopolize, “a
plaintiff must show: ‘(1) the existence of a
conspiracy, (2) an overt act in furtherance of the
conspiracy, and (3) specific intent to
monopolize.'” Sterling Merch., Inc. v. Nestle,
S.A., 724 F.Supp.2d 245, 273 (D.P.R. 2010),
aff'd, 656 F.3d 112 (1st Cir. 2011) (quoting
Dyno Nobel, Inc. v. Amotech Corp., 63 F.Supp.2d 140,
150 (D.P.R. 1999)).
Background Legal Principles
Noerr-Pennington doctrine, which arose in antitrust
cases under the Sherman Act, holds that “[t]hose who
petition government for redress are generally immune from
antitrust liability.” Prof'l Real Estate
Investors, Inc. v. Columbia Pictures Indus., Inc., 508
U.S. 49, 56 (1993) (hereinafter, “PRE”).
Noerr-Pennington immunity extends to
“petitioning” activities before the courts
(i.e., litigation). See Cal. Motor Transp. Co.
v. Trucking Unlimited, 404 U.S. 508, 510 (1972). There
are exceptions to Noerr-Pennington immunity,
however, including when a defendant engages in sham
litigation. See Nobelpharma AB v. Implant Innovations,
Inc., 141 F.3d 1059, 1071 (Fed. Cir.
order to bring a sham litigation claim, a plaintiff must
plausibly plead that the litigation was:
(1) ‘objectively baseless in the sense that no
reasonable litigant could realistically expect success on the
merits'; and (2) subjectively motivated by a desire to
‘interfere directly with the business
relationships of a competitor, through the use of the
governmental process-as opposed to the
outcome of that process-as an anticompetitive
In re Solodyn (Minocycline Hydrochloride) Antitrust
Litig., No. 14-md-02503, 2015 WL 5458570, at *11 (D.
Mass. Sept. 16, 2015) (quoting PRE, 508 U.S. at
60-61). “The existence of probable cause to institute
legal proceedings precludes a finding that an antitrust
defendant has engaged in sham litigation.”
PRE, 508 U.S. at 62. Further, “[o]nly if
challenged litigation is objectively ...