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In re Intuniv Antitrust Litigation

United States District Court, D. Massachusetts

September 24, 2019




         This “pay-for-delay” or “reverse settlement” case concerns an allegedly anticompetitive settlement of patent litigation related to the ADHD drug Intuniv. Direct purchaser plaintiffs Rochester Drug Co-Operative, Inc. (“RDC”) and FWK Holdings LLC (“FWK”) (together, the “DPPs”) bring antitrust claims on behalf of a putative class comprised of entities that purchased Intuniv (the brand name for extended release guanfacine hydrochloride) from brand Intuniv manufacturer Shire LLC and Shire U.S., Inc. (collectively, “Shire”) or generic Intuniv manufacturer Actavis Elizabeth LLC, Actavis Holdco US, Inc., and Actavis LLC (collectively, “Actavis” and together with Shire, “Defendants”). The DPPs allege that Defendants improperly delayed competition for both brand Intuniv and generic Intuniv in violation of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1–2, causing the DPPs to pay an inflated price for Intuniv. See generally [ECF No. 140 (“Consolidated Amended Complaint” or “CAC”)].

         Before the Court is the DPPs’ motion for class certification [ECF No. 198]. For the reasons explained herein, the motion is GRANTED in part and DENIED in part.

         I. BACKGROUND

         The allegations at issue here are set out more fully in the Court’s October 10, 2017 Memorandum and Order on Defendants’ motion to dismiss. [ECF No. 92-1 at 2–8]. The Court therefore reviews only the facts relevant to class certification.

         A. Patent Litigation and Anticompetitive Settlement

         Shire manufactures and sells Intuniv, which is generally prescribed to treat ADHD. [CAC ¶¶ 21–22]. 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. [Id. ¶ 98]. During the relevant time period, Shire held three patents that covered Intuniv (collectively, the “Intuniv Patents”). [Id. ¶¶ 99–101]. Under 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 easier than obtaining approval for an NDA. See In re Loestrin 24 Fe Antitrust Litig., 814 F.3d 538, 543 (1st Cir. 2016). In filing an ANDA to obtain approval for a generic drug, a generic manufacturer must certify that the generic does not infringe any of the patents that the brand company lists as covering the drug at issue. See 21 U.S.C. § 355(j)(2)(A)(vii). On December 29, 2009, Actavis became the first company to file an ANDA for a generic version of Intuniv. [CAC ¶ 8].

         The certification that Actavis filed with its ANDA constituted a constructive act of infringement, granting Shire standing to sue Actavis. See 35 U.S.C. § 271(e)(2)(A); In re Loestrin 24 Fe, 814 F.3d at 543. Shire subsequently filed suit pursuant to 21 U.S.C. § 355(j)(5)(B)(iii), which triggered an automatic 30-month stay of any FDA approval of ANDAs for generic Intuniv. [CAC ¶ 10]; see In re Loestrin 24 Fe, 814 F.3d at 543. As the first filer of an ANDA, Actavis was entitled to “a 180-day period of exclusivity during which ‘no other generic can compete with the brand-name drug.’” In re Loestrin 24 Fe, 814 F.3d at 543 (quoting FTC v. Actavis, 570 U.S. 136, 144 (2013)); see 21 U.S.C. § 355(j). A critical exception to that exclusivity is that the brand company can itself market an “authorized generic” during this 180-day, first-filer exclusivity period. See Sanofi-Aventis v. Apotex Inc., 659 F.3d 1171, 1175 (Fed. Cir. 2011). Shortly after Actavis filed its ANDA, several other companies including TWi Phamaceuticals, Inc. and Anchen Pharmaceuticals, Inc. (together, “Twi/Anchen”) filed their own ANDAs. [CAC ¶ 9]. Shire initiated patent infringement litigations against each ANDA filer. [Id. ¶ 10].

         The DPPs allege that Shire engineered a settlement with Twi/Anchen that would have allowed Twi/Anchen to release an authorized generic Intuniv under certain conditions. [Id. ¶ 11]. That settlement threatened Actavis with the prospect of competition during its valuable 180-day exclusivity period, which Actavis was eager to avoid. Shortly after the conclusion of a bench trial on Shire’s claims against Actavis, the 30-month stay on Actavis’ ANDA expired on October 5, 2012, and the FDA approved the application on the same day. [Id. ¶¶ 120–21, 139– 40].

         The DPPs argue that, at the conclusion of the bench trial on Shire’s patent claims in 2012, a ruling in Actavis’ favor appeared likely. [Id. ¶¶ 120–21]. Success on those claims would not, however, have guaranteed Actavis complete exclusivity from competition for its generic Intuniv during its 180-day exclusivity period given Shire’s own apparent plans for an authorized generic. See [id. ¶ 141]. On April 25, 2013, before any judgment or opinion had entered on the patent claims, Shire and Actavis entered into a settlement agreement. [Id. ¶ 141]. The DPPs claim that despite illusory terms in the settlement agreement that technically permitted Shire to launch an authorized generic directly or through an affiliate, the agreement was a thinly disguised reverse payment agreement. [Id. ¶¶ 91, 152]. According to the DPPs, Shire effectively guaranteed Actavis a full 180-day exclusivity period during which it would face no authorized generic competition. [Id. ¶¶ 148–49]. In exchange, Actavis agreed to delay its launch of generic Intuniv until December 1, 2014, thereby allowing Shire to enjoy monopoly profits for brand Intuniv in the interim. [Id. ¶¶ 149, 152]. The DPPs argue that this anticompetitive settlement agreement caused them to pay artificially inflated prices for both brand and generic Intuniv. See [id. ¶¶ 163–65].

         B. Procedural History

         FWK filed this case on December 30, 2016. [ECF No. 1]. On January 11, 2017, RDC filed similar claims, and on March 1, 2017, the Court granted a joint motion to consolidate the two actions. [ECF No. 19]. RDC is a regional distributor of pharmaceuticals and FWK holds, by assignment, the antitrust claims of Frank W. Kerr Co., a former pharmaceutical wholesaler that entered bankruptcy and subsequently closed.

         This consolidated action has proceeded in coordination with claims brought on behalf of a putative class of indirect purchasers of Intuniv. See Picone v. Shire U.S. Inc. (Indirect Purchaser Antitrust Class Action), No. 16-cv-12396-ADB (D. Mass).[1] On November 1, 2018, the DPPs filed the instant motion to certify the following class:

All persons or entities in the United States and its territories, or subsets thereof, that purchased Intuniv and/or generic Intuniv in any form directly from Shire or Actavis, including any predecessor or successor of Shire or Actavis, from October 19, 2012 through June 1, 2015 (the “Class”).

[ECF No. 198 at 1]. Excluded from the putative class are Shire, Actavis, their officers, directors, management, employees, subsidiaries, and affiliates, as well as governmental entities. [Id. at 1– 2]. Defendants filed their opposition to class certification on February 12, 2019; the DPPs filed a reply on March 21, 2019; the Defendants filed a sur-reply on April 1, 2019; and the DPPs filed a final brief on April 8, 2019. [ECF Nos. 224, 234, 244, 252]. The parties’ combined briefing runs 122 pages of text with 644 footnotes in undersized font and is supported by more than 2, 000 pages of exhibits.

         C. Expert Reports and Class Injury

         The DPPs have proffered an expert declaration from Jeffrey J. Leitzinger, Ph.D. Dr. Leitzinger opines that “there is evidence common to members of the Class which shows, with high likelihood, that all members of the class paid at least some overcharge and therefore suffered antitrust injury.” [ECF No. 199-1, “Leitzinger Decl., ” ¶ 23]. He notes that both the economic literature and documents reflecting the relevant companies’ pricing expectations indicate that earlier entry of generic Intuniv and earlier robust generic competition would have resulted in class members paying less for Intuniv. [Id. ¶¶ 29–32]. Additionally, the observable market prices after entry of Actavis’ generic Intuniv in December 2014 and the entry of four additional generics in June 2015 show that direct purchasers were able to obtain generic Intuniv at considerably less than the brand Intuniv price. [Id. ¶ 33]. By making certain assumptions about the degree and timing of the additional generic competition that might have been present in the marketplace absent Defendants’ allegedly anticompetitive conduct, Dr. Leitzinger is able to posit a range of aggregate class overcharges that the class suffered as a result of Defendants’ conduct. [Id. Exs. 8a, 8b].

         Defendants proffer a counter-declaration from their expert, Gregory K. Bell, Ph.D., who disagrees with Dr. Leitzinger. He opines that the putative class members operate under different business models and that FWK and RDC do not exhibit common behaviors or share common circumstances with many of the absent putative class members whom they seek to represent. [ECF No. 223-55, “Bell Decl., ” ¶¶ 7–8]. As Dr. Bell notes, the putative class contains thirty wholesalers and distributors like RDC, including the “Big 3” wholesalers (AmerisourceBergen Corporation, Cardinal Health, and McKesson Corporation) who were responsible for approximately 90% of the direct purchases of Intuniv during the class period, twelve self-warehousing retail pharmacies like Walmart, five mail-order pharmacies owned by pharmacy benefit managers, and one pharmacy owned by an integrated health maintenance organization. [Id. ¶¶ 11, 47–61]. Dr. Bell states that individualized inquiries would be required to determine whether particular putative class members experienced any impact as a result of the alleged anticompetitive agreement given differences in the class members’ business practices. He further asserts that at least one class member did not suffer any impact from the conduct at issue and that eight putative class members have negative damages in at least one of the four scenarios proffered by Dr. Leitzinger. [Id. ¶¶ 7–9; see Leitzinger Decl. Ex. 7].

         Dr. Leitzinger responds to Dr. Bell’s assertion that several class members were uninjured by arguing that Dr. Bell projects “negative overcharges” for some class members only by engaging in an apples-to-oranges comparison. [ECF No. 234-2, “Leitzinger Rebuttal Decl., ” ¶¶ 17–27]. Dr. Leitzinger contends that Dr. Bell’s analysis relies on the faulty assumption that because some class members paid less than the projected average expected price for Intuniv without Defendants’ anticompetitive conduct, those class members would not have been able to pay even less but-for the illegal behavior. [Id. ¶ 20–24]. The experts also disagree about certain modeling methods and which, if any, class members would have purchased generic Intuniv absent Defendants’ conduct even though they did not actually purchase generic Intuniv when it became available. See [id. ¶¶ 25, 27–40].

         II. ...

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