Antitrust and Unfair Competition Law

Buyer Class Certified and Summary Judgment Denied in Allergan’s Bid to Nix Antitrust Claims in the In re Asacol Litigation

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Abiel Garcia
Gibson Dunn & Crutcher LLP

On November 9, 2017, U.S. District Judge Denise J. Casper granted certification to a group of end payors who allege that they paid higher prices for ulcerative colitis drug Asacol due to a product hop employed by Warner Chilcott and parent company Allergan.  In re Asacol Antitrust Litig., No. 15-cv-12730-DJC, 2017 WL 5196381 (D. Mass. Nov. 9, 2017) (“Asacol”). 

The lawsuit revolves around 400-milligram Asacol.  At the suit’s core, plaintiffs allege that Warner Chilcott, knowing that the Asacol patents were expiring shortly, pulled the original Asacol from the market and forced patients to switch to new drugs, Asacol HD and Delzicol.  The plaintiffs also allege that Warner Chilcott later agreed to pay the company that filed the first abbreviated new drug application (“ANDA”) for a generic alternative to Asacol HD to further delay generic market entry. 

Even though the defendants challenged every aspect of class certification, the court found that the class had satisfied the numerosity, commonality, typicality, and adequacy requirements.  Judge Casper also found multiple genuine disputes as to material facts, such as market definition, leading her to deny the defendants’ motion for summary judgement.

Class Certification

Judge Casper undertook a typical class certification analysis when certifying the class.  Asacol, at *15.  The analysis was succinct and clear when discussing whether numerosity was satisfied, there was commonality between plaintiffs, the typicality of the claims or defenses, and the adequacy of the class representatives.  Judge Casper stated that the class was clearly numerous given that there were over 446,000 relevant prescriptions filled in one year.  Id. at *17.  The defendants did not challenge commonality, but rather contended that issues common to the class did “not predominate over individual issues, as is required by 23(b)(3),” an issue that was taken up later by the court.  Id.  Defendants did however attack typicality, stating that since the named plaintiffs were all unions, they were not sufficiently similar to the individual consumers and health insurers in the class.  Id.  Judge Casper was not persuaded by the argument countering that “even if the named plaintiffs did not suffer a net injury, the named plaintiffs still experienced an injury—the putative overcharge—and seek to recover on that injury on the basis of an antitrust claim, just like the other class members.”  Id. at *17-*18.  Due to this, the court also found that there was no conflict created between the named plaintiffs and members of the purported class, satisfying the adequacy requirement.  Id. at *18.

Judge Casper next turned to the ascertainability, damages methodology, and common proof of antitrust impact to certify the class.  The ascertainability analysis was relatively short, with Judge Casper citing the plaintiffs proposed mechanism for distinguishing injured from uninjured class members—by submitting claims forms alongside data and documentation—as acceptable, citing to In re Nexium Antitrust Litig., 777 F.3d 9, 19 (1st. Cir. 2015).  Asacol, at *19.  Judge Casper then turned to the damages model that were proposed by Dr. Rena Conti.

Dr. Conti’s model “estimate[d] the damages to end-payors by simulating what the price and quantity sold of Asacol 400mg would have been if the Defendants had not pulled Asacol 400mg from the market, under several potential scenarios of generic entry, based on historical data from other products regarding the effect of generic entry on the price and quantity sold of the brand-name product.”  Id. at *19.  The defendants argued that Conti’s model did not match up with the liability theory since the doctor’s model relied upon prescription-level data and not patient-level data.  Id.  That distinction, defendants argued, meant that the model would be unable to calculate the damages based on the plaintiff’s class definition.  Id.  Furthermore, the defendants contended that the model failed to exclude third-party payors who did not purchase Asacol 400mg prior to July 31, 2013.  Id. at *20.  The court found that Conti’s model, to an extent, did exclude third-party claims from the data.  Finally, the defendants argued that Conti’s model did not take into account the role of PBMs who may reimburse third-party payors for drug expenses.  Id.  The court reiterated that this did not matter because “antitrust injury occurs the moment the purchaser incurs an overcharge.” Id. at *20 (citing to Nexium, 777 F.3d at 27).

The court then turned to the common proof of antitrust impact.  The defendants alleged that the model could not provide common proof of antitrust impact for several reasons, including the model’s inability to estimate damages for injured and uninjured members of the class separately, the model’s inappropriate assumption that the effect of generic entry into the market for Asacol 400mg would mirror historical patterns of other drugs or that it would even occur, and that individual issues would predominate with respect to antitrust impact because Conti’s model includes many uninjured members.  Id. at *20*21.  The court was not persuaded by any of these arguments, stating that Conti’s model adjusted for the various claimed deficiencies and that the individualized determinations only appeared to be a de minimis number, thus not defeating class certification.  Id. at *21.

Summary Judgement Denial

Defendants also moved for summary judgment on several grounds: 1) the defendants contended that the hard switch from Asacol 400mg to Delzicol was not exclusionary, 2) that the state-law antitrust claims were precluded by federal food and drug law, 3) that the plaintiffs could not prove antitrust standing because there would not have been any generic entry without the hard switch, 4) the defendants had not exercised any monopoly power, and 5) the defendants contended that Delzicol had procompetitive benefits which outweighed any anticompetitive effects of the hard-switch.  Id. at *21.

The court first addressed the preemption claim and found that the defendants’ argument failed for two reasons.  First, the record before the court did not show that the FDA prohibited the defendants from selling Asacol 400mg, but that the FDA had simply raised issues about the use of the DBP substance in its coating.  Id. at *22.  The FDA provided a series of recommendations to the defendants suggesting that they stop selling the products, but at no point did they require it.  Id.  Second, the defendants misinterpreted the plaintiffs point about state antitrust law requiring the defendants to continue selling Asacol 400mg with DBP.  The plaintiffs point was more to state that the defendants could have reformulated Asacol 400mg with DBS, rather than DBP, without switching to a new product.  Id.  There was no suggestion that the FDA would have prohibited this action.  Id.

Turning to monopoly power, the plaintiffs argued that they showed direct evidence of monopoly power by pointing to the high gross margins of Asacol 400mg as proof of supracompetitive prices.  Id. at *23.  The court, deciding between which framework to apply—the Nexium or Remeron framework—decided to follow In re Remeron Direct Purchaser Antitrust Litig., 367 F.Supp.2d 675, 683 (D.N.J. 2005), which found that in a market for a product with high fixed costs, evidence that prices routinely exceed marginal costs may not necessarily be evidence that prices are supracompetitive, because even competitive prices may exceed marginal cost.  Id.  Even following Remeron, Judge Casper found a genuine dispute of material fact as to whether the prices charged for Asacol 400mg were supracompetitive and additionally stated that the reasonable interchangeability of Asacol 400mg with other drugs would be a factually intensive determination better left for resolution by a jury.  Id. at *22.

Third, the court looked at the exclusionary conduct itself, with the defendants arguing that there was no genuine dispute of material fact regarding the exclusionary nature of the decision to pull Asacol 400mg from the market when it launched Delzicol.  Id. a *25.  Defendants argued that the FDA’s request to remove DBP from Asacol did not require them to reformulate in a manner to aid potential competitors.  Id.  The court found that the defendants did not have to reformulate in such a manner, but rather the defendants had already reformulated to have a different coating and instead of seeking FDA approval for that product, they needlessly included in the new product a patented capsule that conferred no additional value.  Id.  Citing to In re Namenda, 787 F.3d. 638 (2d. Cir. 2015), the court determined there was a genuine dispute as to how anticompetitive the effects of the switch were, and what procompetitive justifications came from the switch.  Id. at *25-*26.  In the court’s review of the procompetitive justifications, the court did not find any persuasive arguments, stating that there was already a reformulation of Asacol 400mg that did not include DBP and did not require the switch, that the defendants did not have any evidence of a benefit from the new product, and that there was no evidence that the defendants needed to produce a different dosage form than before.  Id. at *26.

Finally, with regard to causation and antitrust standing, the defendants pressed the court that the plaintiffs did not show generic versions of Asacol 400mg would have been produced had it not been for the decision to pull it from the market.  Id. at *26.  “The Defendants argue[d] that the Plaintiffs have the burden of showing that a generic manufacturer was ‘ready, willing, and able’ to enter the Asacol 400mg market during the relevant time period.” Id (citing Indium Corp. of Am. v. Semi-Alloys, Inc., 781 F.2d. 879, 882 (Fed. Cir. 1985).  The court disagreed, stating that the antitrust law did not require the plaintiffs to identify a specific entrant that had a pending ANDA, and even if there was no entrant with an approved ANDA, the FDA had the authority and interest to fast-track ANDAs for Asacol 400mg, so an ANDA might have been approved during the relevant period.  Id.  Thus, the court found there existed another genuine dispute of material fact as to the issue of standing.  Id.  With regard to causation, the court found that in evaluating the record, the defendants’ documents and the industry, generally, had identified Asacol 400mg as likely to face generic entry.   Id. at *27.  Because of this, and drawing all inferences in favor of the plaintiffs, there was a genuine dispute of material fact over whether a generic manufacturer would have produced a generic version of Asacol 400mg within the relevant timeframe.  Id


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