In re Namenda Indirect Purchaser Antitrust Litig.

IN RE NAMENDA INDIRECT PURCHASER ANTITRUST LITIGATION

No. 1:15-cv-6549 (CM) (RWL)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

June 11, 2021

DECISION AND ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S AND DEFENDANTS' DAUBERT MOTIONS; AND GRANTING IN PART AND DENYING IN PART THE MOTIONS FOR SUMMARY JUDGMENT

McMahon, J:

Sergeants Benevolent Association Health & Welfare Fund commenced this antitrust lawsuit on behalf of itself and a class of similarly situated indirect purchasers of the brand and generic versions of Namenda - a drug used to treat Alzheimer's disease. Plaintiff accuses Defendants - Forest Laboratories and Merz Pharmaceuticals - of taking actions designed to limit generic competition for Namenda. Plaintiff originally advanced two theories of antitrust liability: (1) that Defendants' entered into several reverse-payment ("pay for delay") settlements with generic manufacturers of Namenda, which unlawfully delayed the market entry of generic competitors; and (2) Defendants' conduct in effectuating a "hard switch" for consumers between two versions of Namenda.

On February 11, 2021, this Court certified a class of indirect purchasers (or "end payors") of Namenda. However, the decision certified only the "pay for delay" theory for class treatment, and "den[ied] the motion insofar as it seeks to certify the same class (or any subclass) pursuant to the hard switch theory." In re Namenda Indirect Purchaser Antitrust Litig., No. 15-cv-6549 (CM), 2021 WL 509988 at *1 (S.D.N.Y. Feb. 11, 2021).

Presently before the Court are three motions for summary judgment: one filed by Defendant Forest (ECF 564); one filed by Defendant Merz (ECF 555); and one for partial summary judgment on Count I filed by SBA (ECF 568). Also before the Court are seven Daubert motions to exclude the opinions and proposed testimony of several experts.

The motions to exclude are granted in part and denied in part. As is generally the case, the principal reason given by each side for excluding the testimony of experts proffered by the other boils down to, "their expert doesn't agree with our expert, and since our expert is correct, theirs is not." Such motions waste the Court's time. There are, however, valid grounds for excluding certain portions of the testimony of several experts.

As for the summary judgment motions, they, too, are granted in part and denied in part. The motions are denied as to SBA's antitrust claims (Counts I and II). As to the consumer-protection claims (Count III), Forest's motion is granted for claims arising under the laws of Alabama, Massachusetts, and Michigan, but are denied for the remaining states; while Merz's motion is granted for all claims except the one arising under California law. Finally, Defendants' motions are granted as to the unjust-enrichment claims (Count IV) arising under the laws of Arkansas, Florida, and New York, but are denied without prejudice as to the rest of the states for further briefing (following trial) on whether the claims are duplicative under each state's unjust-enrichment jurisprudence.

I. BACKGROUND

This decision is the latest in a long line of opinions addressing actions that Forest took regarding its brand-name drug, Namenda. The underlying facts of the case are recounted at lengthin these other opinions. See, e.g., New York v. Actavis, PLC ("Namenda I"), No. 14-cv-7473, 2014 WL 7015198 (S.D.N.Y. Dec. 11, 2014), aff'd sub nom. Schneiderman ex rel. New York v. Actavis, PLC ("Namenda II"), 787 F.3d 638 (2d Cir. 2015); Sergeants Benevolent Ass'n Health & Welfare Fund v. Actavis, PLC ("Namenda III"), No. 15-cv-7488, 2016 WL 4992690 (S.D.N.Y. Sept. 13, 2016) (denying motion to dismiss federal claims brought by direct purchasers); In re Namenda Direct Purchaser Antitrust Litig. ("Namenda V"), 331 F. Supp.3d 152 (S.D.N.Y. 2018) (certifying class of direct purchasers); Sergeants Benevolent Ass'n Health & Welfare Fund v. Actavis, plc (Namenda VI), No. 15-cv-6549, 2018 WL 7197233 (S.D.N.Y. Dec. 26, 2018) (denying Defendants' motion to dismiss in this indirect-purchaser action); In re Namenda Indirect Purchaser Antitrust Litig. ("Namenda VII"), No. 15-cv-6549 (CM), 2021 WL 1000489 (S.D.N.Y. Jan. 12, 2021); In re Namenda Indirect Purchaser Antitrust Litig. ("Namenda VIII"), No. 15-cv-6549 (CM), 2021 WL 509988 (S.D.N.Y. Feb. 11, 2021) (granting in part and denying in part motion for class certification).

The Court only summarizes the facts relevant to summary judgment.

A. The Product

Namenda IR (immediate release) and Namenda XR (extended release) (collectively "Namenda") are brand-name prescription drugs that contain the active ingredient memantine. Namenda is used to treat Alzheimer's disease, and has been commercially successful ever since Forest introduced Namenda IR to the U.S. market in 2003. Total annual sales of Namenda IR grew to approximately $1.5 billion by 2013, the same year that Forest launched Namenda XR. Namenda II, 787 F.3d at 647.

Although both versions of Namenda were patent protected, the patents had different expiration dates. Therein lies the dispute animating this lawsuit. SBA alleges that Defendants acted anticompetitively in attempting to protect Namenda's market advantage afforded by the patents,ultimately resulting in indirect purchasers paying higher prices for memantine than would otherwise have been the case but-for Defendants' conduct.

B. The Parties

Lead plaintiff Sergeants Benevolent Association Health & Welfare Fund ("SBA") is a fund that administers the prescription drug benefit plan for active and retired New York City Police Department sergeants and their dependents. It represents a class of indirect-purchaser plaintiffs ("IPPs"), which includes - subject to some exceptions - "All Third-Party Payors who indirectly purchased, and/or paid, and/or provided reimbursement for, some or all of the price for Namenda IR 5 or 10 mg tablets, their AB-rated generic equivalents, and/or Namenda XR capsules" between June 1, 2012, through December 31, 2017. (ECF 489).

Third-party payors are entities (besides the patient or the health care provider) that reimburse for health care expenses. They include insurance companies and self-insured health and welfare plans run by employers. They are indirect purchasers because they do not purchase drugs directly from the manufacturer (in contrast to direct purchasers like wholesalers). Instead, they pay reimbursement for the purchases made by the individual consumers that they insure.

Defendant Forest Laboratories is a limited-liability company incorporated in Delaware that manufactures and sells branded pharmaceutical products. Forest is a wholly owned subsidiary of Actavis PLC (now known as Allergan PLC).

Defendants Merz GmbH & Co. KGaA.; Merz Pharma GmbH & Co. KGaA; and Merz Pharmaceuticals GmbH (collectively "Merz") are headquartered in Germany and are engaged in the development, production, and distribution of pharmaceutical products. Merz is the original holder of the patent at the center of this dispute, U.S. Patent No. 5,061,703. Merz granted Forest an exclusive license to the '703 Patent in June 2000, which gave Forest the right to market amemantine drug in the United States. As part of the agreement, Forest was required to pay Merz 20% of its net revenues on sales of memantine products in the U.S. (ECF 607, Exh. 23 at 14).

C. The Hatch-Waxman Act and Generic Competition

Under the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq., a pharmaceutical company must file a New Drug Application ("NDA") with the FDA any time it wishes to market a new brand-name drug. The NDA must provide the agency with scientific data showing that the drug is safe and effective. This generally requires conducting preclinical and clinical trials, and can take many years. Namenda II, 787 F.3d at 643; 21 U.S.C. § 355. Although the process is costly and time consuming, once a patented drug is approved, it enjoys a period of exclusivity on the market (generally twenty years) - effectively, a government-sanctioned monopoly. A brand-name drug's developer can recoup its investment into the drug during this exclusivity period because the drug faces no competition from generics. However, once the exclusivity period ends and generic versions of the drug enter the market, it generally results in the brand-name drug losing more than 80% to 90% of its market share within six months - a process known in the industry as going off the "patent cliff." Namenda II, 787 F.3d at 647.

In 1984, Congress enacted the Drug Price Competition and Patent Term Restoration Act (the "Hatch-Waxman Act"), Pub. L. No. 98-417, 98 Stat. 1585. Hatch-Waxman attempted to serve a dual purpose: to lower drug prices by encouraging greater generic competition; and to incentivize innovation from branded drug manufacturers by providing for patent extensions beyond the standard 20-year patent term. Namenda II, 787 F.3d at 644.

To increase generic competition, Hatch-Waxman permits generic manufacturers to file an Abbreviated New Drug Application ("ANDA"), which allows them to "piggy-back" on an already-approved branded drug's NDA information to show that the generic is safe and effective. Ibid. The generic manufacturer can forgo any independent preclinical and clinic trials, but must certify thatthe generic has the same active ingredients as, and is "bioequivalent" to, the already-approved brand-name drug. 21 U.S.C. § 355(j). By allowing generic manufacturers to "piggy-back" on the studies of already-approved drugs, Hatch-Waxman reduced the development costs for lower-priced generics, speeding their introduction to the market. Namenda II, 787 F.3d at 644.

But to succeed on an ANDA, a generic manufacturer must submit a certification to the FDA describing the generic's implications on patents held by the branded manufacturer. The relevant certification here is the "Paragraph IV" route, so named after 21 U.S.C. § 355(j)(2)(A)(vii)(IV). In a Paragraph IV...