In re Niaspan Antitrust Litig.

555 F.Supp.3d 155

IN RE: NIASPAN ANTITRUST LITIGATION

This Document Relates to: All Actions

MDL NO. 2460

MASTER FILE NO. 13-MD-2460

United States District Court, E.D. Pennsylvania.

Filed August 17, 2021

Jeffrey L. Kodroff, Esq. ; John A. Macoretta, Esq. ; Diana J. Zinser, Esq. ; Kenneth A. Wexler, Esq. ; Bethany R. Turke, Esq. ; Justin N. Boley, Esq. ; Tyler J. Story, Esq. ; Marvin A. Miller, Esq.; Lori A. Fanning, Esq. ; Michael M. Buchman, Esq. ; Michelle C. Clerkin, Esq. ; Steven Shadowen, Esq.; D. Sean Nation, Esq., for Plaintiff(s).

Devora W. Allon, P.C., Esq.; Vera C. Esses, Esq. ; Alexandra I. Russell, Esq. ; Joseph E. Wolfson, Esq. ; Jeffrey I. Weinberger, Esq. ; Stuart N. Senator, Esq. ; Jeffrey Y. Wu, Esq. ; Blanca F. Young, Esq. ; Paul H. Saint-Antoine, Esq., for Defendant(s).

MEMORANDUM

DuBOIS, District Judge

I. INTRODUCTION

This multidistrict litigation involves what has come to be known as a "pay-for-delay," or "reverse payment," settlement—a practice in which a brand-name drug manufacturer brings a patent-infringement action against a generic drug manufacturer and then compensates the generic drug manufacturer for its agreement to delay entering the market with a competing generic version of the brand-name drug. In this case, End-Payor Plaintiffs ("EPPs") aver that the brand-name manufacturer of the drug Niaspan, Kos Pharmaceuticals, Inc. ("Kos"), entered into anticompetitive settlement agreements with the generic manufacturer of that drug, Barr Pharmaceuticals, Inc. ("Barr"), in March of 2005 in order to terminate patent-infringement litigation brought by Kos against Barr in the District Court for the Southern District of New York.

Presently before the Court is EPPs’ Renewed Motion for Class Certification. For the reasons stated below, the Renewed Motion is denied on the ground that EPPs failed to satisfy the ascertainability requirement of Federal Rule Civil Procedure 23(b)(3) that they provide a reliable and administratively feasible mechanism for distinguishing between class members and intermediaries in drug transactions which are excluded from the class.

II. BACKGROUND

The background of this case is set forth in detail in the Court's Memorandum and Order dated September 5, 2014. See In re Niaspan Antitrust Litig. , 42 F. Supp. 3d 735 (E.D. Pa. 2014). This Memorandum recites only the facts and procedural history relevant to the motion presently before the Court.

Defendant AbbVie, a drug manufacturer that was spun off from Abbott Laboratories ("Abbott") in January 2013, manufactures and sells Niaspan, a brand-name prescription drug, primarily used to treat lipid disorders. In the early 1990s, Kos, acquired by AbbVie in December 2006, developed a therapeutically-effective time-release version of niacin, which does not cause the side effects previously associated with niacin. Kos obtained a series of U.S. patents on time-release niacin and marketed the drug under the trademark Niaspan.

Niaspan has been manufactured and sold by AbbVie (and AbbVie's predecessor corporations) since September of 1997.

In October 2001, Barr, acquired by Teva in January 2009, filed an Abbreviated New Drug Application ("ANDA") with the Food and Drug Administration ("FDA") seeking authorization to manufacture and sell a generic equivalent of certain dosages of Niaspan. The ANDA process provides for streamlined FDA approval of a generic version of an FDA-approved brand-name drug. As part of the ANDA process, Barr filed certifications with the FDA stating that its generic drug did not infringe any of the patents covering Niaspan and/or that the patents were invalid or unenforceable.

In March 2002, Kos initiated the first of a series of patent-infringement lawsuits against Barr in the Southern District of New York, alleging infringement of its Niaspan patents. After three years of litigation, on April 12, 2005, Kos and Barr entered into several related settlement agreements terminating the litigation. EPPs allege that, under the settlement agreements, Kos paid Barr not to launch a generic equivalent of Niaspan until 2013. These agreements constitute the alleged "pay-for-delay" or "reverse payment" settlement that is the subject of this litigation.

A. Prior Class Certification Motion

On December 19, 2018, EPPs filed a motion to certify classes of consumers and third-party payors ("TPPs") which paid for brand or generic Niaspan. That motion alleged that defendants’ conduct "violated the antitrust laws of 16 states, the consumer protection laws of 5 states, the unfair trade practices laws of 7 states, and the unjust enrichment laws of 25 states—a total of 53 state laws from 26 jurisdictions." In re Niaspan Antitrust Litig. , 464 F. Supp. 3d 678, 689 (E.D. Pa. 2020).

On June 2, 2020, the Court denied EPPs’ motion for class certification on a number of grounds. Id. at 725. First, the Court concluded that EPPs had not satisfied the ascertainability requirement of Federal Rule of Civil Procedure 23, stating that it was "concerned about the economic feasibility of obtaining [the necessary] information and the ability of EPPs to identify class members in a reliable and administratively feasible manner." Id. at 704. Second, the Court determined that EPPs failed to demonstrate they could show by common proof that all class members were injured. On that issue, the Court stated that "the use of average[ ] [prices]" in a model presented by EPPs’ expert, Dr. Meredith Rosenthal, "hides several groups of uninjured class members who cannot easily be identified." Id. at 714. Finally, the Court concluded that EPPs failed to provide the "extensive analysis of the applicable state laws and any variation in state law" necessary to "assure the Court that such differences are minor and manageable." Id. at 724.

B. Renewed Class Certification Motion

On September 4, 2020, EPPs filed the pending Renewed Motion for Class Certification ("Renewed Motion"). In their Renewed Motion, EPPs seek certification of a class under Federal Rule of Civil Procedure 23(b)(3), defined as follows:

All entities in the United States and its territories who [sic] purchased, paid, and/or provided reimbursement for some or all of the purchase price for Niaspan and/or generic versions of Niaspan in Arizona, California, Florida, Iowa, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New York, North Carolina, North Dakota, Oregon, Rhode Island, Tennessee, Vermont, West Virginia, and Wisconsin for consumption by themselves, their families, or their members, employees, insureds, participants, or beneficiaries during the period April 3, 2007 through January 31, 2018.

Mot. at 4–5. The proposed class excludes the following entities:

a. Defendants and their subsidiaries, or affiliates;

b. All federal or state government entities other than cities, towns or municipalities with self-funded prescription drug plans;

c. All entities that, after September 20, 2013, paid and/or provided reimbursement for branded Niaspan and did not pay and/or provide reimbursement for generic Niaspan;

d. All entities who [sic] purchased Niaspan for purposes of resale or directly from Defendants or their affiliates;

e. Fully insured health plans (i.e., plans that purchased insurance from another third party payor covering 100% of the Plan's reimbursement obligations to its members); and

f. Pharmacy Benefit Managers.

Id. The proposed class in EPPs’ Renewed Motion "differs from [the] previous proposed class" by (1) "omitting ‘persons’ (i.e. , consumers) from the class definition," and (2) "invok[ing] only 23 state laws."¹ Id. at 4, 8. In support of their Renewed Motion, EPPs submitted a chart of state law claims, a proposed trial plan, and a model verdict form. Document No. 722, Exs. 1, 3, 4.²

Defendants filed their Opposition to EPPs’ Renewed Motion and Supplemental Opposition to EPPs’ Renewed Motion on November 6, 2020, and December 4, 2020, respectively. EPPs filed a reply on December 18, 2020. Thereafter, the parties submitted numerous documents related to the Renewed Motion, including EPPs’ Motion for Leave to File the Expert Reply Report of Ms. Laura Craft ("Motion for Leave to File") (Document No. 735, filed December 19, 2020), which was granted by Order dated February 24, 2021.³ The last of these documents was not filed until May 27, 2021. The motion is now ripe for decision.

III. LEGAL STANDARD

"The class action is an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only." In re Modafinil Antitrust Litig. , 837 F.3d 238, 248 (3d Cir. 2016). The United States Court of Appeals for the Third Circuit has directed district courts to "treat renewed motions like any other for class certification, and to apply the usual Rule 23 standard." Hargrove v. Sleepy's LLC , 974 F.3d 467, 477 (3d Cir. 2020).

Subsection (a) of Federal Rule of Civil Procedure 23 sets out four prerequisites for a class action—numerosity, commonality, typicality, and adequacy. Subsection (b) provides additional requirements for class actions—the moving party must show "that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." These requirements are referred to, respectively, as predominance and superiority. Rule 23(b)(3) also contains an implied, judicially-created requirement that the identities of class members be ascertainable. Hargrove , 974 F.3d at 477.

"The party seeking certification bears the burden of establishing each element of Rule 23." In re Modafinil Antitrust Litig. , 837 F.3d at 248. "[T]rial courts ‘must engage in a rigorous analysis and find each of Rule 23 [ ]’s requirements met by a preponderance of the evidence before granting certification.’ They must do so even if it involves judging credibility, weighing evidence, or deciding issues that overlap...