In re Wellbutrin XL Antitrust Litig. Indirect Purchaser Class

868 F.3d 132

IN RE: WELLBUTRIN XL ANTITRUST LITIGATION INDIRECT PURCHASER CLASS, Appellants in 15-2875

Aetna Health of California Inc.; IBEW-NECA Local 505 Health and Welfare Plan ; Bricklayers and Masons Union Local Union No. 5 Ohio Health and Welfare Fund; Mechanical Contractors-United Association Local 119 Health and Welfare Plan ; Painters District Council No. 30 Health and Welfare Fund ; Plumbers and Pipefitters Local 572 Health and Welfare Fund; Aetna, Inc., Appellants in 15-3559

Professional Drug Company, Inc., individually and on behalf of the Direct Purchaser Class, Appellant in 15-3591

SmithKline Beecham Corporation d/b/a GlaxoSmithKline and GlaxoSmithKline plc, Appellants in 15-3681/3682

Nos. 15-2875

15-3559

15-3591

15-3681

15-3682

United States Court of Appeals, Third Circuit.

Argued September 7, 2016

Filed: August 9, 2017

Kenneth A. Wexler, Justin N. Boley, Wexler Wallace LLP, 55 W. Monroe St.—Ste. 3300, Chicago, IL 60603, Peter D. St. Phillip, Jr. [ARGUED], Richard W. Cohen, Gerald Lawrence, Jr., Uriel Rabinovitz, Melissa Cabrera, Lowey Dannenberg Cohen & Hart, P.C., One North Broadway—Ste. 509, White Plains, NY 10601, Karen Iannance, Kissel Hirsch & Wilmer, 370 Lexington Avenue—Ste. 1200, New York, NY 10017, James G. Stranch, III, Joe P. Leniski, Branstetter, Stranch & Jennings, PLLC, 227 Second Ave. North—4th Fl., Nashville, TN 37201, Counsel for Appellant Indirect Purchaser Class/End-Payor Class

David F. Sorensen [ARGUED], Andrew C. Curley, Caitlin G. Coslett, Nicholas Urban, Berger & Montague, P.C., 1622 Locust Street, Philadelphia, PA 19103, Thomas M. Sobol [ARGUED], Gregory T. Arnold, David S. Nalven, Kristen A. Johnson, Kristie A. LaSalle, Hagens Berman Sobol Shapiro LLP, 55 Cambridge Parkway—Ste. 3-1, Cambridge, MA 021142, John W. Barrett, Barrett Law Group, 400 Court Square North, P.O. Box 927, Lexington, MS 39095, Peter Kohn, Faruqi & Faruqi, 101 Greenwood Avenue—#600, Jenkintown, PA 19046, Dianne M. Nast, NastLaw, 1101 Market Street—#2801, Philadelphia, PA 19107, Counsel for Appellant Direct Purchaser Class

Leslie E. John [ARGUED], Edward D. Rogers, Stephen J. Kastenberg [ARGUED], Jason A. Leckerman, Jessica M. Anthony, Marcel S. Pratt, Ballard Spahr, 1735 Market Street—51st Fl., Philadelphia, PA 19103, Taimarie N. Adams, 640 N. Broad Street—#529, Philadelphia, PA 19130, Daniel J. Boland, 217 Ryers Avenue, Philadelphia, PA 19102, Timothy K. Gilman, Kirkland & Ellis, 601 Lexington Avenue, New York, NY 10022, Emily P. Hughes, Jason R. Parish, Kirkland & Ellis, 655 15th Street, NW—Ste. 1200, Washington, DC 20005, Simeon G. Papacostas, Kirkland & Ellis, 300 N. LaSalle Street—#2400, Chicago, IL 65054, Susanna R. Greenberg, University of Pennsylvania School of Law, 3400 Chestnut Street, Philadelphia, PA 19104, Chong S. Park, Ropes & Gray, 2009 Pennsylvania Avenue, NW, Washington, DC 20006, Counsel for Appellee SmithKline Beecham Corp, dba GlaxoSmithKline; GlaxoSmithKline PLC

Linda E. Kelly, Quentin Riegel, Leland P. Frost, Manufacturers' Center for Legal

Action, 733 10th Street, NW—Ste. 700, Washington, DC 20001, Brian H. Pandya, Wiley Rein, 1776 K Street NW, Washington, DC 20006, Counsel for Amicus, National Association of Manufacturers

Deborah L. Feinstein, Markus H. Meier, Bradley S. Alberg, Daniel W. Butrymowicz, Elizabeth R. Hilder, Jamis R. Towey, David C. Shonka, Joel Marcus, Mark S. Hegedus, Federal Trade Commission, MS-582, 600 Pennsylvania Avenue, NW, Washington, DC 20580, Counsel for Non Party Amicus, Federal Trade Commission

Barbara W. Mather, Robin P. Sumner, Lindsay D. Breedlove, Pepper Hamilton, 3000 Two Logan Square, Eighteenth & Arch Streets, Philadelphia, PA 19103, Counsel for Amicus, Antitrust Economists

Sarah K. Frederick, Goodwin Procter LLP, Exchange Place, 53 State Street, Boston, MA 02109, Counsel for Amicus, Generic Pharmaceutical Association

David W. Ogden, Wilmer Cutler Pickering Hale and Dorr LLP, 1875 Pennsylvania Avenue, NW, Washington, DC 20006, Mark A. Ford, Peter A. Spaeth, Daniel C. Wewers, Wilmer Cutler Pickering Hale and Dorr LLP, 60 State Street, Boston, MA 02109, Counsel for Amicus, Pharmaceutical Research and Manufacturers of America

Daniel G. Brown, Latham & Watkins, 885 Third Avenue—Ste. 1000, New York, NY 10022, Counsel for Par Pharmaceutical Inc., and its predecessor in interest Anchen Pharmaceuticals

Before: JORDAN, VANASKIE, and NYGAARD, Circuit Judges.

OPINION OF THE COURT

JORDAN, Circuit Judge.

Table of Contents

I. Background....143

A. The Hatch-Waxman Act....143

B. Factual and Procedural Background....145

II. Discussion....147

A. Sham Litigation....147

1. Applicable Law....147

2. The Anchen Lawsuit....149

3. The Abrika Lawsuit....152

4. The Impax and Watson Lawsuits and the Appellants' Conspiracy Theory....153

5. The FDA Citizen Petition....154

6. Serial Petitioning....156

B. Reverse Payment Settlement Agreement....158

1. Events Leading to the Settlement....158

2. The Settlement....159

3. The Appellants Cannot Prevail on Their Antitrust Claims Pertaining to the Alleged Reverse Payment....160

a) The Agreements Are Not Immune from Antitrust Scrutiny; the Rule of Reason Test Applies....160

b) The Appellants Do Not Have Antitrust Standing....163

(1) License-Based Scenario....166

(2) Litigation-Based Scenario....167

C. Class Certification, Daubert , and Intervention Issues....170

III. Conclusion....170

This appeal lies at the confluence of intellectual property and antitrust law. Following the Supreme Court's decision in FTC v. Actavis, Inc. , 570 U.S. 136, 133 S.Ct. 2223, 186 L.Ed.2d 343 (2013), we are tasked with balancing a patent owner's right to exclude and the public's right to benefit from fair and open competition.

The Appellants in this case are the direct and indirect purchasers of Wellbutrin XL, a drug designed to treat depression. (Consolidated Brief of Appellees/Cross-Appellants ("Ans. Br.") 6, 19.) The direct-purchaser Appellants bring claims under federal antitrust law, alleging that the Appellee, GlaxoSmithKline ("GSK"),¹ violated Sections One and Two of the Sherman Antitrust Act by entering into an unlawful conspiracy with a company called Biovail,² GSK's partner in the development of Wellbutrin XL, to delay the launch of generic versions of the drug. (Consolidated Brief of Direct Purchaser and End-Payor Class Plaintiffs-Appellants ("Op. Br.") 2; JA 11465-68.) The indirect-purchaser Appellants assert similar theories, but under state, rather than federal law. They also allege that GSK's actions violated common law principles and state statutes mandating fair trade practices.

According to the Appellants, GSK is liable under two theories. First, the Appellants claim that GSK delayed the launch of generic versions of Wellbutrin XL by supporting baseless patent infringement suits and a baseless FDA Citizen Petition aimed at generic drug companies. Second, they claim that GSK delayed the launch of those generic drugs by entering into an unlawful reverse payment settlement agreement with its potential competitors.³ The District Court granted summary judgment on the merits to GSK with respect to both of those theories. It concluded that there was insufficient evidence that GSK's patent litigation was a sham or that the settlement delayed the launch of generic versions of Wellbutrin XL. At the same time, the Court granted GSK's Daubert motion to exclude the testimony of the Appellants' economic expert. The Court also granted a motion to decertify the indirect-purchaser class for lack of ascertainability and dismissed the indirect-purchaser claims brought under the laws of any state that was not the home of a named class representative.⁴ Finally, the Court denied a motion filed by Aetna, Inc. to intervene on the side of the indirect purchasers.⁵

This appeal followed. Both the direct-purchaser and indirect-purchaser Appellants seek review of the District Court's summary judgment and Daubert rulings. The indirect-purchaser Appellants also contest the order decertifying their class and the denial of Aetna's motion to intervene. GSK filed a conditional cross-appeal challenging on numerosity grounds the certification of the direct-purchaser class. GSK filed a second conditional cross-appeal with respect to the indirect-purchaser class, asking that, if we were to disagree with the District Court's decertification on ascertainability grounds, we nevertheless affirm on numerosity grounds. The direct-purchaser and indirect-purchaser Appellants filed a joint brief addressing the summary judgment orders and the order denying Aetna's intervention; the indirect-purchaser Appellants also filed a separate brief addressing the decertification order.

We agree with the District Court's conclusions that the Appellants have failed to establish a genuine dispute of fact either as to whether GSK engaged in sham litigation or whether GSK's actions delayed the launch of any generic version of Wellbutrin XL. Consequently, we will affirm the District Court's grant of summary judgment and do not reach the remaining issues on appeal.

I. Background

A. The Hatch-Waxman Act

To better explain the antitrust issues in this case, we first describe the regulatory scheme that governs the testing and approval of new drugs in the United States. That framework was established by the Drug Price Competition and Patent Term Restoration Act of 1984, 98 Stat. 1585, as amended, which is commonly known as the Hatch-Waxman Act ("the Act"), or simply Hatch-Waxman. Actavis , 133 S.Ct. at 2227-28.

A drug manufacturer seeking to market a new drug "must submit a New Drug Application [ (NDA) ] to the federal Food and Drug Administration (FDA) ... and undergo a long, comprehensive, and costly testing process, after which, if successful, the manufacturer will receive marketing approval from the FDA." Id. at 2228 (citing 21 U.S.C. § 355(b)(1) ). One of the goals of Hatch-Waxman is to increase competition between generic and brand-name drugs. To that end, the Act allows the manufacturers of generic drugs to obtain FDA approval without having...