In re Zetia (Ezetimibe) Antitrust Litig.

587 F.Supp.3d 356

IN RE: ZETIA (EZETIMIBE) ANTITRUST LITIGATION

MDL NO. 2:18md2836

United States District Court, E.D. Virginia, Norfolk Division.

Signed February 24, 2022

MEMORANDUM ORDER

REBECCA BEACH SMITH, SENIOR UNITED STATES DISTRICT JUDGE

This matter comes before the court on the Report and Recommendation entered by Magistrate Judge Douglas E. Miller on November 1, 2021, ECF No. 1391 ("R&R"), and the Glenmark and Merck Defendants’¹ ("Defendants") Objections thereto, ECF Nos. 1419 ("Glenmark Objections"), 1423 ("Merck Objections") (Merck and Glenmark Objections, collectively, the "Objections"). For the reasons explained below, the court ADOPTS IN FULL the findings and recommendations set forth in the Magistrate Judge's Report and Recommendation, as supplemented by this Memorandum Order; OVERRULES Defendants’ Objections; DENIES the Motion to Exclude; and GRANTS the Motion for Summary Judgment.

I. BACKGROUND

The court will briefly review the facts and procedural history key to understanding Defendants’ Objections and the court's analysis.² On August 10, 2020, Plaintiffs filed a Motion to Exclude the Testimony of Dr. Anupam B. Jena ("Jena"), ECF Nos. 1066, 1070 ("Motion to Exclude"), and a Motion for Partial Summary Judgment Concerning the Relevant Market, ECF Nos. 1077, 1080 ("Motion for Summary Judgment"). Plaintiffs employ these Motions in tandem to prove an essential element of this antitrust case case: the definition of the relevant market. See R&R at 1-3. They collectively move the court to (1) exclude the proposed testimony of Jena, Defendants’ rebuttal expert concerning the relevant market, and (2) find as a matter of law that the relevant market is limited to branded Zetia and its AB-rated generic equivalents. R&R at 1-2, 12.³ The AB-rated generic equivalents of Zetia share the branded drug's active ingredient: the cholesterol-reducing compound ezetimibe. Id. at 3-4.

On November 1, 2021, following a hearing on the Motions, Judge Miller issued the R&R recommending that the undersigned deny the Motion to Exclude and grant the Motion for Summary Judgment. R&R at 2. On November 15, 2021, Defendants separately filed timely Objections to portions of the R&R concerning the Motion for Summary Judgment. ECF Nos. 1419, 1423. Plaintiffs, however, did not object to Judge Miller's recommendation concerning the Motion to Exclude. Having been fully briefed, the Objections and underlying Motions are now ripe for judicial determination.

II. REVIEW AND SUMMARY JUDGMENT STANDARDS

A. Review of Magistrate Judge's R&R

Pursuant to Rule 72 (b) of the Federal Rules of Civil Procedure, the court, having reviewed the record in its entirety, must make a de novo determination of those portions of the R&R to which the parties have specifically objected. Fed. R. Civ. P. 72(b). For unchallenged portions, the court "must ‘only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.’ " Diamond v. Colonial Life & Accident Ins. Co., 416 F.3d 310, 315 (4th Cir. 2005) (quoting Fed. R. Civ. P. 72 advisory committee's note). The court may accept, reject, or modify, in whole or in part, the recommendation of the Magistrate Judge, or recommit the matter to him with instructions. 28 U.S.C. § 636(b)(1).

B. Summary Judgment

Summary judgment is appropriate when the court, viewing the record as a whole and in the light most favorable to the nonmoving party, finds there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law.

Austin v. Clark Equip. Co., 48 F.3d 833, 835-36 (4th. Cir. 1995). "Thus, it is the burden of the moving party to show the court that no material factual issues exist for trial." Id. at 835.

If the moving party carries its burden, the court should grant summary judgment if the nonmoving party has failed to establish, after adequate time for discovery, the existence of an essential element of that party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). At a minimum, the nonmoving party must present "evidence on which the [trier of fact] could reasonably find" for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The nonmoving party must go beyond the facts alleged in the pleadings, and rely instead on affidavits, depositions, or other evidence to show a genuine issue for trial. See Celotex, 477 U.S. at 324, 106 S.Ct. 2548 ; M & M Med. Supplies & Serv., Inc. v. Pleasant Valley Hosp., Inc., 981 F.2d 160, 163 (4th Cir. 1992).

III. MOTION TO EXCLUDE

Judge Miller recommended denying Plaintiffs’ Motion to Exclude Jena's expert testimony, concluding that Plaintiffs’ arguments for exclusion "go to the weight of Jena's testimony and its persuasiveness at trial, or in response to their [Motion for Summary Judgment], not to the admissibility or reliability of his testimony." R&R at 24. Plaintiffs did not object to this recommendation and the court does not find any clear error on the face of the record. Accordingly, the court ADOPTS and APPROVES the Magistrate Judge's conclusion that the Motion to Exclude should be DENIED.

IV. MOTION FOR SUMMARY JUDGMENT

The contested portion of the R&R concerns the Magistrate Judge's recommendation that the undersigned grant the Motion for Summary Judgment. The court will review the jurisprudence concerning the relevant market inquiry before explaining why the court ultimately ADOPTS and APPROVES Judge Miller's recommendation.

A. Defining the Relevant Product Market on Summary Judgment

Antitrust plaintiffs bear the burden of proving the relevant market for assessing the anticompetitive conduct alleged. Satellite Television & Associated Ress., Inc. v. Cont'l Cablevision of Va., Inc., 714 F.2d 351, 355 (4th Cir. 1983). Plaintiffs benefit from proving the narrowest market possible, as allegedly anticompetitive activity is more impactful, and more likely "unreasonable" or indicative of the exercise of monopoly power, in a market with few competitors. See Int'l Wood Processors v. Power Dry, Inc., 792 F.2d 416, 430 (4th Cir. 1986) (noting that "the anticompetitive effect of plaintiff's elimination from [a] larger market necessarily would have been less").

Courts must properly contextualize their assessment, however, as market definition is not an end in and of itself. The purpose of inquiring into the scope of the market "is to determine whether an arrangement has the potential for genuine adverse effects on competition," and "market power ... is but a ‘surrogate for detrimental effects.’ " FTC v. Ind. Fed'n of Dentists, 476 U.S. 447, 460-61, 106 S.Ct. 2009, 90 L.Ed.2d 445 (1986) (quoting 7 P. Areeda, Antitrust Law ¶ 1511, p. 429 (1986)); Dickson v. Microsoft Corp., 309 F.3d 193, 210 (4th Cir. 2002) (accord).⁴

"The market definition has two components - the relevant product market and the relevant geographic market." E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 441 (4th Cir. 2011) (citing Consul, Ltd. v. Transco Energy Co., 805 F.2d 490, 493 (4th Cir. 1986) ). In this case, the geographic market is not in issue, as the "parties agree that the appropriate geographic demarcation is the United States and its territories." R&R at 29; ECF No. 1078 at 13-14. Instead, Defendants argue that Plaintiffs have not satisfied their burden on summary judgment to prove the relevant product market. See ECF No. 1419 at 2-5; ECF No. 1423 at 1-3.

The relevant product market is defined by "the ‘extent to which consumers will change their consumption of one product in response to a price change in another, i.e., the "cross-elasticity of demand." ’ " See It's My Party, Inc. v. Live Nation, Inc., 811 F.3d 676, 683 (4th Cir. 2016) (quoting Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 469, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992) ). Though products need not "be fungible to be considered in the relevant market," United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 394, 76 S.Ct. 994, 100 L.Ed. 1264 (1956), "[f]or every product, substitutes exist," and the "relevant market cannot meaningfully encompass that infinite range," Times-Picayune Pub. Co. v. United States, 345 U.S. 594, 612 n.31, 73 S.Ct. 872, 97 L.Ed. 1277 (1953).

When balancing these considerations, "[t]he circle must be drawn narrowly to exclude any other product to which, within reasonable variations in price, only a limited number of buyers will turn; in technical terms, products whose ‘cross-elasticities of demand’ are small." Id. Thus, products which are interchangeable to some degree, but do not share significant cross-elasticity of demand, are not in the same relevant antitrust product market. See id. Despite the unique characteristics of the pharmaceutical market, "cross-elasticity must be demonstrated between [pharmaceutical] products to establish a market definition that includes them." In re Solodyn (Minocycline Hydrochloride) Antitrust Litig. [Solodyn ], No. 14-md-02503, 2018 WL 563144, at *8 (D. Mass. Jan. 25, 2018) (citing United Food & Com. Workers Local 1776 v. Teikoku Pharma USA [Lidoderm ], 296 F. Supp. 3d 1142, 1169-74 (N.D. Cal. 2017) ).

The court must ultimately ascertain "the narrowest market which is wide enough so that products ... from other producers in the same area cannot compete on substantial parity with those included in the market." Int'l Wood Processors, 792 F.2d at 430 (quoting L. Sullivan, Handbook of the Law of Antitrust § 12, at 41 (1977)). Cross-elasticity of demand is the relevant indicator of this ability to compete, and "products whose ‘cross-elasticities of demand’ are small" must be excluded from the relevant market. See Times-Picayune Pub. Co., 345 U.S. at 612 n.31, 73 S.Ct. 872.

Accordingly, a party moving for summary judgment on this issue bears its initial burden by proposing a relevant product market, and demonstrating that the finder of fact must conclude that the proposed market...