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From Antitrust Law Daily, December 12, 2013

Class of direct purchasers certified in Nexium antitrust litigation

By Jody Coultas, J.D.

In a class action lawsuit, alleging reverse payment agreements to block generic competition for heartburn medication Nexium, the federal district court in Boston certified a class of all persons or entities in the United States who purchased branded Nexium directly from AstraZeneca AB at any time during the period August 27, 2008, through the date of certification (In reNexium (Esomeprazole) Antitrust Litigation, December 11, 2013, Young, W.).

Direct purchasers of Nexium alleged that AstraZeneca and three generic drug manufacturers—Ranbaxy Pharmaceuticals, Inc., Teva Pharmaceutical Industries, Ltd., and Dr. Reddy’s Laboratories Ltd.—entered into the reverse payment agreements to block generic competition for Nexium. The class of direct purchasers was comprised of wholesalers and retailers that purchased Nexium directly from AstraZeneca and that will purchase generic Nexium directly from one or more of other generic manufacturers.

Numerosity. Although the size of the putative direct purchasers’ class alone did not establish a clear case for numerosity, the court held that the subjective factors weighed in favor of finding that the numerosity requirement was satisfied. Generally, classes exceeding forty plaintiffs are deemed sufficient, although courts have certified classes with sizes similar to that presented here. Subjective factors—such as the geographic location of proposed class members, the nature of the action, and matters of judicial economy—must be taken into account. The putative class members were geographically dispersed throughout the country, making joinder difficult, inconvenient, and costly. Many courts have given favorable treatment to class actions in the private enforcement of antitrust laws. Judicial economy would best be served by certifying the class, primarily because all putative class members sought damages from the same transaction between AstraZeneca and the generic manufactures. Therefore, the court accepted the calculations for the class size to be twenty-four or twenty-nine members, depending on the determination of a “but for” generic entry date.

Adequacy of representation. The purchasers met the adequacy of representation requirement for class certification, according to the court. Representatives must fairly and adequately protect the interests of the class, and the interests of the representative party must not conflict with the interests of any of the class members. The manufacturers disputed whether assignees of direct purchaser claims can be included in the proposed class and serve as class representatives. Specifically, direct purchaser plaintiffs American Sales Company, LLC and Meijer, Inc. did not purchase Nexium directly from AstraZeneca, but were assignees of the claims of direct purchasers. There was ample precedent for the proposition that assignees can be adequate class representatives. AstraZeneca failed to offer any evidence to suggest that the actual assignments were invalid, or that ASC and Meijer did not share the same interests as the rest of the class.

Predominance. There was common proof of antitrust impact on the direct purchasers, according to the court. Each member of the class alleged the same claims arising from a “unified course of anticompetitive conduct” by AstraZeneca. Specifically, that AstraZeneca and the generic manufacturers entered into reverse payment agreements to delay generic Nexium from entering the market. The class members were also unified in alleging that the antitrust impact was the overcharge they paid for Nexium as a result of the reverse payment agreements. Finally, the purchasers were able to show that the manufacturers’ conduct had a market-wide effect and artificially inflated Nexium prices, and that all or nearly all class members would have purchased generics at a lower price or Nexium at a lower price absent the antitrust violations.

The direct purchasers were able to show damages common to the class, according to the court. Predominance fails when questions of individual damage calculations overwhelm questions common to the class. This rule does not preclude the use of aggregate damages calculations. The actual price paid among the direct purchasers may preclude some class members from recovery if it is shown that various rebates, discounts, or buying practices did not result in net positive damages. However, the direct purchasers advanced a single, class-wide theory of harm based on the manufacturers’ unlawful conduct, which delayed the entry of lower-priced generics.

Superiority. Due to the complex nature of the litigation, the fact that complete joinder of the direct purchaser class was impracticable, and the “desirability” of concentrating litigation in this single forum, the court held that class action treatment was superior to other methods for adjudicating the case. The direct purchasers argued in favor of the superiority of the class action device, based on the fact the antitrust allegations were brought under a consolidated theory of liability, targeting three specific reverse payment agreements with a single entity, AstraZeneca. The manufacturers counter that the class members were economically well-suited for individual suits because of the nearly $1 billion in damages claimed per plaintiff, and that the class claims were concentrated in three ofthe largest class members who had no need for class action treatment to resolve their claims. Although it was a close call, the court sided with the purchasers.

The case is No. 12-md-02409-WGY.

Attorneys: Nicole M. Acchione (Trujillo Rodriguez & Richards, LLP) for Michigan Regional Council of Carpenters Employee Benefits Fund. Natalie Finkelman Bennett (Shepherd, Finkelman, Miller & Shah, LLP) for Fraternal Order of Police Miami Lodge 20 Insurance Trust Fund. Justin N. Boley (Wexler Wallace LLP) for United Food Workers and Commercial Workers Unions and Employers Midwest Health Benefits Fund. Christopher K. Albert (Hamilton Brook Smith & Reynolds, P.C.) for Dr. Reddy’s Laboratories Ltd. Nicholas W. Allen (McCarter & English, LLP) for AstraZeneca LP. James Douglas Baldridge (Venable LLP) for Ranbaxy Laboratories, Ltd. Peter A. Barile, III (Grant & Eisenhofer, P.A.) for Meijer Distribution, Inc. Ashley E. Bass (Covington & Burling LLP) for Aktiebolaget Hassle.

Companies: Dr. Reddy’s Laboratories Ltd.; AstraZeneca LP; Ranbaxy Laboratories, Ltd.; Meijer Distribution, Inc.; Teva Pharmaceutical Industries, Ltd.

MainStory: TopStory Antitrust MassachusettsNews

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