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From Antitrust Law Daily, July 2, 2015

Decertification of class in Wellbutrin reverse payment settlement litigation granted

By Linda O’Brien, J.D., LL.M.

In an action challenging alleged reverse payment settlement agreements between a brand drug distributor and generic pharmaceutical manufacturers concerning the antidepressant drug Wellbutrin, a group of indirect purchasers was decertified by the federal district court in Philadelphia for failure to meet the requirement of Federal Rule of Civil Procedure 23(b)(3) that the classes be ascertainable (In re Wellbutrin XL Antitrust Litigation, June 30, 2015, McLaughlin, M.).

Global pharmaceutical company, SmithKline Beecham Corporation d/b/a/ GlaxoSmithKline (GSK) is a distributor of Wellbutrin XL, a daily antidepressant medication. A group of employee welfare benefit plans, indirect purchasers of Wellbutrin, filed suit against GSK, alleging that the company delayed the entry of generic versions of Wellbutrin to the U.S. market by entering into illegal reverse agreements with generic drug companies to settle sham patent infringement lawsuits. In August 2011, the court certified an Indirect Purchaser (IP) class under Rule 23(b)(3). GSK moved to decertify the class.

Following the Third Circuit decision in Byrd v. Aaron’s Inc., 784 F.3d 154 (2015), the court determined that, to satisfy the ascertainability requirement, a plaintiff must show that there is a reliable, administratively feasible mechanism that can identify which potential class members fall within the class definition. In this case, the IP class must show that it can identify (1) which entities paid the retail purchase price of Wellbutrin and later purchased its generic equivalent and (2) which individual consumers and entities paid the retail purchase price of generic Wellbutrin.

It was undisputed that third party payers (TPPs), such as health and welfare benefit plans, may have been entities that paid the retail purchase price of Wellbutrin. However, the potential class membership of pharmacy benefit managers (PBMs) was contested. TPPS employ PBMs to determine what portion of a prescription the TPP and individual consumer will pay based on the individual’s insurance coverage. In some contracts with TPPs, PBMs guarantee a certain price discount for prescription drug purchases and are responsible for the difference between the guaranteed discount and actual discount obtained.

The IP class contention that, although price discount guarantees exist, they are “off transaction financial flows” that do not take place when the retail transaction occurs was rejected. The court noted the limitation that only parties who paid at the time of the retail transaction should be included in the class would result in PBMs to be included and TPPs to be excluded as PBMs are often the entities that pay pharmacies at the time of the transaction. Price discount guarantees made by PBMs to TPPs potentially caused PBMs to pay some or the entire retail purchase price of Wellbutrin or its generic version. If a PBM did pay a part of the retail purchase price, then it would be a member of the IP class.

Furthermore, the IP class did not show that there was a reliable and administratively feasible mechanism for determining which PBMs and individual consumers were members of the class, the court found. The IP class failed to produce evidence that purchase records in the pharmaceutical industry could be used to ascertain whether PBMs and individual consumers were members of the class. The IP class’ expert testified that it would be difficult to obtain purchase data from PBMs. Even if PBM and retail pharmacy records could be obtained, due to the number of PBMs and retail pharmacies, there was no evidence that records from these disparate entities could be synthesized and used to ascertain PBMs and individual consumers in a reliable and administratively feasible way.

The IP class’ contention that the existence of data standards set by the National Council for Prescription Drug Programs (NCPDP) as evidence of pharmaceutical records that could ascertain consumer class members was also rejected. The court noted that the NCPDP sets pharmaceutical data standards and does not collect or store any pharmaceutical data. The fact that NCPDP standards include data fields that could be used to ascertain individual class members did not automatically mean that such fields were used by members of the pharmaceutical industry or that such records would be available to aid in the ascertainability inquiry.

The case is No. 08-2433.

Attorneys: Amber M. Nesbitt (Wexler Wallace LLP), Daniel E. Gustafson (Gustafson Gluek PLLC), and David S. Nalven (Hagens Berman Sobol Shapiro LLP) for Plumbers and Pipefitters Local 572 Health and Welfare Fund. Edward D. Rogers (Ballard, Spahr, Andrews and Ingersoll) for SmithKline Beecham Corp.

Companies: Plumbers and Pipefitters Local 572 Health and Welfare Fund; SmithKline Beecham Corp.

MainStory: TopStory Antitrust PennsylvaniaNews

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