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From Antitrust Law Daily, July 28, 2015

Provigil purchasers obtain class certification in “pay-for-delay” suit

By Greg Hammond, J.D.

A 22-member class of direct purchasers of Provigil has been certified in a class action against generic drug companies Mylan Pharmaceuticals, Inc., Mylan Laboratories, Inc., Ranbaxy Laboratories, Ltd., and Ranbaxy Pharmaceuticals, Inc. for entering into unlawful reverse-payment settlements concerning generic Provigil. The federal district court in Philadelphia granted the purchasers’ class certification motion, finding that they satisfied the numerosity, predominance, and superiority requirements of Federal Rule of Civil Procedure 23 (King Drug Co. of Florence, Inc. v. Cephalon, Inc., July 27, 2015, Goldberg, M.).

Direct purchasers of the sleeping disorder medication modafinil, sold under the brand name Provigil, filed a series of class action suits against pharmaceutical manufacturer Cephalon and four generic drug manufacturers for anticompetitive conduct and monopolization by delaying generic competition to Provigil in violation of Sections 1 and 2 of the Sherman Act. The purchasers claim that the manufacturers engaged in restraint of trade by entering into reverse payment settlements to resolve patent infringement suits, thereby delaying generic competition for Provigil.

The purchasers previously reached a settlement agreement with Cephalon, Teva, and Barr, and are now seeking class certification of a litigation class pertaining to Mylan and Ranbaxy. The defendants oppose certification, primarily arguing that the purchasers failed to demonstrate the requirements of numerosity, predominance, and superiority.

Numerosity. According to the court, although the proposed class contains only 22 members, joinder would be impracticable given the complexity and extensive history of the case, the expansive discovery conducted, and the geographic dispersion of the parties over 13 states and Puerto Rico. Judicial economy would be best served by trying the case as a class action, which would prevent additional rounds of discovery, further delays in setting a trial date, and the possibility of inconsistent verdicts. Although the financial resources of the class members and the parties’ abilities to bring individual suits could weigh against a numerosity finding, the court found that these factors were less compelling. The parties were therefore sufficiently numerous, the court concluded.

Predominance. With regard to predominance, the defendants argue that the purchasers failed to demonstrate antitrust impact or damages using class-wide evidence because determining whether a particular purchaser was harmed and/or the extent of that harm would necessitate individualized inquiries. The court rejected this argument, first finding that the purchasers’ expert established antitrust impact for the class using common evidence to support his opinion of class-wide overcharges. In addition, the court found that if either of the remaining generic defendants were ultimately found liable for a violation under Actavis, they would have secured an illegal benefit at the purchasers’ expense, regardless of whether any particular purchaser would have purchased generic Provigil directly from either defendant. Individualized inquiry into which generic manufacturer each class member favored would therefore be unnecessary.

The defendants additionally asserted that the purchasers failed to meet their burden of establishing predominance with regard to antitrust damages because: (1) the plaintiffs claim that generic bypass will affect each plaintiff in varying degrees, which will result in individualized damages inquiries; and (2) the plaintiffs’ damages model no longer matches their theory of liability, since the court previously granted summary judgment against the plaintiffs’ overall conspiracy claims. The court rejected both arguments, noting that variations in damages among individual class members should not defeat predominance, particularly where plaintiffs—such as in this case—have provided a reliable aggregate damages model. Even if the jury does not find that all generic defendants would have launched “at-risk,” the purchasers’ expert provided alternate calculations based upon a lesser number of competitors. The damages model therefore matched their theory of liability and impact, and predominance was consequently satisfied as to damages.

Superiority. In their final attempt to thwart certification, the defendants argued that superiority was not met in this case because it involved a small number of sophisticated entities who are fully capable of pursuing individual claims. While some courts consider class members’ ability to protect their own interests in analyzing superiority, the court found that it is often done so in passing and is not dispositive. Because the purchasers have demonstrated that the class action would achieve economies of time, effort, and expense, and would promote uniformity of decision in this complex litigation that has spanned nearly a decade, the court found that the purchasers established superiority.

The case is number 2:06-cv-1797.

Attorneys: Andrew William Kelly (Odom & Des Roches LLP), Bruce E. Gerstein (Garwin Gerstein and Fisher LLP), and Daniel Berger (Berger & Montague, PC) for King Drug Company of Florence, Inc. Allen D. Black (Fine, Kaplan & Black) for Meijer, Inc. and Meijer Distribution, Inc. Emily R. Whelan (Wilmer Hale) for Cephalon, Inc. C. Fairley Spillman (Akin Gump Strauss Hauer & Feld LLP) and David R. Marriott (Cravath Swaine & Moore LLP) for Mylan Laboratories, Inc. Gregory L. Skidmore (Kirkland Ellis LLP) for Teva Pharmaceutical Industries, Ltd. and Teva Pharmaceuticals USA, Inc. Christopher K. Diamond (Venable LLP) for Ranbaxy Laboratories, Ltd.

Companies: King Drug Company of Florence, Inc.; Meijer, Inc.; Meijer Distribution, Inc.; Cephalon, Inc.; Mylan Laboratories, Inc.; Teva Pharmaceutical Industries, Ltd.; Teva Pharmaceuticals USA, Inc.; Ranbaxy Laboratories, Ltd.

MainStory: TopStory Antitrust PennsylvaniaNews

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