In re Warfarin Sodium Antitrust Litigation

• Decision Date: 08 December 2004
• Docket Number: No. 02-3757.,No. 02-3758.,No. 02-3603.,No. 02-3755.,02-3603.,02-3755.,02-3757.,02-3758.
• Citation: 391 F.3d 516
• Parties: In re: WARFARIN SODIUM ANTITRUST LITIGATION Seymour Eagel, Appellant in No. 02-3603 Willie Hutchinson, Jr.; Vincent Palazzola; Alex Galperin; Shirley Bruce; Madison W. O'Kelly, Jr.; Garey L. McCarty, Appellants in No. 02-3755 Alan Shapiro, Appellant in No. 02-3757 Mary Cleusman, Appellant in No. 02-3758.
• Court: U.S. Court of Appeals — Third Circuit

391 F.3d 516

In re: WARFARIN SODIUM ANTITRUST LITIGATION Seymour Eagel, Appellant in No. 02-3603 Willie Hutchinson, Jr.; Vincent Palazzola; Alex Galperin; Shirley Bruce; Madison W. O'Kelly, Jr.; Garey L. McCarty, Appellants in No. 02-3755 Alan Shapiro, Appellant in No. 02-3757

Mary Cleusman, Appellant in No. 02-3758.

No. 02-3603.

No. 02-3755.

No. 02-3757.

No. 02-3758.

United States Court of Appeals, Third Circuit.

Argued October 29, 2003.

Filed December 8, 2004.

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Paul D. Wexler (Argued), Bragar Wexler Eagel & Morgenstern, LLP, New York, NY, for Appellant Seymour Eagel.

Jeffrey S. Friedman, Silverman & McDonald, Wilmington, DE, Edward Cochran (Argued), Shaker Heights, OH, Hilton F. Tomlinson, Pritchard, McCall & Jones, LLC, Birmingham, AL, Paul Rothstein, Gainesville, FL, N. Albert Bacharach, Jr. Gainesville, FL, Robert W. Bishop, Bishop & Associates, Louisville, KY, for Appellants Willie Hutchinson, Jr., Vincent Palazzola; Alex Galperin; Shirley Bruce; Madison W. O'Kelly, Jr.; Garey L. McCarty.

John J. Pentz (Argued), Maynard, for Appellant Alan Shapiro.

J. Arnold Fitzgerald, Andrew F. Tucker (Argued), Dayton, TN, Sidney Balick, Balick & Balick, Wilmington, DE, for Appellant Mary Cleusman.

Bernard Persky (Argued), Barbara J. Hart, Vaishali Shetty, Goodkind Labaton Rudoff & Sucharow LLP, New York, NY, for Appellees John Kusnerick, et al.; Sara Altman; Samuel Gordon Tischler; Marie A. Steckel; Robert Bareiss; John Civatte, Jr.; Mary Banten; Arkansas Carpenters' Health & Welfare Fund; Operating Engineers Local 312 Health & Welfare Fund; United Food and Commercial Union and Employers Midwest Health Benefits Fund; United Wisconsin Services, Inc., now known as Cobalt Corporation; Louisiana Health Service and Indemnity Corporation doing business as Blue Cross and Blue Shield of Louisiana.

William R. Kane, Miller, Faucher and Cafferty, Philadelphia, PA, Alan H. Rolnick, Hanzman & Criden, Coral Gables, FL, Marvin A. Miller and Jennifer W. Sprengel, Miller, Faucher and Cafferty LLP, Chicago, IL, for Appellees John Kusnerick, et al.; Sara Altman; Samuel Gordon Tischler; Marie A. Steckel; Arkansas Carpenters' Health & Welfare Fund; Operating Engineers Local 312 Health & Welfare Fund; United Food and Commercial Union and Employers Midwest Health Benefits Fund; United Wisconsin Services, Inc., now known as Cobalt Corporation; Louisiana Health Service and Indemnity Corporation doing business as Blue Cross and Blue Shield of Louisiana.

Pamela S. Tikellis, Chimicles & Tikellis, Wilmington, DE, for Appellees John Kusnerick, et al.; Sara Altman; Samuel Gordon Tischler; Marie A. Steckel; Robert Bareiss; John Civatte, Jr. Mary Banten.

Richard W. Cohen (Argued), Lowey, Dannenberg, Bemporad & Selinger, White Plains, NY, for Appellee United Wisconsin Services, Inc., now known as Cobalt Corporation.

Donald J. Wolfe, Jr., Potter, Anderson & Corroon, Wilmington, DE, George D. Ruttinger (Argued), Crowell & Moring, Washington, DC, for Appellee Dupont Pharmaceutical Company.

Before SCIRICA, Chief Judge, FUENTES, and SMITH, Circuit Judges.

OPINION OF THE COURT

FUENTES, Circuit Judge.

This matter arises out of a consolidated class action suit seeking injunctive and monetary relief in connection with the sale of Coumadin, the brand name for the prescription drug warfarin sodium manufactured and marketed by the DuPont Pharmaceuticals Company ("DuPont").¹ Plaintiffs allege that DuPont's anticompetitive behavior and dissemination of false and misleading information about a lower-priced, readily available generic competitor caused them to purchase the higher-priced Coumadin instead of the generic product. At issue in this appeal is whether the District Court abused its discretion in approving a $44.5 million nationwide settlement agreement between DuPont and the fixed co-pay consumers and out-of-pocket consumers (collectively, the "consumers") and Third Party Payors ("TPPs") of Coumadin, and awarding $10 million in fees to class counsel.² Several individual consumers and TPPs challenge the District Court's certification of the class and approval of the settlement. For the reasons discussed below, we conclude that the District Court did not abuse its discretion in certifying the class or in approving the settlement, and accordingly we will affirm the judgment of the District Court.

I. BACKGROUND

A. Factual History

Warfarin sodium is a prescription oral anticoagulant medication sold in tablet form that is taken by more than 2 million Americans to treat blood-clotting disorders. DuPont has been the dominant manufacturer and supplier of warfarin sodium under the brand name Coumadin, recording sales of approximately $550 million and $464 million, respectively, in 1998 and 1999. Although DuPont's Coumadin patent expired in 1962, Coumadin remained the only warfarin sodium product available until July 1997, when a generic version of warfarin sodium was released onto the market following approval by the U.S. Food and Drug Administration ("FDA"). Class action plaintiffs have alleged that DuPont, in response to the competition from lower-priced generic warfarin sodium, disseminated false and misleading information to consumers, TPPs, and others about the safety and equivalence of generic warfarin sodium. As a result, plaintiffs allege that DuPont's campaign of misrepresentations and omissions caused consumers and TPPs to buy higher-priced, brand name Coumadin instead of the lower-priced generic warfarin sodium.

DuPont's alleged violations are said to have begun when Barr Laboratories, Inc. ("Barr") filed a petition with the FDA in May 1995 seeking approval to manufacture and distribute a generic warfarin sodium product. In response to Barr's petition, DuPont filed a petition for stay with the FDA in October 1996 requesting that the FDA adopt stricter bioequivalence standards and postpone approval for all generic warfarin sodium products. The FDA denied DuPont's petition, however, on the grounds that the methods in place for determining bioequivalence were sufficient. At the same time, DuPont filed a petition with the U.S. Pharmacopeial Convention, Inc. ("USP") requesting the adoption of Coumadin's content uniformity specifications as the industry standard for warfarin sodium drugs. The USP rejected this petition.

In March 1997, the FDA approved a generic warfarin sodium, finding that it was the bioequivalent and therapeutic equivalent to Coumadin.³ The generic product was released to the market on July 26, 1997 at prices substantially lower than Coumadin. Plaintiffs allege that DuPont, in the period before and after Barr's introduction of generic warfarin sodium, published false and misleading statements concerning the bioequivalence, therapeutic safety, and efficacy of generic warfarin sodium. For instance, DuPont allegedly issued a variety of false and misleading communications to convince health care professionals, government agencies, and the public that Coumadin was safer and more effective than Barr's generic warfarin sodium product. In addition, DuPont allegedly revised its promotional computer software system designed for health care practitioners monitoring patients using Coumadin to include warnings about switching to generic substitutes, and created a slide presentation for health care professionals claiming that the generic drug may not be the equivalent to Coumadin.

DuPont also allegedly ran a publicity campaign claiming that Coumadin had tighter than USP content uniformity standards. DuPont issued a press release, which stated that patients should receive additional blood tests if switched to generic warfarin sodium and accused Barr of focusing on producing a cheaper product to save money while DuPont focused on patient safety and education. Furthermore, DuPont allegedly created an organization named the Health Alliance for NTI Patient Safety for the purpose of lobbying state legislatures, formularies, and pharmacy boards to exclude NTI drugs from state generic substitution laws.⁴

Plaintiffs assert that the misrepresentations led consumers, TPPs, and others to believe that Coumadin was superior to the generic equivalents, caused millions of prescriptions to be filled with Coumadin that could have been filled with less expensive generic drugs, and allowed DuPont to maintain supracompetitive prices for Coumadin. As evidence that DuPont's misrepresentations and conduct had an anticompetitive effect, plaintiffs cited evidence of the weak market penetration of generic warfarin sodium as compared to Coumadin. Generally, about 40-70% of prescriptions for drugs available from multiple sources are filled with less expensive generic products within one year of generic availability. However, more than 75% of prescriptions for sodium warfarin were still filled with Coumadin a year after Barr introduced its generic version, and DuPont continued to maintain a 67% market share up until the date the complaints in this matter were filed.

B. Procedural History

Beginning in 1997, class action complaints were filed in several federal district courts and were consolidated for pretrial proceedings by the Judicial Panel on Multidistrict Litigation ("MDL panel") before the U.S. District Court for the District of Delaware. The class actions sought treble damages and injunctive relief under federal antitrust laws on behalf of a nationwide class of consumer and TPP purchasers of Coumadin who paid all or part of the purchase price. In an order dated December 7, 1998, the District Court dismissed the claims on the grounds that consumer plaintiffs, as indirect purchasers of Coumadin, lacked standing to seek injunctive relief and treble damages under the Sherman Act. See In re: Warfarin Sodium Antitrust Litig., C.A. No. MDL 98-1232-SLR, 1998 WL 883469 (D. Del. Dec. 7, 1998). This Court reversed the District Court's decision with respect to injunctive relief, finding that consumer plaintiffs...