Eisai, Inc. v. Sanofi Aventis U.S., LLC

• Decision Date: 04 May 2016
• Docket Number: No. 14–2017.,14–2017.
• Citation: 821 F.3d 394
• Parties: EISAI, INC., Appellant v. SANOFI AVENTIS U.S., LLC; Sanofi U.S. Services, Inc. f/k/a Sanofi–Aventis U.S. Inc.
• Court: U.S. Court of Appeals — Third Circuit

821 F.3d 394

EISAI, INC., Appellant

v.SANOFI AVENTIS U.S., LLC; Sanofi U.S. Services, Inc. f/k/a Sanofi–Aventis U.S. Inc.

No. 14–2017.

United States Court of Appeals, Third Circuit.

Argued Jan. 13, 2015.

Opinion filed: May 4, 2016.

Jay N. Fastow, Esquire (Argued), Justin W. Lamson, Esquire, Denise L. Plunkett, Esquire, Ballard Spahr, New York, NY, Joseph C. Amoroso, Esquire, Timothy I. Duffy, Esquire, Coughlin Duffy, Morristown, NJ, Thomas J. Cullen, Jr., Esquire, James Frederick, Esquire, Kamil Ismail, Esquire, Derek M. Stikeleather, Esquire, Goodell, DeVries, Leech & Dann, Baltimore, MD, Counsel for Appellant.

George S. Cary, Esquire (Argued), Leah O. Brannon, Esquire, Cleary, Gottlieb, Steen & Hamilton, Washington, DC, Arminda B. Bepko, Esquire, Cleary, Gottlieb, Steen & Hamilton, New York, NY, Marc D. Haefner, Esquire, Tricia B. O'Reilly, Esquire, Liza M. Walsh, Esquire, Connell Foley, Roseland, NJ, Counsel for Appellees.

Before: AMBRO, FUENTES and ROTH, Circuit Judges.

OPINION

ROTH

, Circuit Judge:

The antitrust laws are concerned with “the protection of competition, not competitors.”¹ Eisai complains that the conduct of Sanofi Aventis U.S., LLC, and Sanofi U.S. Services, Inc., (Sanofi) jointly and severally harmed competition in the market for anticoagulant drugs by preventing hospitals from replacing Lovenox, one of Sanofi's drugs, with competing drugs. The facts, however, do not bear out Eisai's characterization of market events. For the reasons stated below, we conclude that what Eisai calls “payoffs” were, in reality, discounts offered by Sanofi to its customers; what Eisai calls “agreements with hospitals to block access” were, in reality, provisions proscribing customers from favoring competing drugs over Lovenox; what Eisai calls “a campaign of ‘fear, uncertainty, and doubt’ ” was, in reality, Sanofi's marketing of Lovenox. Analyzing Eisai's claims under the rule of reason, we find no evidence that Sanofi's actions caused broad harm to the competitive nature of the anticoagulant market. To the extent that Sanofi's conduct caused damage to its competitors, that is not a harm for which Congress has prescribed a remedy. We will therefore affirm the order of the District Court, granting summary judgment in favor of Sanofi.

I.

A.Lovenox

is an anticoagulant drug used in the treatment and prevention of deep vein thrombosis (DVT), a condition in which blood clots develop in a person's veins. Lovenox belongs to a category of injectable, anticoagulant drugs known as low molecular weight heparin (LMWH). Lovenox was the first LMWH approved by the Food and Drug Administration and has been sold by Sanofi in the United States since 1993. Lovenox has at least seven FDA-approved uses (known as indications), including the treatment of certain severe forms of heart attack.

Fragmin

is a competing injectable LMWH, which Pfizer, Inc., initially sold only abroad. In September 2005, Pfizer sold Eisai an exclusive license to market, sell, and distribute Fragmin in the United States. Fragmin has five FDA-approved indications, some of which overlap Lovenox's indications. Fragmin is also indicated to reduce the reoccurrence of symptomatic venous thromboembolism in cancer patients, while Lovenox is not. Lovenox, however, is indicated for treating certain more severe forms of heart attack, an indication that Fragmin does not have.

The relevant product market also consists of two other injectable anticoagulant drugs, Innohep

and Arixtra. Innohep, a LMWH, was manufactured and sold by LEO Pharma Inc. in the United States from 2000 to 2011. Arixtra is an injectable anticoagulant approved by the FDA in 2001 and sold in the United States by GlaxoSmithKline from 2005 to 2010. While not a LMWH, Arixtra is clinically comparable to LMWHs in its treatment of DVT.

Relevant to Eisai's claims is the market for Lovenox, Fragmin, Innohep, and Arixtra in the United States from September 27, 2005 (when Eisai was able to begin selling Fragmin

) until July 25, 2010 (when Sanofi ended certain marketing practices after a generic entered the market). During that time, Lovenox had the most indications of the four drugs, the largest sales force, and maintained a market share of 81.5% to 92.3%. Fragmin had the second largest market share at 4.3% to 8.2%.

B.

Eisai's antitrust claims relate to Sanofi's marketing of Lovenox to U.S. hospitals. Most hospitals are members of group purchasing organizations (GPOs), which negotiate drug contracts and discounts from pharmaceutical companies on behalf of their members. From September 2005 until July 2010, Sanofi offered GPOs the “Lovenox Acute Contract Value Program” (Program), featuring a contractual offer to sell Lovenox on certain terms and conditions. Eisai's allegations of anticompetitive conduct relate to three elements of this program: (1) market-share and volume discounts, (2) a restrictive formulary access clause, and (3) aggressive sales tactics used to market the program.

(1) Under the terms of the Program, hospitals received price discounts based on the volume of Lovenox they purchased and their market-share calculation tied to their purchases of the four anticoagulant drugs.² The Program generally treated a GPO's members as individual customers when determining the volume and market share. When a hospital's purchases of Lovenox were below 75% of its total purchases of LMWHs, it received a flat 1% discount regardless of the volume of Lovenox purchased. But when a hospital increased its market share above that threshold, it would receive an increasingly higher discount based on a combination of the volume purchased and the market share. For example, in 2008, the discount ranged from 9% to 30% of the wholesale price. Additionally, if certain criteria were met, a multi-hospital system could have the hospitals' volumes and market shares calculated as one entity. For a multi-hospital system, the discount started at 15% for a market share meeting the threshold, and increased to 30%.

Although this discount structure motivated GPOs to purchase more Lovenox, they were not contractually obligated to do so. The consequence of not obtaining 75% market share was that a customer would receive only the 1% discount. If a customer chose to terminate the contract, it was required to give thirty days' notice and could still purchase Lovenox “off contract” at the wholesale price.

(2) The Program also included a formulary access clause that limited a hospital's ability to give certain drugs priority status on its formulary. Generally, a hospital maintains a formulary, a list of medications approved for use in the hospital based on factors such as a drug's cost, safety, and efficacy. The formulary access clause in the Lovenox

contract required customers to provide Lovenox with unrestricted formulary access for all FDA-approved Lovenox indications so that the availability of Lovenox was not more restricted or limited than the availability of Fragmin, Innohep, or Arixtra. Hospitals were also forbidden by the contract to adopt any restrictions or limitations on marketing or promotional programs for Lovenox. In essence, the contract did not prohibit members from putting other anticoagulant drugs on their formularies, but did prohibit them from favoring those drugs over Lovenox. Noncompliance with the contract did not limit a customer's access to Lovenox; it merely caused a customer's discount to drop to the 1% base level.

(3) According to Eisai, Sanofi further engaged in a long-term campaign to discredit Fragmin

by spreading “fear, uncertainty and doubt” about its safety and efficacy. Eisai asserts that the so-called “FUD” campaign consisted of the following conduct: Sanofi paid doctors to publish articles attacking Fragmin

on false grounds, without properly disclosing such payments, and distributed those articles broadly; Sanofi paid doctors to present educational programs regarding the medical and legal risks of switching from Lovenox, casting doubt on Fragmin's effectiveness and promoting a belief that Fragmin use would expose hospitals to malpractice liability; Sanofi's representatives claimed that Lovenox was superior to other drugs, in violation of FDA regulations; and Sanofi promoted Lovenox for non-indicated cancer-related uses, also in violation of FDA regulations.

C.

Eisai commenced this action on August 18, 2008, in the U.S. District Court for the District of New Jersey, asserting (1) willful and unlawful monopolization and attempted monopolization in violation of Section 2 of the Sherman Act;³ (2) de facto exclusive dealing in violation of Section 3 of the Clayton Act;⁴ (3) an unreasonable restraint of trade in violation of Section 1 of the Sherman Act;⁵ and (4) violations of the New Jersey Antitrust Act.⁶ Sanofi moved to dismiss the complaint for failure to state a claim and for being untimely under the applicable statute of limitations. After a hearing, the District Court denied the motion and referred the case to a magistrate judge for further proceedings.

The parties then engaged in extensive discovery. On one particularly contentious discovery issue, Eisai moved to compel discovery of deposition transcripts from a 2003 antitrust lawsuit brought by Organon Sanofi–Synthelabo (OSS) against Aventis Pharmaceuticals (Sanofi's predecessor) relating to a contractual offer similar to the terms of the Lovenox Program. On February 27, 2012, the Magistrate Judge denied Eisai's motion on the basis that the 2003 transcripts were irrelevant to the current action and unlikely to lead to the discovery of admissible evidence, and because the burden or expense of the discovery outweighed its likely benefit. The District Court affirmed the order.

Both parties subsequently moved for summary judgment. Eisai relied largely on an expert report by Professor Einer Elhauge, who determined that customers occupying a certain spectrum of market share would not save money by partially switching to a rival drug, even if the rival drug was cheaper than...