868 F.3d 132 (3rd Cir. 2017), 15-2875, In re Wellbutrin XL Antitrust Litigation

Docket Nº:15-2875, 15-3559, 15-3591, 15-3681, 15-3682
Citation:868 F.3d 132
Opinion Judge:JORDAN, Circuit Judge.
Party Name:IN RE: WELLBUTRIN XL ANTITRUST LITIGATION, Indirect Purchaser Class, Appellants in 15-2875, Aetna Health of California Inc.; IBEW-NECA Local 505 Health and Welfare Plan; Bricklayers and Masons Union Local Union No. 5 Ohio Health and Welfare Fund; Mechanical Contractors-United Association Local 119 Health and Welfare Plan; Painters District Council
Attorney:For Indirect Purchaser Class/End-Payor Class, Appellant: Kenneth A. Wexler, Justin N. Boley, Wexler Wallace LLP, Chicago, IL; Peter D. St. Phillip Jr. [ARGUED], Richard W. Cohen, Gerald Lawrence Jr., Uriel Rabinovitz, Melissa Cabrera, Lowey Dannenberg Cohen & Hart, P.C., White Plains, NY; Karen I...
Judge Panel:Before: JORDAN, VANASKIE, and NYGAARD, Circuit Judges.
Case Date:August 09, 2017
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit
 
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Page 132

868 F.3d 132 (3rd Cir. 2017)

IN RE: WELLBUTRIN XL ANTITRUST LITIGATION, Indirect Purchaser Class, Appellants in 15-2875, Aetna Health of California Inc.; IBEW-NECA Local 505 Health and Welfare Plan; Bricklayers and Masons Union Local Union No. 5 Ohio Health and Welfare Fund; Mechanical Contractors-United Association Local 119 Health and Welfare Plan; Painters District Council No. 30 Health and Welfare Fund; Plumbers and Pipefitters Local 572 Health and Welfare Fund; Aetna, Inc., Appellants in 15-3559, Professional Drug Company, Inc., individually and on behalf of the Direct Purchaser Class, Appellant in 15-3591, SmithKline Beecham Corporation d/b/a GlaxoSmithKline and GlaxoSmithKline plc, Appellants in 15-3681/3682

Nos. 15-2875, 15-3559, 15-3591, 15-3681, 15-3682

United States Court of Appeals, Third Circuit

August 9, 2017

Argued September 7, 2016.

On Appeal from the United States District Court for the Eastern District of Pennsylvania. (D.C. Nos. 2-08-cv-2431 and 2-08-cv-2433). District Judge: Hon. Mary A. McLaughlin.

For Indirect Purchaser Class/End-Payor Class, Appellant: Kenneth A. Wexler, Justin N. Boley, Wexler Wallace LLP, Chicago, IL; Peter D. St. Phillip, Jr. [ARGUED], Richard W. Cohen, Gerald Lawrence, Jr., Uriel Rabinovitz, Melissa Cabrera, Lowey Dannenberg Cohen & Hart, P.C., White Plains, NY; Karen Iannance, Kissel Hirsch & Wilmer, New York, NY; James G. Stranch, III, Joe P. Leniski, Branstetter, Stranch & Jennings, PLLC, Nashville, TN.

For Direct Purchaser Class, Appellant: David F. Sorensen [ARGUED], Andrew C. Curley, Caitlin G. Coslett, Nicholas Urban, Berger & Montague, P.C., Philadelphia, PA; Thomas M. Sobol [ARGUED], Gregory T. Arnold, David S. Nalven, Kristen A. Johnson, Kristie A. LaSalle, Hagens Berman Sobol Shapiro LLP, Cambridge, MA; John W. Barrett, Barrett Law Group, Lexington, MS; Peter Kohn, Faruqi & Faruqi, Jenkintown, PA; Dianne M. Nast, NastLaw, Philadelphia, PA.

For SmithKline Beecham Corp, dba GlaxoSmithKline; GlaxoSmithKline PLC, Appellee: Leslie E. John [ARGUED], Edward D. Rogers, Stephen J. Kastenberg [ARGUED], Jason A. Leckerman, Jessica M. Anthony, Marcel S. Pratt, Ballard Spahr, Philadelphia, PA; Taimarie N. Adams, Daniel J. Boland, Philadelphia, PA; Timothy K. Gilman, Kirkland & Ellis, New York, NY; Emily P. Hughes, Jason R. Parish, Kirkland & Ellis, Washington, DC; Simeon G. Papacostas, Kirkland & Ellis, Chicago, IL; Susanna R. Greenberg, University of Pennsylvania School of Law, Philadelphia, PA; Chong S. Park, Ropes & Gray, Washington, DC.

For National Association of Manufacturers Trade Commission, Amicus: Linda E. Kelly, Quentin Riegel, Leland P. Frost, Manufacturers' Center for Legal Action, Washington, DC; Brian H. Pandya, Wiley Rein, Washington, DC.

For Federal, Non Party Amicus: Deborah L. Feinstein, Markus H. Meier, Bradley S. Alberg, Daniel W. Butrymowicz, Elizabeth R. Hilder, Jamis R. Towey, David C. Shonka, Joel Marcus, Mark S. Hegedus, Federal Trade Commission, Washington, DC.

For Antitrust Economists, Amicus: Barbara W. Mather, Robin P. Sumner, Lindsay D. Breedlove, Pepper Hamilton, Eighteenth & Arch Streets, Philadelphia, PA.

For Generic Pharmaceutical Association, Amicus: Sarah K. Frederick, Goodwin Procter LLP, Boston, MA.

For Pharmaceutical Research and Manufacturers of America, Amicus: David W. Ogden, Wilmer Cutler Pickering Hale and Dorr LLP, Washington, DC; Mark A. Ford, Peter A. Spaeth, Daniel C. Wewers, Wilmer Cutler Pickering Hale and Dorr LLP, Boston, MA.

For Par Pharmaceutical Inc., and its predecessor in interest Anchen Pharmaceuticals: Daniel G. Brown, Latham & Watkins, New York, NY.

Before: JORDAN, VANASKIE, and NYGAARD, Circuit Judges.

OPINION

JORDAN, Circuit Judge.

Table of Contents

I. Background
A. The Hatch-Waxman Act
B. Factual and Procedural Background
II. Discussion
A. Sham Litigation
1. Applicable Law
2. The Anchen Lawsuit
3. The Abrika Lawsuit
4. The Impax and Watson Lawsuits and the Appellants' Conspiracy Theory
5. The FDA Citizen Petition
6. Serial Petitioning
B. Reverse Payment Settlement Agreement
1. Events Leading to the Settlement
2. The Settlement
3. The Appellants Cannot Prevail on Their Antitrust Claims
Pertaining to the Alleged Reverse Payment
a) The Agreements Are Not Immune from Antitrust Scrutiny; the
Rule of Reason Test Applies
b) The Appellants Do Not Have Antitrust Standing
(1) License-Based Scenario
(2) Litigation-Based Scenario
C. Class Certification, Daubert, and Intervention Issues
III. Conclusion
This appeal lies at the confluence of intellectual property and antitrust law. Following the Supreme Court's decision in FTC v. Actavis, Inc., 133 S.Ct. 2223, 186 L.Ed.2d 343 (2013), we are tasked with balancing a patent owner's right to exclude and the public's right to benefit from fair and open competition. The Appellants in this case are the direct and indirect purchasers of Wellbutrin XL, a drug designed to treat depression. (Consolidated Brief of Appellees/Cross-Appellants (" Ans. Br." ) 6, 19.) The direct-purchaser Appellants bring claims under federal antitrust law, alleging that the Appellee, GlaxoSmithKline (" GSK" ),1 violated Sections One and Two of the Sherman Antitrust Act by entering into an unlawful conspiracy with a company called Biovail,2 GSK's partner in the development of Wellbutrin XL, to delay the launch of generic versions of the drug. (Consolidated Brief of Direct Purchaser and End-Payor Class Plaintiffs-Appellants (" Op. Br." ) 2; JA 11465-68.) The indirect-purchaser Appellants assert similar theories, but under state, rather than federal law. They also allege that GSK's actions violated common law principles and state statutes mandating fair trade practices. According to the Appellants, GSK is liable under two theories. First, the Appellants claim that GSK delayed the launch of generic versions of Wellbutrin XL by supporting baseless patent infringement suits and a baseless FDA Citizen Petition aimed at generic drug companies. Second, they claim that GSK delayed the launch of those generic drugs by entering into an unlawful reverse payment settlement agreement with its potential competitors.3 The District Court granted summary judgment on the merits to GSK with respect to both of those theories. It concluded that there was insufficient evidence that GSK's patent litigation was a sham or that the settlement delayed the launch of generic versions of Wellbutrin XL. At the same time, the Court granted GSK's Daubert motion to exclude the testimony of the Appellants' economic expert. The Court also granted a motion to decertify the indirect-purchaser class for lack of ascertainability and dismissed the indirect-purchaser claims brought under the laws of any state that was not the home of a named class representative.4 Finally, the Court denied a motion filed by Aetna, Inc. to intervene on the side of the indirect purchasers.5 This appeal followed. Both the direct-purchaser and...

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