Am. Sales Co. v. AstraZeneca LP (In re Nexium (Esomeprazole) Antitrust Litig.), Nos. 15-2005

• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)
• Writing for the Court: LYNCH, Circuit Judge.
• Citation: 842 F.3d 34
• Parties: In re: Nexium (Esomeprazole) Antitrust Litigation American Sales Company, LLC, on behalf of itself and all others similarly situated; Value Drug Company; Burlington Drug Company Inc. ; Rochester Drug Co–Operative, Inc., on behalf of itself and others similarly situated; Meijer, Inc.; Meijer Distribution, Inc. ; Allied Services Division Welfare Fund; Laborers International Union of North America Local 17 Health Care Fund; Laborers International Union of North America Local 35 Health Care Fund; A.F. of L.–A.G.C. Building Trades Welfare Plan; Fraternal Order of Police Miami Lodge 20 Insurance Trust Fund; New York Hotel Trades Council and Hotel Assoc. of New York City, Inc. Health Benefits Fund; United Food & Commercial Workers Unions and Employers Midwest Health Benefits Fund ; Michigan Regional Council of Carpenters Employee Benefits Fund ; International Union of Machinists and Aerospace Workers District No. 15 Health Fund ; International Brotherhood of Electrical Workers Local 595 Health and Welfare Fund; Walgreen Co.; The Kroger Company; Safeway Incorporated; Supervalu, Inc.; Heb Grocery Co. LP; Giant Eagle, Inc.; Rite Aid Corporation; Rite Aid Headquarters Corporation ; JCG (PJC) USA, LLC ; Maxi Drug, Inc., d/b/a Brooks Pharmacy; Eckerd Corporation; CVS, Inc., Plaintiffs, Appellants, v. AstraZeneca LP; AstraZeneca AB; Aktiebolaget Hassle ; Ranbaxy Pharmaceuticals Inc.; Ranbaxy Inc.; Ranbaxy Laboratories Ltd., Defendants, Appellees.
• Docket Number: 15-2006,Nos. 15-2005,15-2007
• Decision Date: 21 November 2016

842 F.3d 34

In re: Nexium (Esomeprazole) Antitrust Litigation

American Sales Company, LLC, on behalf of itself and all others similarly situated; Value Drug Company; Burlington Drug Company Inc. ; Rochester Drug Co–Operative, Inc., on behalf of itself and others similarly situated; Meijer, Inc.; Meijer Distribution, Inc. ; Allied Services Division Welfare Fund; Laborers International Union of North America Local 17 Health Care Fund; Laborers International Union of North America Local 35 Health Care Fund; A.F. of L.–A.G.C. Building Trades Welfare Plan; Fraternal Order of Police Miami Lodge 20 Insurance Trust Fund; New York Hotel Trades Council and Hotel Assoc. of New York City, Inc. Health Benefits Fund; United Food & Commercial Workers Unions and Employers Midwest Health Benefits Fund ; Michigan Regional Council of Carpenters Employee Benefits Fund ; International Union of Machinists and Aerospace Workers District No. 15 Health Fund ; International Brotherhood of Electrical Workers Local 595 Health and Welfare Fund; Walgreen Co.; The Kroger Company; Safeway Incorporated; Supervalu, Inc.; Heb Grocery Co. LP; Giant Eagle, Inc.; Rite Aid Corporation; Rite Aid Headquarters Corporation ; JCG (PJC) USA, LLC ; Maxi Drug, Inc., d/b/a Brooks Pharmacy; Eckerd Corporation; CVS, Inc., Plaintiffs, Appellants,
v.
AstraZeneca LP; AstraZeneca AB; Aktiebolaget Hassle ; Ranbaxy Pharmaceuticals Inc.; Ranbaxy Inc.; Ranbaxy Laboratories Ltd., Defendants, Appellees.

Nos. 15-2005
15-2006
15-2007

United States Court of Appeals, First Circuit.

November 21, 2016
Rehearing En Banc Denied January 10, 2017

Thomas M. Sobol , with whom David S. Nalven, , Cambridge, MA, Kristen A. Johnson , James J. Nicklaus , Kristie A. LaSalle , Hagens Berman Sobol Shapiro LLP , Bruce E. Gerstein , Joseph Opper , Elena K. Chan , Ephraim R. Gerstein , Garwin Gerstein & Fisher, LLP , David F. Sorensen , Ellen Noteware , Daniel C. Simons , Caitlin G. Coslett , Berger & Montague, P.C. , Philadelphia, PA, Linda P. Nussbaum , Nussbaum Law Group, P.C. , New York, NY, Steve D. Shadowen , Hilliard & Shadowen LLP , Austin, TX, Kenneth A. Wexler , Bethany R. Turke , Justin N. Boley , Wexler Wallace LLP , Chicago, IL, J. Douglas Richards , Sharon K. Robertson , Donna M. Evans , Cohen Milstein Sellers & Toll, PLLC , New York, NY, Jayne A. Goldstein , Pomerantz LLP , Matthew Wessler , and Gupta Wessler PLLC were on brief, for direct purchaser and end-payor class appellants.

Barry L. Refsin , Philadelphia, PA, Monica L. Rebuck , Harrisburg, PA, Maureen S. Lawrence , Philadelphia, PA, Hangley Aronchick Segal Pudlin & Schiller , Bernard D. Marcus , Moira Cain–Mannix , Pittsburgh, PA, Marcus & Shapira LLP , Richard A. Arnold , Scott E. Perwin , Lauren C. Ravkind , Anna T. Neill , and Kenny Nachwalter, P.A. , Miami, FL, on brief for individual retailer appellants.

Kannon K. Shanmugam , with whom Dane H. Butswinkas , Paul B. Gaffney , John E. Schmidtlein , and Williams & Connolly LLP , Washington, DC, were on brief, for appellees AstraZeneca LP, AstraZeneca AB, and Aktiebolaget Hassle.

Jay P. Lefkowitz, P.C. , with whom Steven J. Menashi , Amanda Elbogen , New York, NY, Jonathan D. Janow , Kirkland & Ellis LLP , James Douglas Baldridge , Lisa Jose Fales , Danielle R. Foley , Vincent E. Verrocchio , and Venable LLP , Washington,

842 F.3d 39

DC, were on brief, for appellees Ranbaxy Inc., Ranbaxy Pharmaceuticals Inc., and Ranbaxy Laboratories Ltd.

Mark S. Hegedus , Attorney, Office of the General Counsel, Federal Trade Commission, Deborah L. Feinstein , Director, Markus H. Meier , Acting Deputy Director, Bradley S. Albert , Deputy Assistant Director, Elizabeth R. Hilder , Attorney, Bureau of Competition, Daniel W. Butrymowicz , Attorney, Bureau of Competition, Jonathan E. Nuechterlein , General Counsel, and Joel Marcus , Director of Litigation, on brief for Federal Trade Commission, amicus curiae.

Before Lynch, Stahl, and Thompson, Circuit Judges.

LYNCH, Circuit Judge.

This appeal arises from the first pharmaceutical-settlement antitrust action tried before a jury since the Supreme Court's decision in FTC v. Actavis, Inc., ––– U.S. ––––, 133 S.Ct. 2223, 186 L.Ed.2d 343 (2013). The jury found that although the plaintiffs had proved an antitrust violation in the form of a large and unjustified reverse payment from AstraZeneca to Ranbaxy, the plaintiffs had not shown that they had suffered an antitrust injury that entitled them to damages.

Defendant AstraZeneca is a brand-name drug manufacturer that owns the patents covering Nexium, a prescription heartburn medication that has grossed billions of dollars in annual sales. After defendant Ranbaxy notified the Food and Drug Administration ("FDA") that it sought to market a generic version of Nexium, AstraZeneca sued Ranbaxy for patent infringement. The two companies reached a settlement agreement, under which Ranbaxy agreed to delay the launch of its generic until a certain date in return for various promises from AstraZeneca. AstraZeneca similarly sued and subsequently settled two patent infringement suits with generic manufacturers Teva and Dr. Reddy's, who were (but no longer remain) defendants in this case. The plaintiffs—various pharmaceutical retail outlets and certified classes of direct purchasers and end payors—brought suit, arguing that the terms of these settlement agreements violated federal antitrust laws and state analogues.

After summary judgment proceedings that winnowed down the number of causal mechanisms through which the plaintiffs could attempt to prove antitrust violation and injury, the case proceeded to a jury, which found as we have described. Following the verdict, the district court denied the plaintiffs' motions for a permanent injunction and for a new trial.

The plaintiffs appeal, raising four categories of claims. First, they challenge various evidentiary rulings. Second, they argue that the district court erroneously granted judgment as a matter of law in the defendants' favor on the issue of overarching conspiracy. Third, they argue that the special verdict form and jury instructions contained reversible error. The final argument, which lies at the heart of this appeal, is that the district court, at summary judgment, impermissibly cut down the number of causal mechanisms through which the plaintiffs could make their case to the jury. SeeIn re Nexium (Esomeprazole) Antitrust Litig.("In re Nexium [Summary Judgment]"), 42 F.Supp.3d 231 (D. Mass. 2014). This error at summary judgment pervaded the entire trial, the plaintiffs argue, and constitutes grounds to vacate the jury verdict and award a new trial.

We find no reversible error in the district court's evidentiary rulings, the formulation of the special verdict form and jury instructions, or its judgment as a matter of law on overarching conspiracy. In fact, many of the plaintiffs' objections have

842 F.3d 40

been forfeited or mooted by the jury's findings. We further hold that the jury verdict, finding an antitrust violation but not an antitrust injury, coupled with developments at trial on the issue of patent invalidity, renders harmless any error that may have occurred during the summary judgment proceedings. Accordingly, we need not, and indeed should not, review the summary judgment order for error. We affirm.

I. REGULATORY FRAMEWORK

An overview of the intricate pharmaceutical regulatory framework is necessary to understand the issues presented. A manufacturer that seeks to market a new brand-name drug must file a New Drug Application ("NDA") with the FDA and "undergo a long, comprehensive, and costly testing process." Actavis, 133 S.Ct. at 2228. Generic-drug manufacturers formerly underwent similarly rigorous processes to obtain FDA approval to market generic versions of the brand-name drug. In order to accelerate the entry of generic competitors into the market and decrease healthcare costs, Congress enacted the Drug Price Competition and Patent Term Restoration Act of 1984 ("Hatch–Waxman Act"), Pub. L. No. 98–417, 98 Stat. 1585. The Hatch–Waxman Act has three regulatory components that are relevant here.

First, the Act permits generic manufacturers to file the notably less costly Abbreviated New Drug Application ("ANDA"), "specifying that the generic has the ‘same active ingredients as,’ and is ‘biologically equivalent’ to, the already-approved brand-name drug." Actavis, 133 S.Ct. at 2228 (quoting Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, ––– U.S. ––––, 132 S.Ct. 1670, 1676, 182 L.Ed.2d 678 (2012) ). "[B]y allowing the generic to piggy-back on the pioneer's approval efforts, [the Hatch–Waxman Act] ‘speed[s] the introduction of low-cost generic drugs to market,’ thereby furthering drug competition." Id.(third alteration in original) (quoting Caraco, 132 S.Ct. at 1676 ).

Second, the Act requires brand-name manufacturers to list the numbers and expiration dates of all relevant patents in their NDAs, which are then published in the FDA's "Orange Book," an annual publication of all approved drugs and the reported patents or statutory exclusivities that cover those drugs. In turn, generic manufacturers filing ANDAs must " ‘assure the FDA’ that the generic ‘will not infringe’ the brand-name's patents," and may provide this assurance in one of four ways. Id.(quoting Caraco, 132 S.Ct. at 1676 ). The generic manufacturer may (1) certify that...