In re Cardizem Cd Antitrust Litigation

• Decision Date: 11 May 2000
• Docket Number: No. 99-md-1278.,99-md-1278.
• Citation: In re Cardizem Cd Antitrust Litigation, 105 F.Supp.2d 618 (E.D. Mich. 2000)
• Parties: In re CARDIZEM CD ANTITRUST LITIGATION. This Document Relates to All Actions.
• Court: U.S. District Court — Eastern District of Michigan

105 F.Supp.2d 618

In re CARDIZEM CD ANTITRUST LITIGATIONThis Document Relates to All Actions.

No. 99-md-1278.

United States District Court, E.D.Michigan, Southern Division.

May 11, 2000.

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Patrick E. Cafferty, Miller Faucher and Cafferty LLP, Ann Abor, MI, for PlaintiffsCharles Zuccarini, Albert Eirich and Jan Gabriel.

Bruce E. Gerstein, Garwin, Bronzaft, New York City, for Louisiana Wholesale Drug Co., Sixteenth Street Community.

Stephen Lowery, Lowery, Dannenberg, White Plains, NY, for Betnor, Inc.

Elwood S. Simon, Elwood, S. Simon Assoc., Birmingham, MI, for Albert Eirich.

Joseph J. Tabacco, Berman, DeValerio, San Francisco, CA, for Aetna, U.S. Healthcare of California.

Richard B. Drubel, Boies & Schiller, Hanover, NH, for Duane Reade, Inc.

Joseph J. Tabacco, Berman, DeValerio, San Francisco, CA, Elwood S. Simon, Michael G. Wassmann, Lance C. Young, Elwood, S. Simon Assoc., Birmingham, MI, Stephen Lowery, Lowery, Dannenberg, White Plains, NY, for State Law Plaintiffs.

Joe Rebein, Shook, Hardy, Kansas City, MO, for Hoechst AG, Hoechst Akeingesellschaft.

Norman C. Ankers, Honigman, Miller, Detroit, MI, Colin A. Underwood, Louis M. Solomon, Hal S. Shaftel, Michael S. Lazaroff, Solomon, Zauderer, New York City, for Andrx Pharmaceuticals, Inc.

Louis M. Solomon, Hal S. Shaftel, Michael S. Lazaroff, Solomon, Zauderer, New York City, for Andrx Corp.

Michael D. Hausfeld, Cohen, Milstein, Washington, DC, for Eugenia Wynne Sams.

Andrew J. McGuinness, Dykema Gossett, Ann Arbor, MI, Craig L. John, Kimberly A. Bickersteth, Dykema Gossett, Bloomfield Hills, MI, for Aventis Pharmaceuticals, Inc.

Elwood S. Simon, Elwood, S. Simon Assoc., Birmingham, MI, Stephen Lowery, Richard W. Cohen, Lowery, Dannenberg, White Plains, NY, Angela K. Green, Niewald, Waldeck, Kansas City, MO, for Philip Neal.

ORDERNO. 12

MEMORANDUM OPINION AND ORDER DENYING DEFENDANTS' MOTIONS TO DISMISS

EDMUNDS, District Judge.

DefendantHoechst Marion Roussel, Inc.("HMRI"), a wholly owned subsidiary of Defendant Hoechst Aktiengesellschaft ("Hoechst AG"), is the manufacturer of the brand name prescription heart drug Cardizem CD which consists of a once-daily dosage of the chemical compound diltiazem hydrochloride.Cardizem CD is widely prescribed for the treatment of chronic chest pains (angina), high blood pressure (hypertension), and for the prevention of heart attacks and strokes.Until June 23, 1999, when DefendantAndrx Pharmaceuticals Inc.("Andrx") began to sell Cartia XT, the first generic bioequivalent to Cardizem CD, Defendant HMRI had a monopoly in the $700-million-plus annual United States market for Cardizem CD and its generic bioequivalents.

These cases involve claims that the Defendants violated section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1, and various state antitrust and unfair competition statutes.Plaintiffs allege the following contract, combination or conspiracy in restraint of trade: Defendant Andrx developed a generic drug which is the bioequivalent to the Hoechst Defendants' prescription drug Cardizem CD.Andrx's generic drug was approved by the FDA for sale and could have entered the U.S. market on or about July 9, 1998.Andrx, however, did not enter the market at that time because it had agreed with its horizontal competitor, HMRI, that it would delay the entry of its generic version of Cardizem CD in exchange for, inter alia, non-refundable payments of $40 million per year from HMRI.Plaintiffs allege that this agreement is embodied in a September 24, 1997 document executed by Defendants HMRI and Andrx (the "HMRI/Andrx Agreement").

The HMRI/Andrx Agreement was executed eight days after the FDA preliminarily approved Defendant Andrx's generic drug as the first AB-rated generic bioequivalent for Cardizem CD.It is alleged that, under the terms of the Agreement, Defendant Andrx agreed not to market its generic drug when it received FDA approval and not to transfer, assign, or relinquish its right to a 180-day exclusivity period that Andrx would enjoy once it finally did begin to market its generic version of Cardizem CD, and Defendant HMRI paid Andrx $89.83 million, beginning on the date the Andrx product received FDA approval.Thus, it is alleged that the HMRI/Andrx Agreement not only protected HMRI from competition from Andrx, but it also protected HMRI from competition from other generic competitors because Andrx agreed not to give up its FDA firstfiler status, thus blocking and delaying other drug manufacturers from introducing generic versions of Cardizem CD in the United States market; i.e., Andrx's delayed entry would postpone the start of its 180-day exclusivity period, and Andrx's agreement not to give up or transfer its right to that 180-day period of exclusivity would preclude other generic competitors from entering the market until that 180-day exclusivity period expired.

After these actions were first filed in August 1998, Defendants' HMRI/Andrx Agreement was widely publicized in the media, was condemned by public officials and health care payors injured by Defendants' acts, and was investigated by the FTC.¹As a result, Plaintiffs' allege that, in June 1999, HMRI and Andrx terminated their Agreement, settled their patent infringement action, and Andrx began to market Cartia XT, its generic version of Cardizem CD.

In addition to the above, it is also alleged that Defendants have engaged in a continuing pattern of unlawful anticompetitive conduct to delay the introduction of generic bioequivalent versions of Cardizem CD in the United States.The targets have included, at varying times, co-Defendant Andrx, and Hoechst AG's former joint venture partner, Biovail International Corporation("Biovail").The alleged pattern includes the Hoechst Defendants' filing and continued prosecution of a baseless patent infringement action, breached agreements with Biovail, false misrepresentations made to the United States Food & Drug Administration ("FDA"), and manipulation of a Consent Decree with the United States Federal Trade Commission("FTC") which was designed to prevent the anticompetitive trade practices which are the subject of Plaintiffs' suits.

This matter is now before the Court on numerous motions brought by Defendants requesting dismissal of Plaintiffs' complaints in this multidistrict antitrust litigation pursuant to Rules 12(b)(2) and (12)(b)(6) of the Federal Rules of Civil Procedure.At issue are: (1)State Law Plaintiffs' Coordinated First Amended Class Action Complaints alleging that Defendants HMRI, Hoechst AG, and Andrx committed a per se violation of various state antitrust laws and were unjustly enriched in violation of various states' common laws; (2)Sherman Act Class Plaintiffs' Consolidated Amended Class Action Complaint alleging a section 1, Sherman Act violation against Defendants HMRI and Andrx under either a per se or rule of reason analysis of the reasonableness of the Defendants' alleged restraint of competition; (3) Individual Sherman ActPlaintiffs' Amended Complaint brought by the Kroger Co., Albertson's, Inc., the Stop & Shop Supermarket Co., Eckerd Corporation, Walgreen Co. and Hy-Vee, Inc. against Defendants HMRI and Andrx alleging a per se violation of section 1 of the Sherman Act; and (4) Individual Sherman ActPlaintiffs' Complaint brought by PlaintiffsCVS Meridian, Inc. and Rite Aid Corporation against Defendants HMRI and Andrx alleging a violation of section 1 of the Sherman Act under either a per se or rule of reason analysis.

For the reasons stated below, this CourtDENIES:(1)DefendantHoechst AG's motion to dismiss the Minnesota action(Aetna U.S. Healthcare, No. 99-73329) for lack of personal jurisdiction and failure to state a claim; (2)DefendantHoechst AG's motion to dismiss the Tennessee action(Larry S. Sizemore, No. 99-73345) for lack of personal jurisdiction and failure to state a claim; (3)Defendant HMRI's motion to dismiss the Sherman Act Class Plaintiffs' Amended Complaint (Louisiana Wholesale, No. 99-73259, andDuane Reade, No. 99-73870); (4)Defendant HMRI's motion to dismiss Sherman Act Individual Plaintiffs' Amended Complaint(Kroger, et al., No. 99-73735); (5)Defendant HMRI's motion to dismiss Sherman Act Individual Plaintiffs' Complaint(CVS Meridian and Rite Aid Corp., No. 99-75036); (6)Defendant HMRI's motion to dismiss State Law Plaintiffs' Coordinated First Amended Complaints (Nos. 99-75070, 99-73422, 99-73412, 99-73871, 99-74262, 99-73667, 98-74043, 99-73239, 99-73845, 99-73713, 99-74377, 99-73190, 99-73345, 99-73981, and99-73666); (7)Defendant Andrx's motion to dismiss the Coordinated "Indirect Purchaser" Complaints (Nos. 98-74043, 99-75070, 99-73422, 99-73412, 99-73871, 99-74262, 99-73239, 99-73667, 99-73845, 99-73713, 99-74377, 99-73190, 99-73345, 99-73981, and99-73666); and (8)Defendant Andrx's motion to dismiss the Consolidated "Direct Purchaser" Complaint and the two additional "Direct Purchaser" Complaints (Nos. 99-73870, 99-73259, 99-73735, and99-75036).

I.Facts

A.The Parties

1.Defendants

a. Hoechst Defendants

On or about June 25, 1995, DefendantHoechst AG bought Marion Merrell Dow, Inc.("Dow"), a major pharmaceutical company.Dow's best-selling prescription drug product was Cardizem CD.After the acquisition, Dow's name was changed to HMRI.²HMRI is responsible for developing, distributing, advertising and selling Cardizem CD throughout the United States.

HMRI is an indirectly wholly owned subsidiary of Hoechst AG, a German company, whose stock is publicly traded on the Frankfurt Stock Exchange and until November 26, 1999 was traded on the New York Stock Exchange.Hoechst AG is a 96% owned, direct subsidiary of Aventis, a French corporation, which prior to December 15, 1999, was named Rhone-Poulenc, S.A. Aventis stock is publicly traded on the Frankfurt Stock Exchange, the Paris Bourse, and the New York Stock...