IN RE FLONASE ANTITRUST LITIGATION

• Decision Date: 21 January 2010
• Docket Number: Civil Action No. 08-CV-3301.
• Citation: 692 F. Supp.2d 524
• Parties: In re FLONASE ANTITRUST LITIGATION. This Document Relates to: Indirect Purchaser Actions.
• Court: U.S. District Court — Eastern District of Pennsylvania

692 F. Supp.2d 524

In re FLONASE ANTITRUST LITIGATION This Document Relates to: Indirect Purchaser Actions.

Civil Action No. 08-CV-3301.

United States District Court, E.D. Pennsylvania.

January 21, 2010.

Anthony J. Bolognese, Joshua H. Grabar, Bolognese & Associates, LLC, Philadelphia, PA, Christopher E. Coleman, Lieff Cabraser Heimann & Bernstein LLP, Nashville, TN, Eric B. Fastiff, Jordan Elias, Joseph R. Saveri, Lieff Cabraser Heiman & Bernstein, LLP, San Francisco, CA, J. Cecil Gardner, The Gardner Firm, Mobile, AL, Jennifer Fountain Connolly, Wexler Wallace LLP, Marvin A. Miller, Matthew E. Vantine, Miller Law LLC, Chicago, IL, Michael M. Buchman, Pomerantz Haudek Block Grossman & Gross LLP, New York, NY, Joseph G. Sauder, Chimicles & Tikellis LLP, Haverford, PA, for Plaintiffs.

Edward D. Rogers, Leslie E. John, Stephen J. Kastenberg, Arthur Makadon, Jason A. Leckerman, Jessica Moltisanti Anthony, Job Michael Itzkowitz, Susanna R. Greenberg, Ballard, Spahr, Andrews and Ingersoll, Philadelphia, PA, for Defendant.

MEMORANDUM

ANITA B. BRODY, District Judge.

I. INTRODUCTION

On May 21, 2009, Plaintiffs A.F. of L.A.G.C. Building Trades Welfare Plan ("AFL"), International Association of Bridge, Structural, Ornamental and Reinforcing Ironworkers Local No. 79 Health Fund ("IABORI"), IBEW-NECA Local 505 Health and Welfare Plan ("IBEW"), Painters District Council No. 30 Health & Welfare Fund ("Painters"), Sheet Metal Workers Local 441 Health and Welfare Plan ("Sheet Metal"), and Andrea Kehoe ("Kehoe"), collectively "Plaintiffs," filed a corrected second amended class action complaint ("SAC") against Defendant SmithKline Beecham Corporation, doing business as GlaxoSmithKline, Inc. ("GSK").

Plaintiffs are indirect purchasers of the prescription drug Flonase. They allege that GSK filed sham citizen petitions with the Food and Drug Administration ("FDA") to delay the entry of a generic version of Flonase (fluticasone propionate)¹ into the market. Plaintiffs bring claims against GSK under several states' laws: (1) Monopolization under the law of Arizona, Iowa, North Carolina, and Wisconsin; (2) Unfair and Deceptive Trade Practices under the law of Arizona, Florida, Illinois, Iowa, Massachusetts and North Carolina; and (3) Unjust Enrichment under the law of Arizona, Florida, Illinois, Iowa, Massachusetts, North Carolina, and Wisconsin. Plaintiffs maintain that they sustained injury when they "purchased and/or provided reimbursement for Flonase purchases" in the respective states. (Compl. ¶¶ 5-9.) On June 19, 2009, GSK filed a Motion to Dismiss the second amended complaint.

II. BACKGROUND²

Under the Federal Food, Drug and Cosmetic Act ("FDCA"), drug manufacturers must receive FDA approval before selling a new drug. The manufacturer of a new drug who obtains FDA approval enjoys a period of market exclusivity during which their patent is protected. Once this period expires, other ("generic") manufacturers may market and sell the drug. Before the generic version is approved for sale, a prospective manufacturer of a generic drug must file an Abbreviated New Drug Application ("ANDA") with the FDA. The manufacturer must demonstrate to the FDA that the generic version is the "bioequivalent" of the brand name drug; in other words, the generic version must contain the same active ingredient(s), dosage form, route of administration, and strength. Once a generic drug enters the market, the price and sales volume of the name-brand drug typically drop. While the approval of a generic version is pending, "citizen petitions" may be filed with the FDA to express legitimate concerns regarding a product and to request that the FDA take, or refrain from taking, administrative action. Because citizen petitions can delay a generic drug's approval, they are open to abuse by pharmaceutical companies attempting to prolong their monopoly in the market.³

Plaintiffs contend that in 2004, as the end of GSK's exclusivity period for Flonase approached, GSK filed four successive sham citizen petitions solely to delay the FDA's approval of generic versions of the drug, and with no reasonable basis for objecting to the approval. Plaintiffs allege that because of this unlawful behavior, their ability to purchase lower-priced generic versions of Flonase was delayed and they were denied the benefits of unrestrained competition.

III. JURISDICTION

Jurisdiction over this action is proper under the Class Action Fairness Act of 2005, which grants district courts original jurisdiction over "any civil action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interests and costs, and is a class action in which ... any member of a class of plaintiffs is a citizen of a State different from any defendant." 28 U.S.C. § 1332(d)(2); See Kaufman v. Allstate N.J. Ins. Co., 561 F.3d 144, 148 (3d Cir.2009).

IV. LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(b)(1), a court must grant a motion to dismiss if it lacks subject matter jurisdiction to hear a claim. "A motion to dismiss for want of standing is also properly brought pursuant to Rule 12(b)(1), because standing is a jurisdictional matter." Ballentine v. United States, 486 F.3d 806, 810 (3d Cir.2007). Pursuant to Rule 12(b)(1), "the Court must accept as true all material allegations set forth in the complaint, and must construe those facts in favor of the nonmoving party." Id. On a motion to dismiss for lack of standing, "the plaintiff bears the burden of establishing the elements of standing, and each element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation." Id. (internal quotations omitted). However, "general factual allegations of injury resulting from the defendant's conduct may suffice." Id. (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)).

Under Federal Rule of Civil Procedure 12(b)(6), a court must grant a motion to dismiss if the plaintiff fails "to state a claim upon which relief can be granted." In deciding a motion to dismiss pursuant to Rule 12(b)(6), the court must accept as true the well-pleaded allegations of the complaint and draw all reasonable inferences in the plaintiff's favor. Brown v. Card Serv. Ctr., 464 F.3d 450, 452 (3d Cir.2006). While a complaint "does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal quotations omitted). To survive a motion to dismiss, a complaint must contain "sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (internal quotations omitted).

V. DISCUSSION

A. Standing under 12(b)(1): The named plaintiffs have standing in states where they are located or where they purchased Flonase or reimbursed for purchases of Flonase

Article III of the Constitution requires that a plaintiff has standing to assert his or her claims. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). In a class action, "the initial inquiry ... is whether the lead plaintiff individually has standing." Winer Family Trust v. Queen, 503 F.3d 319, 326 (3d Cir.2007). See also O'Shea v. Littleton, 414 U.S. 488, 494, 94 S.Ct. 669, 38 L.Ed.2d 674 (1974). The issue before me is whether the named plaintiffs in the present action have standing in the states where they make their claims. I find that they do.⁴

At a minimum, constitutional standing requires three elements: (1) injury-in-fact, which is an invasion of a legally protected interest that is concrete and particularized, and actual or imminent; (2) causation; and (3) likelihood that the injury will be redressed by a favorable decision. Winer, 503 F.3d at 325; Lujan, 504 U.S. at 560-61, 112 S.Ct. 2130.

Plaintiffs' allegations meet the requirements of constitutional standing. They have experienced an injury—paying too much for Flonase—in states where they are located, in states where they purchased Flonase and in states where they reimbursed members for purchases of Flonase. Defendant allegedly caused this injury by wrongfully filing citizen petitions, and thereby unfairly extending its monopoly on the market by preventing the entry of generic versions of Flonase. The injury is likely to be redressed by a favorable court decision. Therefore, each named plaintiff has standing to bring a claim under the laws of the states where they are located, and where they purchased Flonase or reimbursed their members for Flonase purchases.

Case law supports the position that Plaintiffs suffered injury and have standing in states where they purchased a drug or reimbursed their members for purchases of a drug. See In re Wellbutrin XL Antitrust Litig., 260 F.R.D. 143, 156-57 (E.D.Pa.2009) (McLaughlin, J) (holding that indirect purchaser plaintiffs had standing to bring claims under the laws of states where their members resided, and stating that "reimbursement for the purchase of drugs ... constitutes a monetary injury to the plaintiffs" and "the plaintiffs' claims have clear connection to the states where the plaintiffs themselves are located and the states where their members made purchases."); Ferrell v. Wyeth-Ayerst Labs., Inc., No. C-1-01-447, 2004 U.S. Dist. LEXIS 15127, at *13 (S.D. Ohio, June 30, 2004) (holding that indirect purchaser funds had standing in states...