In re Generic Pharm. Pricing Antitrust Litig.

Decision Date16 October 2018
Docket NumberMDL 2724,16-DV-27240, 16-DV-27241, 16-DV-27242, 16-DV-27243,16-DG-27240, 16-DG-27241, 16-DG-27242, 16-DG-27243,16-PV-27240, 16-PV-27241, 16-PV-27242, 16-PV-27243,16-EC-27240, 16-EC-27241, 16-EC-27242, 16-EC-27243,16-DX-27240, 16-DV-27241, 16-DX-27242, 16-DX-27243,16-MD-2724,16-CB-27240, 16-CB-27241, 16-CB-27242, 16-CB-27243
Citation338 F.Supp.3d 404
Parties IN RE: GENERIC PHARMACEUTICALS PRICING ANTITRUST LITIGATION This Document Relates To: In re: Clobetasol Cases All Direct Purchaser, End-Payer, and Indirect Reseller Actions In re: Digoxin Cases All Direct Purchaser, End-Payer, and Indirect Reseller Actions In re: Divalproex ER Cases All Direct Purchaser, End-Payer, and Indirect Reseller Actions In re: Doxycycline Cases All Direct Purchaser, End-Payer, and Indirect Reseller Actions In re: Econazole Cases All Direct Purchaser, End-Payer, and Indirect Reseller Actions In re: Pravastatin Cases All Direct Purchaser, End-Payer, and Indirect Reseller Actions
CourtU.S. District Court — Eastern District of Pennsylvania
OPINION

Rufe, District Judge.

This multidistrict antitrust litigation alleges that certain pharmaceutical companies engaged in an unlawful scheme or schemes to fix, maintain and stabilize prices, rig bids, and engage in market and customer allocations of certain generic pharmaceutical products. In this Opinion, the Court considers Defendants'1 joint and individual motions to dismiss the Sherman Act claims2 in the operative consolidated class action complaints brought on behalf of the Direct Purchaser Plaintiffs ("DPPs"), the End-Payer Plaintiffs ("EPPs"), and the Indirect-Reseller Plaintiffs ("IRPs") (hereinafter collectively referred to as the "Class Plaintiffs"3 ) with respect to the following drugs: (1) clobetasol4

; (2) digoxin5 ; (3) divalproex ER6 ; (4) doxycycline7

; (5) econazole8 ; and (6) pravastatin9 (collectively, the "Group 1" drugs). The Court's Opinion also considers pending motions to dismiss by certain individual Defendants. For the reasons set forth below, the motions will be granted in part and denied in part.

I. BACKGROUND

Defendants are alleged to have engaged in conduct that "subvert[ed] the operation of a competitive marketplace for generic pharmaceuticals."10 Class Plaintiffs contend Defendants engaged in anticompetitive conduct that was part of a larger conspiracy or series of conspiracies involving many generic pharmaceutical manufacturers and many generic pharmaceuticals.11 Group 1 DPPs specifically allege Defendants "and co-conspirators engaged in an overarching anticompetitive scheme in the market for [each Group 1 drug] to artificially inflate prices through unlawful agreements."12 In support of their claims, Group 1 DPPs' complaints include allegations "based on information made public during ongoing government investigations of Defendants and other generic pharmaceutical companies for alleged unlawful price-fixing and other conduct in the generic pharmaceutical industry"13 and Group 1 EPPs and IRPs contend these investigations "have uncovered the existence of a broad, well-coordinated and long-running series of schemes to fix the prices and allocate markets for a number of generic pharmaceuticals in the United States."14

A. PUTATIVE CLASS ACTION COMPLAINTS

On August 5, 2016, the United States Judicial Panel on Multidistrict Litigation ("JPML") transferred "for coordinated or pretrial proceedings" putative class "actions shar[ing] factual questions arising from allegations that defendants, all of which are manufacturers of generic pharmaceuticals, conspired to fix the prices of" digoxin and doxycycline.15 The JPML then expanded the scope of the MDL on April 6, 2017,

to include actions in which: (a) plaintiffs assert claims for price fixing of generic drugs in violation of the Sherman Act and/or state antitrust laws on behalf of overlapping putative nationwide classes of direct or indirect purchasers of generic pharmaceuticals; (b) the average market price of the subject generic pharmaceutical is alleged to have increased between 2012 and the present; (c) defendants are alleged to have effectuated the alleged conspiracy through direct company-to-company contacts and through joint activities undertaken through trade associations, in particular meetings of the Generic Pharmaceutical Association; and (d) the allegations stem from the same government investigation into anticompetitive conduct in the generic pharmaceuticals industry.16

In expanding the MDL's scope to include additional putative class actions, the JPML reasoned that "[a]lthough separate conspiracies are alleged, they may overlap significantly," noting that the allegations in all the initial cases in the MDL and in the additional actions "stem from the same government investigation into price fixing, market allocation, and other anticompetitive conduct in the generic pharmaceuticals industry."17 The JPML explained that, as in the digoxin and doxycycline actions, Plaintiffs in the additional putative class action cases

allege[d] that, between 2012 and 2015, the average market price for these generic drugs underwent significant increases that corresponded with meetings of trade associations, in particular those of the Generic Pharmaceutical Association. Indeed, many of the complaints identify the same trade association meetings and name overlapping generic pharmaceutical manufacturers as defendants.18

Despite these overlaps, for the drugs relevant to this Opinion the DPPs, EPPs, and IRPs are currently proceeding with claims set forth in multiple separate complaints, each of which is focused on an alleged conspiracy regarding one generic drug (although each complaint addresses claims pertaining to multiple strengths and/or formulations of the same drug).19

As noted, this Opinion addresses the six Group 1 drugs.20

B. THE BROADER MDL

The putative class actions are not the only cases in this MDL. On August 3, 2017, the JPML transferred into this MDL an antitrust enforcement action first filed by 40 states—the State Plaintiffs21 —against six pharmaceutical manufacturers relating to Doxy DR and glyburide.22 "[T]he States do not assert class claims, but rather proceed individually or on a parens patriae basis."23 In transferring the State Plaintiffs' action, the JPML explained that

the States: assert claims for price fixing of generic drugs (specifically, doxycycline hyclate delayed release and glyburide) in violation of the Sherman Act and state antitrust laws; allege that the average market price of these pharmaceutical products increased between 2012 and the present; and allege that defendants effectuated the alleged conspiracy through direct company-to-company contacts and through joint activities undertaken through trade associations.
The States' claims, like those of the private plaintiffs, stem from the same government investigation into anticompetitive conduct in the generic pharmaceuticals industry.24

Now, the State Plaintiffs are proceeding on a single consolidated amended complaint that raises claims pertaining to an alleged overarching conspiracy that was effectuated by a series of interrelated conspiracies across a broader market for a number of generic drugs.25 Their single operative complaint specifically implicates fifteen generic drugs: acetazolamide

, Doxy DR, Doxy Mono, fosinopril-hydrochlorothiazide, glipizide-metformin, glyburide, glyburide-metformin, leflunomide, meprobamate, nimodipine, nystatin, paromomycin, theophylline, verapamil, and zoledronic acid.26 Of these, only Doxy DR and glyburide (a Group 3 drug) are also implicated in the Class Plaintiffs' individual actions.

Also part of this MDL is a direct action complaint that was filed in this Court on January 22, 2018, on behalf of three companies that own and operate retail grocery stores and pharmacies: The Kroger Co.; Albertsons Companies, LLC; and H.E. Butt Grocery Company L.P. ("Direct Action Plaintiffs"). Direct Action Plaintiffs allege an overarching antitrust conspiracy related to thirty drugs (both the drugs named by Class Plaintiffs and the drugs identified in the State Plaintiffs' consolidated amended complaint).27 Humana, Inc., an insurance company, filed a separate direct action complaint related to this MDL on August 3, 2018, alleging a "a broad, overarching conspiracy to inflate the prices of ... generic drug portfolios en masse."28 Additionally, on September 25, 2018, Marion Diagnostic Center, LLC and Marion Healthcare LLC filed a putative class action complaint alleging "an overarching generic conspiracy," with allegations that drug manufacturer Defendants "have enlisted tacitly or explicitly distributor McKesson as a cooperating co-conspirator (and possibly other unnamed distributors) to aid and conceal their price fixing and market allocation across the generic drug industry."29

C. CLASS PLAINTIFFS NAMED IN THE GROUP 1 COMPLAINTS

Three types of Class Plaintiffs have emerged from the generic pharmaceutical supply chain to assert claims on behalf of overlapping putative nationwide classes of purchasers of the generic drugs included in this litigation.

As their group name implies, the Direct Purchaser Plaintiffs – DPPs – allege they directly purchased generic pharmaceuticals from Defendants. They include drug purchasing cooperatives and retail pharmacy operators. The Group 1 DPPs, who each assert claims with respect to all of the Group 1 drugs, are identified in the following table:

GROUP 1 CASES                      Clobetasol     Digoxin     Divalproex     Doxycycline     Econazole     Pravastatin
                Direct Purchaser Plaintiffs:                                                       ER
                Ahold USA, Inc.                         x            x             x               x              x              x
                César Castillo, Inc.                    x            x             x               x              x              x
                FWK Holdings, L.L.C.                    x            x             x               x              x              x
                KPH Healthcare Services, Inc.,
...

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    • U.S. District Court — Eastern District of Pennsylvania
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1 books & journal articles
  • Section 1 of the Sherman Act and the Per Se Rule
    • United States
    • ABA Antitrust Library International Antitrust Cartel Handbook
    • December 6, 2019
    ...40. See , e.g. , In re Generic Pharm. Pricing Antitrust Litig., 338 F. Supp. 3d 404, 442 (E.D. Pa. 2018) (“[T]he Third Circuit has found that a showing of parallel pricing requires only evidence that defendants ‘acted similarly,’ and not evidence that they charged the same prices or engaged......

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