In re Lorazepam & Clorazepate Antitrust Litigation

• Decision Date: 20 December 2006
• Docket Number: No. MDL 1290.,MDL 1290.
• Court: U.S. District Court — District of Columbia
• Parties: In re LORAZEPAM & CLORAZPATE ANTITRUST LITIGATION This Opinion applies to: All Actions

467 F.Supp.2d 74

In re LORAZEPAM & CLORAZPATE ANTITRUST LITIGATION

This Opinion applies to: All Actions

No. MDL 1290.

United States District Court, District of Columbia.

December 20, 2006.

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MEMORANDUM OPINION

THOMAS F. HOGAN, Chief Judge.

Pending before the Court are several post-trial motions. Defendant Mylan Laboratories, Inc., Defendant Mylan Pharmaceuticals, Inc. (together, "Mylan"), Defendant Cambrex Corporation ("Cambrex"), and Defendant Gyma Laboratories of America, Inc. ("Gyma"), collectively ("Defendants"), filed the following post-trial motions: Defendants' Renewed Motion for Judgment as a Matter of Law Under Rule 50(b) [dkt. 883], Defendants' Motion for New Trial Under Rule 59(a) [dkt. 888], and Defendants' Motion for Remittur under Rule 59(e) [dkt. 890], among others. Upon careful review of the parties' motions, oppositions, replies thereto, and the entire record herein, the Court will deny the Defendants' Renewed Motion for Judgment as a Matter of Law and Defendants' Motion for a New Trial. The Court will not rule on Defendants' Motion for Remittur under Rule 59(e) at this time.¹

I. BACKGROUND²

After a jury trial lasting over three weeks, on June 1, 2005, the jury found for the Plaintiffs and against all Defendants on the following state law claims:³ agreement in unreasonable restraint of trade, conspiracy in unreasonable restraint of trade, monopolization, and attempted monopolization, all in the Lorazepam active pharmaceutical ingredient ("API") market and the Lorazepam tablet market and in the Clorazepate API and tablet markets.⁴ The jury awarded Plaintiff Blue Cross Blue Shield of Minnesota $1,756,096.00, Plaintiff Blue Cross Blue Shield of Massachusetts $8,430,887.00, Plaintiff Federated Mutual Insurance Company $410,878.00, and Plaintiff Health Care Services Corporation ("HCSC") $1,448,437.00 in damages.

At the center of this litigation are exclusive licensing agreements between Defendants. In November 1997, Mylan and Profarmco entered two agreements, each entitled, "Exclusive Agreement," in which Profarmco agreed to supply its Lorazepam and Clorazepate API to Mylan in exchange for an upfront payment and a share of Mylan's profits from the sale of the two drugs in the form of royalty payments. The Exclusive Agreements had a term of ten years and provided that Profarmco would not supply Lorazepam and Clorazepate API to any other generic manufacturers in the United States, but did not prohibit such sale to the branded manufacturers or to any manufacturer outside of the United States. The Exclusive Agreements did, however, provide that Profarmco should take all steps reasonably necessary to prevent its Lorazepam and Clorazepate API that it sold outside of the United States to enter the United States. The Exclusive Agreements were terminated in December 1998 after the Federal Trade Commission ("FTC") announced its investigation of Mylan's actions.

A The Parties

Plaintiffs Blue Cross Blue Shield ("BCBS") of Minnesota, Federated Mutual Insurance Company ("Federated"), and BCBS of Massachusetts (collectively, "BCBS Plaintiffs"), and Plaintiff HCSC are health insurance companies that are third-party payors for prescription drugs, including Lorazepam and Clorazepate, on behalf of their insureds and self-funded customers, typically employer-sponsored health plans that contract with Plaintiffs to administer claims on their behalf and pursue plan-related costs.

Defendant Mylan is a large generic drug manufacturer and distributor that markets at least 91 generic drugs, including Lorazepam and Clorazepate. Defendant Cambrex sells chemicals through its subsidiaries for, among other things, drug manufacture. Defendant Profarmco is an Italian company that is a wholly-owned subsidiary of Cambrex that manufactures and sells various APIs. Defendant Gyma sells APIs and other chemicals to the pharmaceutical industry. Gyma acts as a U.S. agent for Profarmco, buying various APIs from Profarmco and selling them to generic manufacturers in the United States. Prior to the agreements at issue in this case, Profarmco and Gyma sold Lorazepam and Clorazepate API to Mylan and its generic competitors.

B. The Pharmaceutical Industry

1. The Supply Chain

Mylan, and other generic drug manufacturers, sell their products to wholesalers and retail pharmacies. The pharmacies sell the generic drugs to consumers, and then seek reimbursements for costs beyond the consumer's co-payment or co-insurance payment from the consumer's insurance company, such as Plaintiffs. BCBS Plaintiffs contract with what is known as a pharmacy benefit manager ("PBM"), who in turn contracts directly with the pharmacies. Plaintiff HCSC contracts directly with the pharmacies. Thus,. the pharmacies generally bill the PBMs, who in turn bill the insurance companies. The amount Plaintiffs pay for a prescription reimbursement varies, and is set by formulas with many fluctuating variables in their contracts with the PBMs or directly with the pharmacies.

2. Regulatory Framework

Prior to selling prescription drugs in the United States, a manufacturer must obtain approval from the Food and Drug Administration ("FDA"). Manufacturers of generic drugs can expedite the approval process by filing an Abbreviated New Drug Application ("ANDA"), which relies on the data filed with the FDA concerning the bioequivalent pioneer drug. The ANDA process can take from several months to up to two years. All ANDA applications must reference the API provider that has already been approved by the FDA to supply API for the relevant drug. To obtain FDA approval to sell API, the API manufacturer must file a Drug Master File ("DMF") with the FDA. Different drug manufacturers.may reference the DMF of the same API producer in their ANDAs. Further, when a generic drug manufacturer wants to use a new API producer that it did not originally gain approval to use, it must Me a supplemental ANDA that references that API supplier's DMF and test results using the new supplier's API. This approval process can take up to one year.

II. DEFENDANTS' RENEWED MOTION FOR JUDGMENT AS A MATER OF LAW UNDER RULE 50(B)

A. Legal Standard

A Rule 50(b) motion "should not be granted unless the evidence, together with all inferences that can reasonably be drawn therefrom, is so one-sided that reasonable jurors could not disagree on the verdict." Elam v. C & P Telephone Co., 609 F.Supp. 938, 940 (D.D.C.1984) (internal citations omitted).

The Court must grant a motion for judgment as a matter of law if "there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue." Fed. R. Civ. Pro. 50(a); Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000). If reasonable minds could disagree about the import of the evidence, judgment as a matter of law is inappropriate. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250-51, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When making its decision, the court should review all of the evidence in the record. Reeves, 530 U.S. at 150, 120 S.Ct. 2097. In doing so, however, the court must draw all reasonable inferences in favor of the non-moving parties, and it may not make credibility determinations or weigh the evidence. Id. (citing Lytle v. Household Mfg., Inc., 494 U.S. 545, 554, 110 S.Ct. 1331, 108 L.Ed.2d 504 (1990)); Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 696, n. 6, 82 S.Ct. 1404, 8 L.Ed.2d 777 (1962); Thomas v. Mineta, 310 F.Supp.2d 198, 203 (D.D.C.2004); Nyman v. Chairman, Federal Deposit Insurance Corp., 1997 WL 243222, *2 (D.D.C.1997). Thus, although the court should review the record as a whole, it must disregard all evidence favorable to the movant that the jury was not required to believe. Reeves, 530 U.S. at 151, 120 S.Ct. 2097. That is, the court must give credence to the evidence favoring the non-moving party as well as that evidence supporting the movant that was uncontradicted and unimpeached. Id. (internal citations omitted).

B. Agreement in Unreasonable Restraint of Trade

Plaintiffs' first claim against Defendants is that they entered agreements that unreasonably restrained trade, in violation of Illinois, Massachusetts and Minnesota antitrust laws. See generally 740 Ill. Comp. Stat. Ann. § 10/7 (2004); Mass. Gen. Laws ch. 93A § 2(a) (2004); Minn.Stat. § 325D.49 (2004).⁵ To prevail on this claim, Plaintiffs were required to show by a preponderance of the evidence that: (i) the Defendants entered into an agreement; (ii) the agreement unreasonably restrained trade in an appropriately defined relevant market; (iii) the restraint of trade affected commerce in the relevant states as to relevant Plaintiffs; and (iv) Plaintiffs were injured in their business or property because of Defendants' conduct.

1. Unreasonable Restraint of Trade

Here, there was no dispute that Defendants entered into an agreement. Defendants' primary contention is that the evidence at trial did not show that their agreements unreasonably restrained trade. To prove that the restraint of trade was unreasonable, Plaintiffs had to prove by a preponderance of the evidence (a) what the relevant market is; (b) Defendants' actions had a substantially harmful effect on overall competition in that relevant market, for example, by raising prices or reducing output; and (c) the harmful effect on competition outweighed any beneficial effect on competition. See e.g., Business Elects. Corp. v. Sharp Elects. Corp., 485 U.S. 717, 723, 108 S.Ct. 1515, 99 L.Ed.2d 808 (1988). In the context of exclusive agreements, as the jury was instructed, such agreements are considered unreasonable restraints of trade when a significant fraction of buyers or sellers are foreclosed from the market for a non-transitory period of time. See e.g., Tampa Elect. Co. v. Nashville Coal Co., 365 U.S. 320, 327-28, 81 S.Ct. 623, 5...