In re Nexium (Esomeprazole) Antitrust Litig., CIVIL ACTION NO. 12-md-02409-WGY

• Decision Date: 30 July 2015
• Docket Number: CIVIL ACTION NO. 12-md-02409-WGY
• Parties: IN RE: NEXIUM (ESOMEPRAZOLE) ANTITRUST LITIGATION
• Court: U.S. District Court — District of Massachusetts

IN RE: NEXIUM (ESOMEPRAZOLE) ANTITRUST LITIGATION

CIVIL ACTION NO. 12-md-02409-WGY

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

July 30, 2015

MEMORANDUM AND ORDER

YOUNG, D.J.

I. INTRODUCTION

I did not try this case very well. I did try it fairly. As the Supreme Court has recognized, "a litigant is entitled to a fair trial but not a perfect one." McDonough Power Equip., Inc. v. Greenwood, 464 U.S. 548, 553 (1984) (internal quotation marks and alterations omitted); see also Kyle v. United States, 297 F.2d 507, 514 (2d Cir. 1961) (Friendly, J.) (noting that "the interest in obtaining an ideal trial . . . may be outweighed by the interest in avoiding a retrial unlikely to have a different outcome"). The question now before this Court in considering these post-trial motions is thus whether the trial proceedings here were sufficiently fair that one can have a strong degree of confidence in the outcome. The answer to that question is that they were.

This multi-district litigation case is one of a spate of antitrust claims that turns on the Supreme Court's

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decision in Federal Trade Comm'n v. Actavis, Inc., 133 S. Ct. 2223 (2013).¹ This case arises as a result of alleged reverse payment settlements between the brand manufacturer of a heartburn medication called Nexium, referred to in its generic form as esomeprazole magnesium ("generic Nexium"), and other pharmaceutical companies.

Reverse payment settlements are

agreements to settle patent infringement litigation under which the patent holder pays the claimed infringer handsomely to refrain from competing with the patent holder until the patent or patents in suit expire. The arrangement preserves the patent holder's monopoly and the full term of its patents, while compensating the claimed infringer with at least some of the money it would have earned had it successfully challenged the patents.

In re Nexium (Esomeprazole) Antitrust Litig., 42 F. Supp. 3d 231, 240 (D. Mass. 2014)("In re Nexium Summary Judgment 2014").

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The action is brought by a class of wholesale drug distributors (the "Direct Purchasers"), and another class of individual consumers, third-party payors, union plan sponsors, and certain insurance companies (the "End-Payors") (collectively, with the Direct Purchasers, the "Class Plaintiffs"), and a number of pharmaceutical retail outlets² (collectively, the "Retailer Plaintiffs") (collectively, with the Direct Purchasers and the End-Payors, the "Plaintiffs"). In re Nexium Summary Judgment 2014, 42 F. Supp. 3d at 240. The Plaintiffs brought claims against AstraZeneca AB, Aktiebolaget Hassle, and AstraZeneca LP (collectively, "AstraZeneca"), Ranbaxy Pharmaceuticals, Inc., Ranbaxy Inc., and Ranbaxy Laboratories, Ltd. (collectively, "Ranbaxy"), Teva Pharmaceutical Industries, Ltd. and Teva Pharmaceuticals USA, Inc. (collectively, "Teva"), and Dr. Reddy's Laboratories Ltd. and Dr. Reddy's Laboratories, Inc.

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(collectively, "DRL") (collectively, with Ranbaxy and Teva, the "Initial Defendants"). Id.

Trial commenced before a jury on October 21, 2014. Elec. Clerk's Notes, Oct. 21, 2014, ECF No. 1151. The Plaintiffs settled first with DRL and then with Teva³ during the course of the trial. The special questions that went to the jury thus concerned only the dispute between the Plaintiffs and AstraZeneca and Ranbaxy (collectively, the "Defendants"). The jury returned its verdict, answering the special questions, on December 5, 2014. Elec. Clerk's Notes, Dec. 5, 2014, ECF. 1382. The answers mandate the entry of judgment for the Defendants.

The Plaintiffs filed timely motions for a new trial along with supporting memoranda, Class Pls.' Mot. New Trial Fed. R. Civ. Proc. 59 ("Class Pls. Mot. New Trial"), ECF No. 1450; Mem. Support Class Pls.' Mot. New Trial Pursuant Fed. R. Civ. P. 59 ("Class Pls. Mem. New Trial"), ECF No. 1451; Ind. Pls.' Mot. New Trial ("Retailers Pls. Mot. New Trial"), ECF No. 1453; Ind. Pls.' Mem. Support Mot. New Trial, ECF No. 1454, and supplemental submissions in connection with these motions, Pls.' Supp. Submission

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Connection Pending New Trial Mots. ("Pls. Supp. Mem."), ECF No. 1515. The Retailer Plaintiffs also filed a motion for permanent injunction. Mot. Permanent Inj., ECF No. 1457; American Sales Co., LLC's Joinder Mot. Permanent Inj., ECF No. 1464.

These motions are best analyzed by considering the run-up to trial (where a major misconception crept into this Court's understanding of this case), and the trial itself (where the misconception was corrected). Along the way a few comments on the class certification issues may be helpful.

II. THE RUN-UP TO TRIAL: A CAUTIONARY TALE

"Well now they file their libels And they cite Sir William Scott. The sailors say the French must pay Their Counsel argues not." ⁴

On December 7, 2012, the Judicial Panel on Multi District Litigation consolidated six actions pending in the District of Massachusetts, the District of New Jersey, and the Eastern District of Pennsylvania into the present multidistrict litigation and assigned it to this Session of the Court pursuant to 28 U.S.C. § 1407. Elec. Notice, ECF No. 1; Transfer Order, ECF No. 2.

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On February 1, 2013, representatives for the End-Payors filed a consolidated complaint, Corrected Consol. Am. Class Action Compl. & Demand Jury Trial ("End-Payors' Compl."), ECF No. 114, and representatives for the Direct Purchasers filed their consolidated complaint on February 21, 2013, Consol. Am. Compl. & Demand Jury Trial ("Direct Purchasers' Compl."), ECF No. 131.

By any standard, this is a "big" case and the Court has treated it as such.⁵ The Initial Defendants filed a number of motions to dismiss these complaints, and the Court denied all of them at a motion hearing held on April 18, 2013. In re Nexium (Esomeprazole) Antitrust Litig., 968 F. Supp. 2d 367, 376 (D. Mass. 2013) ("In re Nexium Motions to Dismiss 2013").

Six months later, this Court granted two motions certifying a Direct Purchase Class and an End-Payor class.⁶

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In re Nexium (Esomeprazole) Antitrust Litig., 297 F.R.D. 168, 184 (2013); In re Nexium (Esomeprazole) Antitrust Litig., 296 F.R.D. 43 (D. Mass 2013); In re Nexium (Esomeprazole) Antitrust Litig., 296 F.R.D. 47, 60 (D. Mass. 2013). During this period, the Retailer Plaintiffs individually entered this litigation when they collectively filed three amended complaints against the Initial Defendants. Am. Compl. & Demand Jury Trial, ECF No. 515; Am. Compl. & Demand Jury Trial, ECF No. 516; Am. Compl., ECF No. 517.

In late 2013, the Initial Defendants collectively filed eleven motions for summary judgment, to which the Plaintiffs responded. In re Nexium Summary Judgment 2014, 42 F. Supp. 3d at 241.

So far so good. The case had been set at the initial case management scheduling conference for a February 2014 trial, and we were on track. Jan 22, 2013 Scheduling Conference Tr. 20:11-12, ECF No. 90.

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To understand how this Court initially lost its way, it is worth remembering how the case appeared at this juncture. Necessarily, the consolidated complaint here is somewhat kaleidoscopic as the Plaintiffs, post-Actavis, were seeking to explore terrain where no court had gone before. The legal contours, however, were ascertainable.

First, and perhaps foremost, this antitrust action cannot be maintained unless the Plaintiffs prove an "antitrust injury" -- a real-world impact on the relevant market from the alleged monopolistic practice or practices. Atl. Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 334 (1990) (noting that a "plaintiff must prove the existence of antitrust injury, which is to say injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful") (quotation marks omitted).

Second, one must understand and thread the morass of the governing statutory law (the Hatch-Waxman Act) and its attendant regulations:

When a pharmaceutical manufacturer seeks to introduce a new brand-name prescription drug to the U.S. market, it must file a New Drug Application with the United States Food and Drug Administration ("FDA") and undergo a long and expensive review process to gain agency approval. See Actavis, 133 S. Ct. at 2228; see also Caraco Pharm. Labs, Ltd v. Novo Nordisk A/S, 132 S. Ct. 1670, 1676. When a generic pharmaceutical manufacturer seeks to market

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a generic version of a brand-name drug, the approval process is considerably less burdensome. The Drug Price Competition and Patent Term Restoration (Hatch-Waxman) Act of 1984, 21 U.S.C. § 355, "was passed with the express purpose of expediting the entry of noninfringing generic competitors into pharmaceutical drug markets in order to decrease healthcare costs for consumers." In re Nexium, 968 F. Supp. 2d at 378.

To launch a generic version of a brand-name drug, a pharmaceutical manufacturer is required to file an ["ANDA"] showing that the proposed generic product is suitably equivalent to

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