In re Suboxone (Buprenorphine Hydrochlorine & Naloxone) Antitrust Litig.

• Decision Date: 28 July 2020
• Docket Number: No. 19-3640,19-3640
• Citation: In re Suboxone (Buprenorphine Hydrochlorine & Naloxone) Antitrust Litig., 967 F.3d 264 (3rd Cir. 2020)
• Parties: IN RE: SUBOXONE (BUPRENORPHINE HYDROCHLORINE AND NALOXONE) ANTITRUST LITIGATION Indivior Inc. f/k/a Reckitt Benckiser Pharmaceuticals, Inc., Appellant
• Court: U.S. Court of Appeals — Third Circuit

967 F.3d 264

IN RE: SUBOXONE (BUPRENORPHINE HYDROCHLORINE AND NALOXONE) ANTITRUST LITIGATION

Indivior Inc. f/k/a Reckitt Benckiser Pharmaceuticals, Inc., Appellant

No. 19-3640

United States Court of Appeals, Third Circuit.

Argued July 1, 2020

Filed: July 28, 2020

Bruce E. Gerstein, Joseph Opper, Garwin Gerstein & Fisher, Wall Street Plaza, 88 Pine Street, 10th Floor, New York, NY 10036, Counsel for Plaintiff-AppelleeBurlington Drug Co. Inc.

Thomas M. Sobol, Hagens Berman Sobol Shapiro, 55 Cambridge Parkway, Suite 301, Cambridge, MA 02142, Counsel for Plaintiff-AppelleesMeijer Inc. and Meijer Distribution Inc.

Caitlin G. Coslett, David F. Sorensen, Berger Montague, 1818 Market Street, Suite 3600, Philadelphia, PA 19103, Peter Kohn[ARGUED], Faruqi & Faruqi, 1617 John F. Kennedy Boulevard, Suite 1550, Philadelphia, PA 19103, Counsel for Plaintiff-AppelleeRochester Drug Cooperative Inc.

Jonathan B. Berman[ARGUED], Jones Day, 51 Louisiana Avenue, N.W., Washington, DC 20001, James R. Saywell, Jones Day, 901 Lakeside Avenue, North Point, Cleveland, OH 44114, Counsel for Defendant-AppellantIndivior Inc., f/k/a Reckitt Benckiser Pharmaceuticals Inc.

Anthony Russomanno, Wisconsin Department of Justice, P.O. Box 7857, Madison, WI 53707, Counsel for Amicus State of Wisconsin in support of Appellees

Randy Stutz, 10418 Ewell Avenue, Kensington, MD 20895, Counsel for Amicus American Antitrust Institute in support of Appellees

Before: GREENAWAY, JR., SHWARTZ, and RENDELL, Circuit Judges.

OPINION

SHWARTZ, Circuit Judge.

Indivior, Inc., formerly Reckitt Benckiser Pharmaceuticals, Inc.("Reckitt"), manufactured Suboxone, a prescription drug used to treat opioid addiction.Direct purchasers of Suboxone ("Purchasers") allege that Reckitt engaged in anticompetitive conduct that impeded the entry of generic versions of the drug into the market in violation of § 2 of the Sherman Act,15 U.S.C. § 2.In a thorough, thoughtful, and well-reasoned opinion, the District Court certified a class of those who purchased Suboxone from Reckitt, and Reckitt appeals the certification order.We will affirm.

I

A

We first explain how prescription drugs enter the market.A company wishing to offer a new drug for sale must seek approval from the Food and Drug Administration ("FDA") by filing a New Drug Application ("NDA").Mylan Pharms. Inc. v. Warner Chilcott Pub. Ltd. Co., 838 F.3d 421, 427(3d Cir.2016)(citing21 U.S.C. § 355 ).Once the drug is approved for sale, it is considered a "brand" or "brand-name" drug.Id.To increase competition and reduce prices, Congress enacted a streamlined method for generic manufacturers to introduce drugs by allowing them to "piggy-back" on the brand drug's "approval efforts."FTC v. Actavis, Inc., 570 U.S. 136, 142, 133 S.Ct. 2223, 186 L.Ed.2d 343(2013).Specifically, a generic drug maker may submit an Abbreviated New Drug Application ("ANDA") that may "rely on a name-brand drug company's original NDA approval for a particular drug in order to gain quicker, less costly FDA approval of a generic version."Mylan, 838 F.3d at 427.

If a generic drug manufacturer demonstrates that "the proposed generic product is both a ‘bioequivalent’ and a ‘pharmaceutical’ equivalent of the name-brand drug," then it may "have [its] product deemed ‘AB-rated’ to the name-brand drug by the FDA."Id. at 427-28.¹State laws either allow or require pharmacists to substitute these AB-rated, lower-cost generic drugs for a name-brand version.Id. at 428.Due to such substitution laws and the generic drugs’ low cost, generics often significantly erode a brand drug's market share.SeeIn re: Suboxone (Buprenorphine Hydrochloride & Naloxone) Antitrust Litig.(Motion to Dismiss ), 64 F. Supp. 3d 665, 673(E.D. Pa.2014).

B

Reckitt developed Suboxone tablets.The FDA granted Reckitt a seven-year period of exclusivity in which other manufacturers could not introduce generic versions of Suboxone tablets.As the exclusivity period neared its end for its brand drug, Reckitt developed an under-the-tongue film version of Suboxone, which would enjoy its own exclusivity period.Generic versions of Suboxone tablets would not be AB-rated to Suboxone film, so state substitution laws would not require pharmacists to substitute generic Suboxone tablets if a patient were prescribed Suboxone film.

According to the Purchasers, Reckitt's transition to Suboxone film was coupled with efforts to eliminate demand for Suboxone tablets and to coerce prescribers to prefer film.To that end, Reckitt allegedly: (1) engaged in a widespread campaign falsely disparaging Suboxone tablets as more dangerous to children and more prone to abuse; (2) publicly announced that it would withdraw Suboxone tablets from the market due to these safety concerns; (3) ended its Suboxone tablet rebate contracts with managed care organizations in favor of Suboxone film rebate contracts; (4) increased tablet prices above film prices; (5) withdrew brand Suboxone tablets from the market; and (6) impeded and delayed the market entry of generic Suboxone tablets by manipulating the FDA's Risk Evaluation and Mitigation Strategy ("REMS") process² and filing a baseless citizen petition.³Through these actions, Reckitt shifted the market to Suboxone film by the time generic Suboxone tablets hit the market and continued to dominate the Suboxone market as the exclusive maker of Suboxone film.

The Purchasers sued Reckitt,⁴ alleging that its efforts to suppress generic competition amounted to unlawful maintenance of monopoly power, in violation of § 2 of the Sherman Act.The Purchasers moved to certify a class of "[a]ll persons or entities ... who purchased branded Suboxone tablets directly from Reckitt" during a specified period.App. 5-6.The proposed class representatives were Burlington Drug Company, Inc. and two other purchasers.Burlington's corporate designee testified that although Burlington was not "control[ling]" class counsel, Burlington is aware it is a "fiduciary" for the class, understands the injury claimed, and has been kept apprised of activities in the case.App. 186.In addition, Burlington has produced thousands of pages of electronic transaction level data reflecting purchases, charge backs, and sales of Suboxone tablets, as well as documents from the electronic files of ten employees.

In support of class certification, the Purchasers submitted an expert report by Dr. Russell Lamb, an economist.Dr. Lamb concluded that, due to Reckitt's allegedly anticompetitive conduct, the proposed class paid more for brand Suboxone products.⁵

Dr. Lamb attributed these overcharges to Reckitt's actions that: (1) suppressed generic tablet competition, so the Purchasers had to buy brand tablets or film instead of less expensive generic tablets; (2) delayed market entry of generic tablets, increasing the time more expensive brand tablets could dominate the market; and (3) increased the price of brand tablets.To reach these conclusions, Dr. Lamb relied on internal Reckitt documents reflecting its national Suboxone strategy and economic analysis of tablet pricing.Dr. Lamb also calculated the damages attributable to this injury.Using economic modeling and data from Reckitt, he estimated, in the aggregate, the difference between the actual prices charged for brand Suboxone tablets and film and the price class members would have paid for generic and non-Reckitt-brand versions.

The District Court certified the class.In re: Suboxone (Buprenorphine Hydrochloride & Naloxone) Antitrust Litig.(Class Certification ), 421 F. Supp. 3d 12, 26(E.D. Pa.2019).As relevant to this appeal, the Court held that (1) common evidence of injury and damages showed that the Purchasers paid more for brand Suboxone products than they would have for generic tablets due to Reckitt's actions to promote film, disparage tablets, and suppress generics’ market entry, id. at 62-63;(2) although the Purchasers’ aggregate damages model did not allocate damages among class members, "[i]ssues regarding allocation of individual damages [were] insufficient to defeat class certification,"id. at 64; and (3) Burlington was an adequate class representative because it had the requisite knowledge of the litigation, including "the basis for the claimed injury," and its interests aligned with the class, id. at 51.Reckitt appeals.

II⁶

Federal Rule of Civil Procedure 23 sets forth the requirements for class certification.Gonzalez v. Corning, 885 F.3d 186, 192(3d Cir.2018).As relevant here, Rule 23(b)(3) requires that common questions predominate and Rule 23(a)(4) requires that the named plaintiffs adequately represent the class, two requirements Reckitt disputes are satisfied.

A

Rule 23(b)(3) requires that "questions of law or fact common to class members predominate over any questions affecting only individual members."Fed. R. Civ. P. 23(b)(3)."To assess predominance, a court ... must examine each element of a legal claim through the prism of Rule 23(b)(3)" by determining whether each element is "capable of proof at trial through evidence that is common to the class rather than individual to its members."

Marcus v. BMW of N. Am., LLC, 687 F.3d 583, 600(3d Cir.2012)(internal quotation marks and citations omitted).The Purchasers’ claims require them to prove (1)"a violation of the antitrust laws"(here, unlawful monopolization by Reckitt);⁷(2)"individual injury resulting from that violation"; and (3)"measurable damages."In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 311(3d Cir.2008), as amended(Jan. 16, 2009).

Reckitt first argues that the Purchasers have not provided common evidence of injury or damages⁸ that matches a viable theory of liability, as required by Comcast Corp. v. Behrend, 569 U.S. 27, 37-38, 133 S.Ct. 1426, 185 L.Ed.2d 515(2013)(holding that class certification was inappropriate when a damages model reflected injury from four antitrust injuries, but only one viable theory of antitrust liability and injury...