KPH Healthcare Servs. v. Mylan N.V.

• Decision Date: 08 August 2022
• Docket Number: 20-2065-DDC-TJJ
• Parties: KPH HEALTHCARE SERVICES, INC., a/k/a KINNEY DRUGS INC., FWK HOLDINGS, LLC, and CESAR CASTILLO, LLC, individually and on behalf of all those similarly situated, Plaintiffs, v. MYLAN N.V., et al., Defendants.
• Court: U.S. District Court — District of Kansas

KPH HEALTHCARE SERVICES, INC., a/k/a KINNEY DRUGS INC., FWK HOLDINGS, LLC, and CESAR CASTILLO, LLC, individually and on behalf of all those similarly situated, Plaintiffs,
v.
MYLAN N.V., et al., Defendants.

No. 20-2065-DDC-TJJ

United States District Court, D. Kansas

August 8, 2022

MEMORANDUM AND ORDER

Daniel D. Crabtree United States District Judge

This Order decides two Motions to Dismiss in a lawsuit brought by plaintiffs on behalf of themselves and a putative class of direct purchasers of EpiPens. Plaintiffs have filed a Consolidated Fourth Amended Class Action Complaint (Doc. 128). It alleges Sherman Antitrust Act violations against defendants who manufacture and sell the EpiPen. Defendants have filed Motions to Dismiss the Consolidated Fourth Amended Class Action Complaint under Fed.R.Civ.P. 12(b)(6) for failing to state a claim (Docs. 134 & 137). Plaintiffs have submitted a Consolidated Opposition to both motions (Doc. 145). And, defendants have filed Replies (Docs. 147 & 148). Also, defendants have filed a Notice of Supplemental Authority (Doc. 163), and, of course, plaintiffs have filed a Response (Doc. 167). And, defendant Pfizer filed another Notice of Supplemental Authority (Doc. 168), to which plaintiffs responded (Doc. 171). To say the least, the issues are fully briefed. The court has reviewed carefully all of the parties' submissions, and is now prepared to rule.

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For reasons explained below, the court grants the motions in part and denies them in part. The court grants Pfizer's Motion to Dismiss plaintiffs' antitrust claims because the Supreme Court's holding in Illinois Brick bars plaintiffs-as indirect purchasers-from asserting their antitrust claims premised on a generic delay theory against Pfizer. The court denies Mylan's Motion to Dismiss because plaintiffs have asserted plausibly that they bring their claims in a timely fashion and have stated plausible claims for relief under the Sherman Antitrust Act. The court explains how it reaches these conclusions in more detail, below.

I. Factual Background

The following facts come from plaintiffs' Consolidated Fourth Amended Class Action Complaint (FAC). Doc. 128. The court accepts them as true and views them in the light most favorable to plaintiffs. Doe v. Sch. Dist. No. 1, 970 F.3d 1300, 1304 (10th Cir. 2020) (explaining that on a motion to dismiss the court “accept[s] as true all well-pleaded factual allegations in the complaint and view[s] them in the light most favorable to” plaintiffs (citation and internal quotation marks omitted)).

EpiPen

EpiPen “is a disposable, prefilled, FDA-approved epinephrine auto injector (‘EAI')” that delivers epinephrine to treat severe allergic reactions known as anaphylaxis. Doc. 128 at 4 (FAC ¶¶ 2-3). Between 2013 and 2016, sales of EpiPens in the United States generated more than $1 billion annually. Id. at 33 (FAC ¶ 106).

The Parties

Plaintiffs bring their lawsuit against two groups of defendants. Doc. 128 at 4 (FAC ¶ 1). The first group includes Mylan N.V., Mylan Specialty L.P., and Mylan Pharmaceuticals, Inc. (collectively, “Mylan”). Id. Mylan markets, sells, and distributes EpiPens in the United States.

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Id. at 31 (FAC ¶ 96). The second group of defendants includes Pfizer, Inc., King Pharmaceuticals, Inc., and Meridian Medical Technologies, Inc. (collectively, “Pfizer”). Id. at 4 (FAC ¶ 1). Pfizer manufactures EpiPens, holds EpiPen patents, and supplies EpiPens to Mylan. Id. at 4-5 (FAC ¶¶ 4-5).

Three plaintiffs bring this lawsuit on behalf of themselves and a putative class of direct purchasers of the EpiPen. Id. at 4 (FAC ¶ 1). The three plaintiffs are: (1) KPH Healthcare Services, Inc., a/k/a Kinney Drugs, Inc. (“KPH”), (2) FWK Holdings, LLC (“FWK”), and (3) Cesar Castillo, LLC (“Castillo”). Id.

Plaintiff KPH operates retail and online pharmacies under the name Kinney Drugs, Inc. Id. at 7 (FAC ¶ 14). KPH is the assignee of McKesson Corporation, who purchased EpiPens directly from Mylan. Id. (FAC ¶ 15). Plaintiff FWK is an Illinois limited liability company. Id. at 9 (FAC ¶ 19). FWK is the assignee of Frank W. Kerr Co, who purchased EpiPens directly from Mylan. Id. (FAC ¶ 20). Plaintiff Castillo is a Puerto Rico corporation. Id. (FAC ¶ 21). Castillo purchased EpiPens directly from defendants. Id. at 9-10 (FAC ¶ 21).

Alleged Anticompetitive Conduct

Plaintiffs' lawsuit alleges that defendants, through their manufacture and sale of the EpiPen, engaged in an “anticompetitive and unlawful conspiracy” and entered “agreements in restraint of trade to substantially delay the onset of generic competition for the EpiPen[.]” Id. at 4 (FAC ¶ 2). Specifically, plaintiffs allege, “on April 26, 2012, [d]efendants entered into a series of unlawful and anticompetitive agreements with generic drug manufacturer, Teva Pharmaceuticals USA, Inc.” and those agreements “agreed to delay entry of Teva's AB-rated generic EpiPen until June 22, 2015 (subject to FDA approval) and settle patent litigation related to Teva's ANDA to manufacture and market an AB-rated generic EpiPen[.]” Id. at 5 (FAC ¶ 6).

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In exchange for Teva's agreement to delay entry of a generic EpiPen, “Teva and Mylan agreed to delay entry of Mylan's generic version of Nuvigil [a prescription drug sold by Teva] until June 1, 2016, and to settle patent litigation related to Mylan's ANDA to market a generic version of Nuvigil.” Id.

According to plaintiffs, had defendants not entered these agreements with Teva, a generic EpiPen would have entered the EAI market in March 2014. Id. at 5-6 (FAC ¶ 7). And, after entry of a generic EpiPen, plaintiffs “and other direct purchasers of EpiPens would have been able to pay significantly lower prices than they were forced to pay because of [d]efendants' unlawful and anticompetitive conduct to delay generic entry.” Id. Plaintiffs' lawsuit seeks to recover “overcharge damages” that plaintiffs and putative class members purportedly paid for EpiPens and that defendants allegedly caused with their “unlawful, anticompetitive, and exclusionary conduct[.]” Id. at 6 (FAC ¶ 9); see also id. at 7-10 (FAC ¶¶ 15, 20, 21) (alleging that direct purchasers “paid supra-competitive prices for [their] EpiPen purchases” because of “[d]efendants' alleged anticompetitive conduct”).

II. Procedural Background

Plaintiff KPH filed this action on February 14, 2020. Doc. 1 (Compl.). KPH was the only plaintiff named in the original Complaint. Id. The original Complaint alleged Sherman Antitrust Act and Clayton Act violations on behalf of a class of direct purchasers based on a scheme to monopolize (Count I), unlawful tying (Count II), exclusive dealing (Count III), and deceptive conduct (Count IV). Id. at 83-89 (Compl. ¶¶ 171-205).

On September 10, 2020, and with defendants' consent, plaintiff KPH filed a First Amended Class Action Complaint. Doc. 54. Like the original Complaint, plaintiff KPH was the only named plaintiff in the First Amended Class Action Complaint. And, again as in the original

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Complaint, the First Amended Class Action Complaint alleged federal antitrust claims based on a conspiracy to restrain trade and monopolize (Count I), unlawful tying (Count II), exclusive dealing (Count III), and deceptive conduct (Count IV). Id. at 86-94 (First Am. Compl. ¶¶ 273315).

On November 3, 2020, plaintiff KPH filed a Second Amended Class Action Complaint (SAC) as a matter of course under Fed.R.Civ.P. 15(a)(1)(B). Doc. 72 at 4 n.1. The SAC alleged the same federal antitrust claims asserted in its predecessors. Defendants filed Motions to Dismiss the SAC. Docs. 76 & 78. Defendants' motions asserted several arguments supporting dismissal. See generally id. But, the court's Memorandum and Order rulings those motions addressed only defendants' first dismissal argument because it was dispositive. Doc. 113 at 9-10. The court agreed with defendants that KPH lacked antitrust standing to assert any of the claims alleged in the SAC because those claims exceeded the reach of KPH's Assignment from McKesson. Id. at 10. So, the court concluded, KPH lacked “antitrust standing to bring the claims as the SAC currently alleges them.” Id. It thus dismissed plaintiff's SAC “but without prejudice and with leave to file a Third Amended Complaint asserting only claims that fall within plaintiff's Assignment from McKesson.” Id.

After the court issued its Memorandum and Order granting defendants' Motions to Dismiss but before plaintiff KPH filed a Third Amended Complaint, plaintiff Castillo filed a Motion to Intervene. Doc. 115. The motion asked the court to allow Castillo to intervene as a class representative on behalf of an existing class of direct purchasers. Id.

On August 16, 2021, plaintiffs KPH and FWK filed a Third Amended Class Action Complaint (TAC). Doc. 117. The TAC added FWK to the lawsuit as a plaintiff. Id. at 4, 8-9 (TAC ¶¶ 1, 19). Also, it narrowed the scope of the antitrust claims asserted by KPH's earlier

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Complaints. The TAC asserted two claims premised on a generic delay theory: (1) violation of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1, based on an “unlawful contract, combination, or conspiracy in unreasonable restraint of trade[,]” Id. at 54 (TAC ¶ 196), and (2) violation of Section 2 of the Sherman Antitrust Act, 15 U.S.C. § 2, based on a conspiracy “to unlawfully maintain monopoly power in the relevant market by agreeing to delay market entry of Teva's AB-rated generic EpiPen[,]” Id. at 56 (TAC ¶ 207).

After filing the TAC, plaintiffs KPH, FWK, and Castillo agreed to file a Fourth Amended Complaint naming the three parties as plaintiffs. Doc. 126. Also, plaintiffs secured defendants' agreement not to oppose a motion for leave to file a Fourth Amended Complaint. Id. The court granted plaintiffs' unopposed motion for leave and also denied as moot plaintiff Castillo's Motion to Intervene. Doc. 127.

On September 21, 2021, the three named plaintiffs filed...