Sanofi-Aventis U.S., LLC v. Mylan, Inc. (In re Epipen (Epinephrine Injection, Usp) Mktg., Sales Practices & Antitrust Litig.)

• Decision Date: 29 July 2022
• Docket Number: 21-3005
• Citation: 44 F.4th 959
• Parties: IN RE: EPIPEN (EPINEPHRINE INJECTION, USP) MARKETING, SALES PRACTICES AND ANTITRUST LITIGATION. Sanofi-Aventis U.S., LLC, Plaintiff Counterclaim Defendant - Appellant, v. Mylan, Inc., Defendant - Appellee, and Mylan Specialty, LP, Defendant Counterclaimant - Appellee. Open Markets Institute ; American Antitrust Institute; Allergy & Asthma Network; the Committee to Support the Antitrust Laws; Pharmaceutical Care Management Association; International Center for Law & Economics and Scholars of Law and Economics; The Chamber of Commerce of the United States of America ; J. Gregory Sidak, Amici Curiae.
• Court: U.S. Court of Appeals — Tenth Circuit

44 F.4th 959

IN RE: EPIPEN (EPINEPHRINE INJECTION, USP) MARKETING, SALES PRACTICES AND ANTITRUST LITIGATION.

Sanofi-Aventis U.S., LLC, Plaintiff Counterclaim Defendant - Appellant,

v.Mylan, Inc., Defendant - Appellee,andMylan Specialty, LP, Defendant Counterclaimant - Appellee.

Open Markets Institute ; American Antitrust Institute; Allergy & Asthma Network; the Committee to Support the Antitrust Laws; Pharmaceutical Care Management Association; International Center for Law & Economics and Scholars of Law and Economics; The Chamber of Commerce of the United States of America ; J. Gregory Sidak, Amici Curiae.

No. 21-3005

United States Court of Appeals, Tenth Circuit.

FILED July 29, 2022

Gregory Silbert of Weil, Gotshal & Manges LLP, New York, New York (Yehudah L. Buchweitz, Eric S. Hochstadt, Joshua Halpern of Weil, Gotshal & Manges LLP, New York, New York and Washington, D.C., with him on the briefs), for Plaintiff Counterclaim Defendant-Appellant.

Roy T. Englert, Jr. (Philip A. Sechler, Lee Turner Friedman, Ralph C. Mayrell, John B. Goerlich with him on the brief) of Robbins, Russell, Englert, Orseck & Untereiner LLP, Washington, D.C., for Defendant Counterclaimant-Appellee.

Sandeep Vaheesan of Open Markets Institute, Washington, D.C.; David Seligman of Towards Justice, Denver, Colorado, for Amicus Curiae Open Markets Institute.

Randy M. Stutz of American Antitrust Institute, Washington, D.C., for Amicus Curiae American Antitrust Institute.

Joseph D. Adamson of Lane Powell PC, Seattle, Washington, for Amicus Curiae Allergy & Asthma Network.

Deborah A. Elman of Grant & Eisenhofer, P.A., New York, New York; Archana Tamoshunas of Taus, Cebulash & Landau, LLP, New York, New York; Swathi Bojedla of Hausfeld LLP, Washington, D.C.; Gary I. Smith, Jr. of Hausfeld LLP, Philadelphia, Pennsylvania, for Amicus Curiae The Committee to Support the Antitrust Laws.

John S. Linehan of Pharmaceutical Care Management Association, Washington, D.C.; Ruthanne M. Deutsch and Hyland Hunt of Deutsch Hunt PLLC, Washington, D.C., for Amicus Curiae Pharmaceutical Care Management Association.

Aaron M. Panner, Jayme L. Weber and Hannah D. Carlin of Kellogg, Hansen, Todd, Figel & Frederick, P.L.L.C., Washington, D.C., for Amici Curiae International Center for Law & Economics and Scholars of Law and Economics.

Daryl Joseffer and Paul Lettow of U.S. Chamber Litigation Center, Washington, D.C.; Seth P. Waxman, Leon B. Greenfield and David M. Lehn of Wilmer Cutler Pickering Hale and Dorr LLP, Washington, D.C., for Amicus Curiae The Chamber of Commerce of the United States of America.

J. Gregory Sidak, Golden Oak, Florida; Jeffrey A. Lamken, Lucas M. Walker, Lauren M. Weinstein and Kenneth E. Notter III of MoloLamken LLP, Washington, D.C., for Amicus Curiae J. Gregory Sidak.

Before MORITZ, BALDOCK, and EID, Circuit Judges.

BALDOCK, Circuit Judge.

"Competition is a tough weed, not a delicate flower." —George Stigler

Despite the extraordinary length of this opinion, this appeal presents a simple question. Can a plaintiff present a triable issue of monopolization without offering any evidence of actual or threatened consumer harm? We conclude such a plaintiff cannot.

I.

Plaintiff Sanofi-Aventis U.S., LLC ("Sanofi") sued Defendants Mylan, Inc. and Mylan Specialty, LP (collectively "Mylan") under Section 2 of the Sherman Antitrust Act. 15 U.S.C. § 2. Sanofi, one of the world's largest pharmaceutical companies, alleges Mylan, the distributor of EpiPen, monopolized the epinephrine auto-injector market effectively and illegally foreclosing Auvi-Q—Sanofi's innovative epinephrine auto-injector—from the market. The parties cross-moved for summary judgment. The district court, holding no triable issue of exclusionary conduct, granted Mylan's motion for summary judgment. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.¹

A.

The following facts are either uncontroverted, or, where genuinely controverted, are viewed in the light most favorable to Sanofi, the party opposing the grant of summary judgment to Mylan.² Scott v. Harris , 550 U.S. 372, 378–80, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007). We are mindful, however, that when "opposing parties tell two different stories, one of which is blatantly contradicted by the record, so that no reasonable jury could believe it, a court should not adopt that version of the facts for purposes of ruling on a motion for summary judgment." Id. at 380, 127 S.Ct. 1769. Sanofi's allegations of monopolization center around industry-specific practices in the prescription drug market. We must, therefore, begin with an indispensable, albeit technical, overview of the prescription drug market.

"Before a patient can go to the pharmacy (or mailbox) to pick up their prescription, the medicine must make its way from the pharmaceutical manufacturer to the pharmacy." Pharm. Research & Mfrs. of Am., Follow the Dollar 3 (2017) [hereinafter Follow the Dollar ], http://phrma-docs.phrma.org/files/dmfile/Follow-the-Dollar-Report.pdf.

The distribution chain starts with the manufacturer who sells to a wholesaler for the wholesale acquisition cost ("list price"). Wholesalers then sell to the pharmacy, who dispense the product to the patient with a doctor's prescription.

While prescription drug distribution is conventional, the payments are not. "Drug pricing is a complex and often confusing issue, shaped by a pharmaceutical distribution and payment system that involves multiple transactions among numerous stakeholders." Id. at 1. The cost of prescription drugs is shared between the patient and a patient's health plan, so the amount a patient pays depends on the existence and extent of the patient's insurance. An uninsured patient pays the price set by the pharmacy. An insured patient pays—depending on the insurance policy's terms—a co-payment (a fixed dollar amount), a co-insurance payment (a percentage of the drug's price), or the full price. If the insured is paying a co-payment or co-insurance, the health plan covers the balance.

At this point, the drug has been purchased, but the amount paid to the pharmacy does not typically represent the drug's actual price. Health plans can effectively reduce the price of a drug by negotiating rebates with drug manufacturers. Charles Roehrig, Altarum, The Impact of Prescription Drug Rebates on Health Plans and Consumers 7 (2018), https://altarum.org/sites/default/files/Altarum-Prescription-Drug-Rebate-Report_April-2018.pdf. A rebate is a partial refund on the purchase price of an item. Even though the health plan must circle back post-purchase to collect the rebate, we can say the rebate is, in effect, a price discount. The cost savings from rebates are substantial. One report found "health plans received manufacturer rebates of $23 billion [in 2016], which is 12% of point-of-purchase spending." Id. These rebate agreements are at the heart of the present dispute.

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Figure 1. Visual representation of the flow of prescription drugs (Rx) and payments ($). Id. at 3 .

To understand why drug manufacturers offer rebates, we must explain the role of health plans. The managed care health plan is the most common form of commercial health insurance in the United States. "Managed care" means the health plan controls patients’ access to benefits to reduce costs. By controlling patients’ access to benefits, a managed care health plan adjusts coverages and premiums to meet patient demands. Managed care health plans control patients’ access to things like providers, medical procedures, and, relevant to this appeal, prescription drugs. By purchasing managed care health plans, the patient relinquishes some treatment-choice autonomy for lower premiums.

Health plans control patients’ access to prescription drugs by utilizing formularies. A formulary is a list of drugs covered by the health plan and is usually structured as "open" or "closed." An "open" formulary generally covers many, or sometimes all, drugs, whether they are listed on the formulary or not. A "closed" formulary only covers drugs listed on the formulary. Health plans are not required to cover all available prescription drugs. Some formularies cover a wide range of drugs to treat the same condition, while others are more restrictive. Choice comes at a cost. At his deposition, Sanofi's former CEO testified that health plans "can control the price [of a pharmaceutical product] by controlling access to the formulary; so the tighter the access to any given formulary, the more you have control over price." When a formulary covers more drugs, it increases the health plan's costs which, in turn, raises the patient's premiums.

Some health plans develop and manage their own formularies, but most retain Pharmacy Benefit Managers ("PBMs") to do so on their behalf. PBMs are effectively purchasing cooperatives. Instead of hundreds or thousands of health plans individually negotiating formulary access and rebates, the PBM acts in their collective interest, wielding the health plans’ aggregate purchasing power to gain greater discounts than the health plans could obtain individually. After negotiating rebates with drug manufacturers, PBMs develop national formularies that health plans can adopt or customize in response to a particular plan's needs. Even if a PBM excludes or disadvantages a particular drug on its national formulary, the health plan may, nevertheless, choose to cover it.

The PBM industry is "highly consolidated," with three PBMs processing about 70% of all prescription drug claims. Follow the Dollar , supra , at 7. The number of patients enrolled in a particular health insurance plan is often referred to as the number of "covered lives." Sanofi's expert economist, Fiona M. Scott Morton, Ph.D., estimates that, as of January 2015, the seven largest PBMs managed prescription drug benefits for 86% of covered commercial lives.³ The PBMs are: Express Scripts ("ESI") (38%), CVS Caremark ("CVS") (20%), OptumRx (10%), Prime Therapeutics ("Prime") (7%), MedImpact (6%), Cigna (4%),...