Whether a putative class of indirect purchasers can be certified in a pharmaceutical antitrust litigation under the predominance requirement of Rule 23(b)(3) and the First Circuit's 2018 holding in In re Asacol Antitrust Litigation, 907 F.3d 42 (1st Cir. 2018), which held that at putative class containing many members who suered no injury could not be certified.
The defendants in this case are two pharmaceutical companies, Shire and Actavis, that manufacture a medication to treat ADHD. Shire manufactures and holds patents for a brand name version of the medication, called "Intuniv." Plaintiffs alleged that in 2009, Actavis filed for approval to manufacture a generic version of Intuniv, and in the process Actavis constructively infringed on Shire's patents. Shire then sued, and the two companies reached a settlement agreement in which Actavis agreed to delay its launch of the generic drug.43
In 2016, the plaintis filed a complaint and motion for certification of two classes of indirect purchasers of Intuniv, alleging that Shire and Activis settled "sham litigation" as part of an anticompetitive "pay-for-delay" scheme to create a period during which Activis could charge artificially high prices for Intuniv.44 The two proposed classes aimed to cover those who had either personally paid the entire purchase price for Intuniv, or who had paid some of the purchase price pursuant a co-payment or co-insurance plan.45
In an order on August 21, 2019, the court denied the motion for class certification for failure to meet the predominance requirement of Rule 23(b)(3), nding that the plaintiffs had failed to put forth a reasonable and workable plan to weed out over 10,000 uninjured class members from each of the putative classes.46 The court found that the putative classes incorporated at least three groups of uninjured class members. These included: (1) "brand loyalists," who would have continued to purchase the brand name drug over the generic; (2) consumers who received co-payment coupons from Shire and thus for whom purchasing the generic drug would have been more costly; and (3) consumers who purchased the drug after reaching out-of-pocket maximums under their insurance plans.47 Weeding these groups out would require individualized assessment of several facts, including each consumer's insurance plan, views on Intuniv and the generic, consumption habits, and use of coupons, among others. Based on expert testimony, the court concluded that uninjured class members totaled over 25,000 individuals, and likely comprised at least 8% of each putative class.48 Given the high number of potential uninjured class members, the lack of a plan to exclude them, and the Defendant's stated intent to challenge any attestations that individual class members were injured, the court found that the plaintis could not show that "questions of law or fact common to class members [would] predominate over any questions affecting only individual members."49
In reaching this conclusion, the court relied on First Circuit precedent in In re Asacol Antitrust Litigation, a case where the First Circuit found that a district court had abused its discretion in certifying a class in which thousands of class members had likely suffered no injury.50 In a footnote, the district court noted that In re Asacol was "likely a death knell for pharmaceutical, antitrust class actions brought by indirect purchasers," given the many ways in which consumers could theoretically be uninjured.51 The court determined that it would become "nearly impossible" for indirect purchasers to show that common issues would predominate once a defendant asserted an intent to challenge each individual claim of injury.52
Plaintis led a motion with the district court to reconsider its denial of class certification.53
On November 6, 2019, the court denied the motion to reconsider class certification. Noting that reconsideration is "an extraordinary remedy" that should only be granted if "the court has patently misunderstood the party or there is a significant change in the law or facts," the court provided three reasons for rejecting the plainti's motion.54
First, the court found that it had not misunderstood plainti's proposed class in the first instance, as the plaintiffs argued, and stated that plaintis could not use the motion for reconsideration to re-characterize its proposed classes. The court also stated that the plaintiffs had failed to support their argument that "district courts must sua sponte create a workable class after plaintiffs have failed to carry their burden."55 Second, the court found that the plaintiff had failed to show that the named plaintiffs would be representative of the classes, as newly characterized, in the original motion for certification. Finally, the court found that the plaintiffs had failed to address the court's concerns regarding the number of uninjured plaintiffs in the putative classes. The court also noted the practical concern that, should it not either deny the motion to reconsider or stay proceedings, the district court was at risk of analyzing the denial of certification at the same time as the First Circuit. Given that the district court found that the motion to reconsider lacked merit, the court decided to deny the motion and "provide a clean jurisdictional record to the court of appeals."56
Thoughts & Takeaways
This case both applies and provides further analysis on the First Circuit's decision in In re Asacol, and how that decision may affect future pharmaceutical antitrust class actions under Rule 23(b)(3). The court expresses a negative outlook on the future of indirect purchaser class actions, and in denying the motion to reconsider, seems to set up the First Circuit to clarify how In re Asacol should apply going forward.
43 Memorandum and Order at 2-4, In re Intuniv Antitrust Litig., 1:16-cv-12396-ADB (D. Mass. Aug. 21, 2019), ECF No. 230.
44 Id. at 4-5.
45 See id.
46 See id. at 18.
47 See id. at 6-7.
48 See id. at 16-17.
49 Id. at 18 (citation omitted).
50 See id. at 16 n.8, 16-17.
51 Id. at 16 n.8.
52 See id.
53 See Petition for Permission to Appeal from Order Denying Class Certication Pursuant to Fed. R. Civ. P. 23(f), Picone v. Shire U.S. Inc., No. 19-8023 (1st Cir. Sept. 6, 2019), ECF No. 1.
54 Memorandum and Order on Plaintis' Motion for Reconsideration at 4-5, In re Intuniv, No. 1:16-cv-12396-ADB (D. Mass. Nov. 6, 2019), ECF No. 276 (citations omitted).
55 Id. at 6.
56 Id. at 3-4.
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