By E. Darius Sturmer, J.D.
In a massive multi-district litigation alleging an illegal product-hopping scheme to monopolize the U.S. market for Suboxone, a combination drug used to treat opioid addiction, the federal court in Philadelphia has dismissed defendant Indivior PLC (IPLC) because the complaint failed to establish that the company engaged in anticompetitive behavior or could be held liable for the actions of affiliated entities under corporation succession or agency theories. The actions of eventual subsidiary Indivior Inc. prior to its acquisition, the court said, did not render IPLC responsible for a conspiracy to monopolize the market and restrain trade. IPLC’s motion to dismiss was granted in its entirety (In re Suboxone (Buprenorphine Hydrochloride and Naloxone) Antitrust Litigation, October 25, 2017, Goldberg, M.).
According to the complaint, several companies involved in the manufacture, and/or sale of Suboxone—primarily Reckitt Benckiser Healthcare (RBH) and Indivior, Inc.—engaged in product-hopping to prevent or delay less expensive generic versions of Suboxone from entering the market in order to preserve their profits from the sale of the drug. Faced with the loss of their exclusive rights to the Suboxone tablet as generics began to enter the market, RBH and Indivior contracted with MonoSol Rx, LLC, a U.S. company that produces technology that allows pharmaceuticals to be converted into a film, to produce a new film version of Suboxone. The actions that they took in moving those patients using the tablet form of Suboxone to the film version of Suboxone between 2007 and 2013 are the subject of this lawsuit.
In June 2013, several putative class actions were filed against RBH, Indivior Inc., IPLC, and MonoSol, alleging anticompetitive behavior in the marketing and sale of Suboxone. Those cases were consolidated in the Philadelphia court. In 2015, Amneal Pharmaceuticals LLC, a generic manufacturer, filed suit, also alleging anticompetitive behavior in the sale of Suboxone. The suit was consolidated into this one, although all claims that Amneal alleged against RBH and IPLC were dismissed.
In September 2016, 35 states and the District of Columbia filed suit against RBH, Indivior, Indivior, PLC, and MonoSol, alleging (1) monopolization and attempted monopolization under §2 of the Sherman Act against Indivior, IPLC, and RBH, (2) conspiracy to monopolize under §2 of the Sherman against all four defendants, (3) illegal restraint of trade under §1 of the Sherman Act against all four defendants, and (4) individual state law claims against all four defendants. Indivior’s motion to dismiss was denied. RBH’s motion to dismiss, however, was granted earlier this month, for failure to state any viable claims against it.
Indivior contends primarily that it could have participated in the alleged conspiracy to a sufficient degree for liability because it did not come into existence as an entity until 2014, after the alleged conduct had ended. The court agreed, rejecting separate theories of liability offered by the defendants: that (1) the amended complaint asserted plausible direct claims against IPLC for anticompetitive conduct that continues to the present; (2) the amended complaint validly asserted that IPLC joined the Suboxone film conspiracy; (3) IPLC had successor liability for Reckitt Benckiser Group’s ("RB Group’s") alleged misconduct; (4) IPLC was estopped from denying its role in the film conspiracy; (5) Indivior was IPLC’s alter ego; and (6) IPLC was liable for the acts of its agent Indivior.
Participation in anticompetitive conduct. IPLC’s participation in or perpetuation of any illegal anticompetitive conduct prohibited by Sec. 2 of the Sherman Act could not be reasonably inferred from the company’s stated goals to sustain its leadership position in the market for the film form of the drug, to expand treatment, and to develop a pipeline of "potentially transformational products for the treatment of addiction and closely related conditions." The goals described legal, "benign" pursuits. Absent some indication in the amended complaint that IPLC "intended to engage in anticompetitive behavior in connection with their introduction of new products," the plaintiffs could not speculate that the company’s development of new drugs would result in a product-hopping scheme similar to the one at issue in the case.
Additionally, there were no factual allegations to support the plaintiff’s averment that IPLC joined the Suboxone conspiracy after its formation. Thus, it could not be made retroactively liable for the harm caused by that conspiracy.
Corporate successor liability. The court next rejected the plaintiffs’ argument that IPLC was liable as the corporate successor of the RB Group. Their contention that IPLC "expressly agreed to indemnify RB Group with respect to ‘any claims and expenses incurred by any company within the Indivior Group or the RB Group arising out of or associated with the Indivior business prior to the transfer’ " suffered from several fundamental deficiencies, in the court’s view. First, indemnification agreement in the case did not transfer liability to a successor corporation. Second, the continued existence of the original entity precluded successor liability. Third, the court remarked, even if it was the successor to the RB Group, that entity was not a named defendant and was not alleged to have any liability. Thus, even as RB Group’s successor, IPLC could not be held liable for any of the claims in the amended complaint, the court noted.
Estoppel. The plaintiffs’ claim that IPLC, having held itself out as being an active participant in all things related to Suboxone film, must be equitably estopped from now claiming that it had no role in the film conspiracy, was similarly meritless in the eyes of the court. The plaintiffs had failed to identify with any precision the alleged statements made to any regulatory agency that formed the basis for such a claim, the court remarked. Moreover, even if IPLC had expressly represented to an agency that it was involved with the production of Suboxone film, such a statement did not constitute any admission of participation in the anticompetitive activities attributed to Indivior.
Alter ego, agency. Finally, the court discarded the plaintiffs’ theories that IPLC was liable for the acts of Indivior as an alter ego for the entity or on an agency basis. The plaintiffs "completely disregard[ed] the fact that all of the actions constituting the alleged anticompetitive activity set forth in the [a]mended [c]omplaint occurred prior to [IPLC’s] formation," the court stated, and the amended complaint contained almost none of the facts relied on by the plaintiffs in the brief supporting their position. Even a liberal reading of the amended complaint and pubic financial statements submitted by the plaintiffs did not allow any reasonable inference that IPLC exercised a greater than normal degree of control over Indivior sufficient for the alter ego label or an agency theory to apply. The plaintiffs never charged that Indivior was a mere sham corporation, the court observed, or even that Indivior had undertaken any anticompetitive or conspiracy-related actions at the behest of IPLC.
The case is MDL No. 2445, 13-MD-2445.
Attorneys: Gwendolyn J. Cooley, Attorney General of Wisconsin, for State of Wisconsin. Andrew J. Lee (Steptoe & Johnson LLP) for Monosol RX, LLC. Jonathan Berman (Jones Day) for Indivior Inc. f/k/a Reckitt Benckiser Pharmaceuticals, Inc.
Companies: Monosol RX, LLC; Indivior Inc. f/k/a Reckitt Benckiser Pharmaceuticals, Inc.
MainStory: TopStory Antitrust PennsylvaniaNews
Interested in submitting an article?
Submit your information to us today!Learn More