Antitrust Law Daily End-Payor plaintiff class certification denied in Niaspan ‘pay-for-delay’ case
Thursday, June 4, 2020

End-Payor plaintiff class certification denied in Niaspan ‘pay-for-delay’ case

By Nicole D. Prysby, J.D.

The EPPs failed to demonstrate a feasible method of removing excluded or uninjured consumers from the class.

End-Payor Plaintiffs (EPPs) failed to demonstrated ascertainability, predominance, or superiority for their proposed class in litigation alleging that Kos Pharmaceuticals, Inc. and Barr Pharmaceuticals, Inc., engaged in a pay-for-delay scheme over Niaspan, the federal district court in Philadelphia has decided. The EPPs’ proposed class met Rule 23(a) requirements, but they failed to demonstrate an administratively feasible method for removing excluded purchases (such as consumers with the same co-payment for generic and brand drugs) from the class. The EPPs’ expert’s use of averages for her yardstick model to determine classwide injury masked uninjured class members and the EPPs presented no non-individualized means of removing uninjured class members. The EPPs also failed to provide a record sufficient for the court to conclude that variations in applicable state laws would be manageable in a single trial (In re Niaspan Antitrust Litigation, June 3, 2020, DuBois, J.).

Buyers of the lipid disorder drug Niaspan filed a series of putative class action suits alleging that that the branded drug’s manufacturer (Kos Pharmaceuticals) and a generic drug maker (Barr Pharmaceuticals) violated federal antitrust law by entering into a reverse payment agreement to delay market entry of a generic version of the drug. The plaintiffs included the EPPs and Direct Purchasers. The EPPs alleged that defendants’ conduct violated the antitrust laws of 16 states, the consumer protection laws of five states, the unfair trade practices laws of seven states, and the unjust enrichment laws of 25 states. The EPPs motioned for class certification and both sides motioned to exclude expert testimony. The EPPs sought certification of an overcharges class and an unjust enrichment class, each with two subclasses, a third party payor and a consumer subclass.

Class certification denied. The court found that the EPPs proposed class met Rule 23(a) requirements. Numerosity was met given the EPP’s claim that Niaspan prescriptions peaked at about 600,000 per month in 2011. Commonality was met through the common questions such as whether Kos entered into a conspiracy with Barr to restrain trade. Typicality was met as the named plaintiffs’ claims arose out of the same facts and legal theories that gave rise to the claims of all EPP class members: that Kos and Barr entered into a reverse-payment settlement that unlawfully extended Kos’ monopoly over the Niaspan market and delayed the onset of generic competition. Adequacy was met as the EPPs were represented by experienced counsel and there was no likelihood of a conflict of interest among class members.

However, the court found that the EPPs did not satisfy predominance and superiority requirements of Rule 23(b)(3) and the ascertainability requirement.

As to ascertainability, the class definition was properly defined by objective criteria. However, the EPPs failed to show a reliable and administratively feasible mechanism for identifying class members. Through court-issued subpoenas, records of brand and generic Niaspan transactions can be obtained. But the class definitions had a number of exclusions (such as "flat co-payors," consumers with the same co-payment for generic and brand drugs), and the EPPs presented no administratively feasible methodology for applying the exclusions to the purchase records. For example, exclusion of flat co-payers required a determination of what purchasers would have paid for their brand Niaspan prescription as well as what they would have paid for generic Niaspan they never purchased. The EPPs did not establish that pharmacy benefit managers (PBMs) could provide purchase records that excluded consumers with the same co-payment for brand and generic drugs, or that transactional records stored by PBMs and other record holders contained information related to plan details in a way that could be programmatically and feasibly applied in order to exclude "flat co-payors" from the class. In addition, even if identification of class members was technically possible, the EPPs’ proposed methodology would be prohibitively expensive and thus infeasible.

The EPPs’ proposed class also failed the predominance and superiority requirements, as individual questions would predominate the issue of antitrust injury. The EPPs could satisfy their burden of showing common evidence of antitrust injury by establishing that each class member paid an overcharge, regardless of whether that overcharge was subsequently passed on to others. But the court found that the EPPs’ common proof of injury was flawed, as the expert’s model calculated an average overcharge but did not address whether any or all individual class members were injured. The EPPs presented no non-individualized means of removing uninjured class members, such as consumer brand loyalists, coupon users, and flat co-payers. The EPPs’ claims arising under consumer protection and unfair trade practices statutes and the unjust enrichment claims also failed the predominance requirement, because they did not identify the substantive elements of each state law claim, analyze the variations between the state laws, or propose a trial plan through which variations could be addressed. And because the EPPs did not provide a record sufficient for the court to conclude that variations in applicable state laws would be manageable in a single trial, superiority failed as well.

Other issues. The court rejected the defendants’ motion to exclude the expert testimony of two EPP rebuttal experts on class ascertainability and denied as moot the EPPs’ motion to exclude one defendant witness.

This case is No. 2:13-md-02460-JD.

Attorneys: Jeffrey Kodroff (Spector Roseman & Kodroff PC), Kenneth Wexler (Wexler Wallace LLP), Michael Buchman (Motley Rice LLC) and Steve Shadowen (Hilliard & Shadowen LLP) for End-Payor plaintiffs. Devora Allon (Kirkland & Ellis LLP) and Joseph Wolfson (Stevens & Lee) for Barr Pharmaceuticals LLC, Teva Pharmaceuticals USA, Inc., Teva Pharmaceuticals Industries Ltd., Teva Women’s Health, Inc. and Duramed Pharmaceuticals Sales Corp. Stuart Senator (Munger, Tolles & Olson LLP) and Paul Saint-Antoine (Feagre Drinker Biddle & Reath LLP) for AbbVie Inc., Abbott Laboratories and Abbott Respiratory LLC.

Companies: Barr Pharmaceuticals LLC; Teva Pharmaceuticals USA, Inc.; Teva Pharmaceuticals Industries Ltd.; Teva Women’s Health, Inc.; Duramed Pharmaceuticals Sales Corp.; AbbVie Inc.; Abbott Laboratories; Abbott Respiratory LLC

MainStory: TopStory Antitrust GCNNews PennsylvaniaNews

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