Duane Morris Antitrust Class Action Review – 2024

In the case of In Re Niaspan Antitrust Litigation , 67 F.4th 118 (3d Cir. 2023), the plaintiffs, a group of end- payor prescription drug plan sponsors, filed a class action alleging that the defendants AbbVie, Inc. and Teva engaged in violations of the Sherman Act when they delayed dissemination of a generic version of Niaspan, a cholesterol drug. The plaintiffs alleged that the defendants made pay-for-delay deal in a settlement agreement, which caused the price for Niaspan to skyrocket and cost them over $320 million in overcharges. The district court denied the plaintiffs’ motion for class certification. On appeal, the Third Circuit affirmed the district court ’ s ruling on the basis that it did not err in denying class certification on the ground that the class was not ascertainable. The Third Circuit found that the district court was not erroneous in concluding that a small number of companies, Pharmacy Benefit Managers (PBMs), could not adequately identify the end-payors because PBM data contained only code numbers, not names or descriptions of entities, and those numbers were not designed to indicate the relationships between parties. Id. at 121. The Third Circuit also determined that the plaintiffs provided no evidence on how the numbers could be used to accurately identify class members, and thus the data matching technique was unreliable because the proper class members could not be identified without analyzing the contractual relationships behind each transaction. Accordingly, the Third Circuit affirmed the district court ’ s ruling denying the plaintiffs’ motion for class certification pursuant to Rule 23. Similarly, a group of 49 pharmaceutical wholesaler plaintiffs were denied class certification due to their failure to produce evidence sufficient to show that joinder would be impracticable under Rule 23(a)(1) in Value Drug Co., et al. v. Takeda Pharmaceuticals, U.S.A. Inc., 2023 U.S. Dist. LEXIS 33102 (E.D. Pa. Feb. 28, 2023). The wholesalers alleged that they paid too much for the drug colchicine, which is used to treat Familial Mediterranean Fever and prevent gout, due to an alleged pay-for-delay conspiracy between the brand name patent owner and three generics that delayed competition in violation of Section 1 of the Sherman Act. The court did not address the sufficiency of the merits of the conspiracy claim, and the same court had previously denied class certification, finding that the plaintiffs relied on expert economist assumptions regarding the potential outcome of patent litigation. The plaintiffs argued that the court should presumptively conclude that they established impracticability of joinder under Rule 23(a)(1) because there were over 40 colchicine purchasers in the putative class. The court disagreed. It noted that the burden is on the plaintiffs to establish impractability of joinder by a preponderance of evidence and that the court must engage in a “rigorous analysis” of such evidence based on In Re Modafinil Antitrust Litigation , 837 F.3d 238, 250 (3d Cir. 2016), as amended (3d Cir. Sept. 29, 2016). The Third Circuit uses six factors to determine whether joinder would be impracticable, including: “(1) judicial economy, (2) the claimants’ ability and motivation to litigate as joined plaintiffs, (3) the financial resources of class members, (4) the geographic dispersion of class members, (5) the ability to identify future claimants, and (6) whether the claims are for injunctive relief or for damages.” Id. at 253. Based on these factors, the court concluded that the lack of evidence propounded by the plaintiffs compelled a finding that joinder was not impracticable. The two most important factors under the Modafinil test, i.e., judicial economy and motivation to litigation, both favored joinder, because there was no evidence that a class action would be substantially more efficient than joinder or that the other putative class members would not be motivated or incapable of litigating through joinder. Because the proposed class consisted of a set number of sophisticated entities, the “substantial financial resources” and “no future claimants” factors both favored joinder as well. Even though geographic dispersion of the 49 wholesalers favored a class action, the court reasoned that this factor alone was insufficient to establish that joinder was impracticable.

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