Antitrust Law Daily Wrap Up, ANTITRUST—D. Conn.: State law claims brought by indirect purchaser plaintiffs in generic Aggrenox case dismissed, (Aug 10, 2016)

By Edward L. Puzzo, J.D.

Indirect purchaser plaintiffs in multidistrict litigation challenging an exclusion payment agreement between a brand name drug manufacturer and a generic drug manufacturer could not maintain all claims brought under the antitrust, consumer protection, and unfair trade practices statutes of various states, the federal district court in Bridgeport, Connecticut has ruled (In Re Aggrenox Antitrust Litigation, August 9, 2016, Underhill, S.).

This ongoing multidistrict litigation (MDL) originated in allegations that competition was suppressed by an exclusion payment ("pay-for-delay") agreement made between brand name drug manufacturer BoehringerIngelheim and generic drug manufacturer Barr Pharmaceuticals, whereby Barr agreed to delay from 2008 to 2015 its release of a generic equivalent to BoehringerIngelheim's Aggrenox prescription stroke medication, in exchange for a one-time co-promotion payment and yearly royalty payments. Various plaintiffs brought claims under federal antitrust law and under various states' antitrust and consumer protection statutes.

At this juncture, motions to dismiss the complaints of the following plaintiffs were currently pending: (1) the putative class complaint by indirect-purchaser plaintiffs (IPPs), also known as end-payor plaintiffs (EPPs); the complaint by large indirect purchaser Humana, that opted out of the putative class; and the complaint of indirect purchaser Louisiana Health Service Indemnity Co.

Louisiana Health's claims. The court opined that Louisiana Health had pleaded essentially undifferentiated claims under the consumer protection laws of 15 different states as simple surrogates for antitrust law. Citing the court's March 23, 2016 order regarding the IPPs and Humana, the court ruled that Louisiana Health's pleadings in this regard should be dismissed because they listed claims under many state laws, but failed to truly plead the claims in a manner sufficient to show their entitlement of recovery under them.

Applying Illinois Brick. A complicating factor in these claims is the Supreme Court's holding in Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) that only the overcharged direct purchaser, and no one else in the chain of distribution, can recover damages under federal antitrust law. This raised the issue of whether Illinois Brick applied to the antitrust laws of particular states. Certain states have passed so-called so-called Illinois Brick repealers, limiting that holding to claims brought under federal antitrust law, the court noted.

Claims under Rhode Island law. Here, Rhode Island enacted a so-called Illinois Brick repealer on July 15, 2013. Therefore, Louisiana Health's claims brought under Rhode Island law and alleging overcharges prior to the enactment of the repealer must be dismissed, the court ruled.

Claims under Louisiana law. Louisiana, unlike some states, has not passed an Illinois Brick repealer. Louisiana Health argued that a repealer was not necessary, as Illinois Brick only applied to claims brought under federal antitrust law. The court disagreed, ruling that in the absence of a state repealer allowing indirect purchasers to recover under state antitrust laws, those laws must be interpreted in a manner consistent with federal law.

Claims under Illinois and California law. Defendants argued that no one other than the state attorney general was authorized to assert claims under Illinois antitrust law on behalf of indirect purchasers. The court discussed how varying interpretations of Shady Grove Orthopedic Associates v. Allstate Ins. Co., 559 U.S. 393 (2010) and Rule 23 would impact this determination, but ultimately denied defendants’' motion to dismiss the claims brought under Illinois antitrust law. The court opined that the issue would no doubt surface again in this litigation, at which time the court may have clearer guidance as to the applicability of Shady Grove.

As to claims brought by the IPPs and Louisiana Health under the Illinois Consumer Fraud and Deceptive Business Practices Act, the court stated that plaintiffs may not assert what are essentially antitrust claims in the guise of a claim under the Illinois consumer protection statute. Plaintiffs argued that the language of the Illinois consumer protection statute was broad enough to include all unfair business practices, including antitrust violations, but the court disagreed, dismissing plaintiffs' claims brought under that statute.

The court viewed the claims brought under California's Unfair Competition Law (UCL) similarly, and also dismissed those claims.

Claims brought under Florida law. Plaintiffs were able to cite to a Florida appellate court decision holding that proscribed acts under brought under Florida's Deceptive and Unfair Trade Practices Act included antitrust violations. For that reason, the court ruled that the Florida unfair trade practices law could be used as a surrogate for antitrust law, and therefore denied defendants' motion to dismiss these claims.

Claims brought under Massachusetts law. The court ruled that indirect purchasers engaged in the conduct of trade or commerce could not make claims under Section 9 of the Massachusetts Consumer Protection Act, and therefore dismissed these claims.

Claims brought under South Carolina law. The court granted defendants' motion to dismiss claims brought under the South Carolina Unfair Practices Act because the statute by its own terms did not permit class actions.

Claims brought under Vermont law. The court granted defendants' motion to dismiss claims brought by Humana under the Vermont Consumer Fraud Act because Humana was not a consumer. The court opined that Humana may be able to sue under this statute in connection with office equipment of which Humana is a business consumer, but not in connection with drugs of which Humana’s members, not Humana itself, are consumers.

Injunctive relief. The three groups of plaintiffs sought injunctive relief. The defendants argued that even if the challenged agreements delayed the entry of Aggrenox, those generics are now in the market and have been since July 2015 so there is no ongoing harm to enjoin. The court conceded that the defendants had a strong argument to dismiss, but ruled against doing so. The court reasoned that injunctive relief was merely a peripheral issue in the case and ongoing inclusion would not prejudice any party in any way.

The case is No. 3:14-md-02516-SRU.

Attorneys: Brian P. Daniels (Brenner, Saltzman & Wallman LLP) for Aggrenox Antitrust Litigation. Mathew P. Jasinski (Motley Rice LLC) for A.F. of L. - A.G.C. Buildings Trade Welfare Plan and Painters District Council No. 30. Brigid M. Carpenter (Baker, Donelson, Berman, Caldwell & Berkowitz, P.C), Peter J. Carney (White & Case LLP) and Robert D. Carroll (Goodwin Procter, LLP) for Barr Pharmaceuticals Inc. n/k/a Barr Pharmaceuticals, LLC, Duramed Pharmaceuticals Inc. n/k/a Teva Women's Health, Inc. and Barr Lab Inc.

Companies: A.F. of L. - A.G.C. Buildings Trade Welfare Plan; Painters District Council No. 30; Barr Pharmaceuticals Inc. n/k/a Barr Pharmaceuticals, LLC; Duramed Pharmaceuticals Inc.; Barr Lab Inc.

Cases: Antitrust StateUnfairTradePractices ConsumerProtection ConnecticutNews