Antitrust Law Daily Wrap Up, ANTITRUST—D. Mass.: Premera claims against Takeda about generic Amitiza largely survive dismissal, (Oct 1, 2024)

By Justin Marcus Smith, J.D.

The court agreed with the magistrate’s recommendation that duplicative recovery was not a bar against antitrust standing in Illinois Brick repealer states; however, the court modified the magistrate’s stated reasoning by noting that damages calculations can minimize duplicative recovery.

The federal district court in Boston overruled Takeda Pharmaceuticals’ objections to a magistrate Report and Recommendation (R&R) that recommended against dismissal of a gamut of Premera Blue Cross “end-payor” claims against Takeda over generic constipation drug Amitiza sales. The court adopted the magistrate’s recommendation that Premera plausibly demonstrated antitrust standing. As to Premera’s pleading of payments, the court agreed with the magistrate that Premera had the motivation of natural economic self-interest in paying the lowest price possible. The court also agreed with the magistrate’s conclusion that potential duplicative recovery in Illinois Brick repealer states was not a ground for dismissal; however, the court modified the magistrate’s stated reasoning, i.e., that duplicative recovery would necessarily flow from indirect purchaser recovery, with the observation that damages calculations could minimize duplicative recovery. The court rejected Takeda’s reverse payment objection because Takeda did not present a reason to reconsider a prior decision in a parallel matter. The court also modified a handful of magistrate recommendations on the dozens of state law claims, but otherwise adopted and approved them, and accordingly partly granted and partly denied Takeda’s motion to dismiss (In Re Amitiza Antitrust Litigation, No. 1:21-cv-11057-MJJ (D. Mass. Sept. 30, 2024)).

Background. In 2014, Sucampo Pharmaceuticals, Inc. and commercialization partners Takeda Pharmaceutical Company Limited, Takeda Pharmaceuticals U.S.A., Inc., and Takeda Pharmaceuticals America, Inc. (collectively, Takeda) settled patent infringement litigation against Par Pharmaceutical, Inc. (Par), in connection with Par’s development of generic Amitiza. Sucampo developed Amitiza as a constipation drug.

In 2023, Premera Blue Cross (Premera), a health care company, sued Takeda on behalf of Premera and similarly situated “end payors” on the basis that the Sucampo/Takeda-Par settlement was an implicit “no-AG [authorized generic]” “pay-to-delay” or “reverse payment” agreement causing end payors to pay higher prices for generic Amitiza since 2015. “Direct purchaser” and “retailer” class actions are also pending.

Here, Premera brought antitrust, consumer protection, and unjust enrichment claims under the laws of various states and territories because, as an indirect purchaser, the Supreme Court’s decision in Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) meant it could not bring federal antitrust claims.

District Court Judge Joun granted Takeda’s motion to dismiss Premera’s first proposed class action complaint. Premera then filed a second complaint, and Takeda moved again to dismiss. Magistrate Judge Kelley issued a 75-page Report and Recommendation (R&R) recommending that Judge Joun partly grant and partly deny Takeda’s motion to dismiss. The details were extensive as they pertained to claims under the laws of 46 states, the District of Columbia, and Puerto Rico. Takeda filed objections to the R&R, and Judge Joun made a de novo determination on those objections, only.

Antitrust standing. The R&R recommended that Premera plausibly demonstrated antitrust standing based on a multi-factor balancing test from Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519 (1983) (ACG). Takeda objected that the R&R antitrust standing recommendation erred on two main points: 1) Takeda argued that Premera did not adequately plead its payments for Amitiza prescriptions; and, 2) Takeda faulted the R&R statement that duplicative recovery necessarily flows from indirect purchaser recovery.

As to Premera’s pleading of Amitiza payments, Takeda did not contest improper motive nor that payment of supracompetitive prices qualified as an antitrust injury. Beyond that, the R&R: 1) rejected Takeda’s duplicative recovery argument; 2) concluded that the presence of direct purchasers and retailers did not preclude antitrust standing because Premera was motivated by economic self-interest; 3) added that duplicative recovery was a necessary consequence flowing from indirect purchaser recovery, not a bar against antitrust standing in Illinois Brick repealer states; and, 4) relied on cases that denied motions to dismiss end-payor claims.

As to Takeda’s first objection that Premera did not plausibly plead its payments, the court agreed with the R&R that Premera incurred substantial costs when it bought Amitiza from third-party pharmacies, nearly 7,000 payments in total. Premera had a significant economic interest in paying the lowest cost possible. Any inferiority compared to other potential plaintiffs was not dispositive. Takeda did not distinguish a long line of authorities confirming indirect purchaser standing against prescription manufacturers.

As to Takeda’s second objection about duplicative recovery, Takeda invoked examples of Illinois Brick repealer states that would nonetheless limit duplicative recovery. The court found these only highlighted that duplicative recovery could be minimized in the calculation of damages. The court also agreed with the R&R’s respect for Illinois Brick repealer state laws and public policies.

The court overruled Takeda’s objection to antitrust standing, and denied dismissal on that basis, but modified the disputed statement about duplicative recovery to emphasize the minimization of duplicate recovery in the calculation of damages.

Reverse payment. The R&R did not recommend dismissal of Premera’s claims for failure to plead a reverse payment. On review of the R&R, the court agreed with Judge Stearn’s prior ruling about reverse payments in In re Amitiza Antitrust Litig., No. 21-11057, 2022 WL 17968695, at 4 (D. Mass. Dec. 27, 2022). Takeda conceded the allegations in the instant matter were essentially the same and pertained to the same reverse-payment theories as the direct purchasers. The court overruled Takeda’s objection because it presented no basis for revisiting Judge Stearn’s decision.

Conclusion. The court overruled Takeda’s objections; modified the reasoning with respect to duplicative damages and minimizing them; modified the disposition of the Alabama, Missouri (class only), and Utah unjust enrichment claims; modified the California unjust enrichment claims; and modified the R&R summary chart.

The court otherwise adopted and approved the R&R recommendations as to all other claims. Accordingly, the court partly granted and partly denied Takeda’s motion to dismiss with the modification that it be granted on the California unjust enrichment claims based on Amitiza purchases outside the two-year statute of limitations and denied as to the Alabama, Missouri (class only), and Utah unjust enrichment claims.

The Case is No. 1:21-cv-11057-MJJ.

Judge: Joun, M.

Attorneys: Alberto Rodriguez (Sperling & Slater, P.C) for FWK Holdings LLC. Scott E. Perwin (Kenny Nachwalter, P.A) for Albertsons Companies, Inc. Barry L. Refsin (Hangley, Aronghick, Segal, Pudlin & Schiller) for CVS Pharmacy, Inc. Aakruti G. Vakharia (Haug Partners LLP) for Takeda Pharmaceutical Co Ltd. Forrest Lovett (Dechert LLP) for Par Pharmaceutical, Inc.

Companies: FWK Holdings LLC; Albertsons Companies, Inc.; CVS Pharmacy, Inc.; Takeda Pharmaceutical Co Ltd.; Par Pharmaceutical, Inc.

Cases: Antitrust MassachusettsNews