Antitrust Law Daily Wrap Up, ANTITRUST—D.N.J.: Fact issues preclude summary judgment in action challenging Pfizer's efforts to protect Neurontin, (Aug 9, 2013)

By Jeffrey May, J.D.

The federal district court in Newark, New Jersey, has rejected Pfizer Inc.'s motion for summary judgment in an action against the drug maker for monopolizing the market for the anti-epilepsy drug gabapentin by preventing generic competition for its branded drug Neurontin. The court also rejected a motion for partial summary judgment filed by the complaining direct purchasers of the drug. These plaintiffs included a certified direct purchaser class, as well as opt-outs CVS Pharmacy, Inc., Rite Aid Corp., Walgreen Co., The Kroger Co., Safeway Inc., American Sales Co., Inc., and Supervalu Inc. (In re Neurontin Antitrust Litigation, August 8, 2013, Hochberg, F.).

Monopoly power. Both sides moved for summary judgment on the issue of monopoly power. At the outset, the court took up a dispute between the parties on what was required to establish monopoly power through direct evidence of injury to competition or through indirect evidence of market share. Then, the court considered whether the plaintiffs could show monopoly power through either method.

To establish monopoly power through the direct evidence method, the plaintiffs had to define the relevant market—at least with a degree of approximation—and show how the use of monopoly power impacted the market. The plaintiffs “defined the approximate contours of the relevant market, at least roughly,” in the court's view. They limited the market to branded Neurontin and its generic equivalents.

While the plaintiffs could not rely solely on supracompetitive pricing to support their allegation of market power under the direct evidence method, they did offer sufficient evidence at this stage of the litigation that the higher prices could be the result of monopoly power. The plaintiffs offered evidence that the higher prices were not the result of a higher quality product or because of research and development costs. According to the plaintiffs, after generic entry, Pfizer started selling generic gabapentin capsules and tablets that were virtually identical to Neurontin at lower prices. Thus, there were disputed issues of fact requiring denial of summary judgment. The court rejected Pfizer's assertion that evidence of restricted output was necessary to permit a jury to determine why the defendant was able to charge a supracompetitive price.

To prove monopoly power under the indirect evidence method, a plaintiff typically had to prove that the defendant had a dominant share in the relevant market, and that significant entry barriers protected that market, the court explained. Pfizer took issue with the plaintiffs' expert’s exclusion of therapeutic alternatives to Neurontin and gabapentin products from the relevant market and his decision to disregard Neurontin’s primary competitors during the period of Pfizer’s purported monopoly power. The disputed issues of material fact as to the confines of the relevant market would be tested by cross examination when the case went to trial, according to the court. Therefore, summary judgment on the indirect evidence method for monopoly power was denied.

Anticompetitive conduct. There also were numerous disputed issues of material fact with respect to the anticompetitive conduct element of the plaintiffs’ monopolization claims. The plaintiffs were attempting to show that Pfizer’s patent prosecutions, infringement suits, and Orange Book listings and its off-label marketing of Neurontin were all part of its overall scheme to preserve its gabapentin monopoly.

The court ruled that Pfizer was collaterally estopped from relitigating certain key facts about criminal and civil proceedings regarding the off-label marketing. In addition, the court decided that both sides could use portions of prior court rulings in various patent cases with respect to Neurontin to support and defend against the sham litigation allegations. However, the court rejected the plaintiffs' efforts to preclude Pfizer from using evidence of settlements it had reached with generic manufacturers in prior infringement cases to establish that its infringement lawsuits had merit and to refute the sham litigation allegations.

The case is MDL No. 1479 (Master Docket No. 02-1390 (FSH)).

Attorneys: Bryan L. Clobes (Caffery Clobes Meriwether & Sprengel LLP) for direct purchaser class. John J. Francis, Jr. (Drinker, Biddle & Reath, LLP) for Pfizer Inc.

Companies: American Sales Co., Inc.; CVS Pharmacy, Inc.; The Kroger Co.; Pfizer Inc.; Rite Aid Corp.; Safeway Inc.; Supervalu Inc.; Walgreen Co.

Cases: Antitrust NewJerseyNews