Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Pa.: Class certification denied to end payors in action over delayed generic competition of Provigil, (Jun 11, 2015)

By Linda O’Brien, J.D., LL.M.

In an action against brand and generic pharmaceutical manufacturers over the alleged delayed generic competition of the sleeping disorder medication Provigil, end payor plaintiffs failed to establish the Federal Rule of Civil Procedure 23 requirements of ascertainability, predominance, and superiority for class certification, the federal district court in Philadelphia has ruled (Vista Healthplan, Inc. v. Cephalon, Inc., June 10, 2015, Goldberg, M.).

Consumers, retailers, and health plan providers (end payor plaintiffs) that purchased a sleeping disorder medication (modafinil) sold under the brand name Provigil, filed a class action suit against pharmaceutical manufacturer Cephalon, Inc. and four generic drug manufacturers — Teva Pharmaceuticals, Ranbaxy Laboratories, Mylan Pharmaceuticals, and Barr Laboratories — for anticompetitive conduct and monopolization by delaying generic competition to Provigil in violation of state antitrust and consumer protection laws. The plaintiffs alleged the manufacturers engaged in restraint of trade by entering into reverse payment settlements to resolve patent infringement suits, thereby delaying generic competition for Provigil. The plaintiffs sought class certification and asserted that the requirements of Rule 23 have been satisfied.

Ascertainability. The court found that the plaintiffs failed to present a methodology that identified class members and would not require extensive individualized inquiry. The plaintiffs proposed a class definition that essentially included persons from numerous states who purchased Provigil. In determining that the Third Circuit Court of Appeals decision in Byrd v. Aaron’s Inc., 784 F.3d 154 (2015) required a “rigorous analysis” to be conducted with respect to ascertainability, the court noted that there was no feasible way to administer the proposed class since many individualized questions must be answered to determine whether someone fell within the class.

The plaintiff’s argument that readily available records could be used to ascertain the identities of the class members was rejected since it was contrary to the plaintiff’s expert who testified that no such database or collection of records existed. Further, the plaintiff’s expert did not concede that an ascertainability mechanism could not be developed and the plaintiffs’ plans to create a methodology at a later date were insufficient. The plaintiffs were required to identify class members at the outset.

Predominance. The predominance requirement considered whether the proposed class was sufficiently cohesive to warrant adjudication by representation. The plaintiffs’ contention that, by entering into the reverse payment settlement, the defendants kept generic Provigil off the market until 2012, causing universal injury was rejected. According to the court, the individualized evidence regarding the antitrust impact was greater than the common evidence since the class included numerous categories of purchasers that suffered not injury — purchasers who met their annual out-of-pocket maximum, whose insurer had the same copay for branded and generic Provigil, or who were brand loyal even if a generic was available — and there was no class wide methodology for distinguishing those persons from injured class members.

Superiority. The plaintiffs failed to show that a class action was a fair and efficient method of adjudicating the consumer protection claims of the proposed class. The plaintiffs’ contention that a jury could be instructed as to each state’s relevant laws individually or as to the laws of grouped states was rejected. The court noted that such an instruction process would not be manageable or could likely confuse a jury. Furthermore, the plaintiffs did not present the requisite extensive analysis on how the substantive differences in state consumer protection laws would be overcome, the court concluded.

The case is No. 2:06-cv-1833.

Attorneys: Joseph H. Meltzer (Kessler Topaz Meltzer & Check, LLP), Kevin B. Love (Hanzman Criden & Love, PA), Lawrence Kendall Satterfield (Finkelstein Thompson LLP), and Theodore M. Lieverman (Spector Roseman Kodroff & Willis, PC) for Vista Healthplan, Inc., Pennsylvania Turnpike Commission, Pennsylvania Employees Benefit Trust Fund, and District Council 37 Health & Security Plan. Gregory P. Teran (Wilmer Cutler Pickering Hale & Dorr LLP) for Cephalon, Inc. Gregory L. Skidmore (Kirkland & Ellis), and Lathrop B. Nelson, III (Montgomery Mccracken Walker and Rhoads, LLP) for Barr Laboratories, Inc. C. Fairley Spillman (Akin Gump Strauss Hauer & Feld LLP), and David R. Marriott (Cravath Swaine & Moore LLP) for Mylan Laboratories, Inc. Jeffrey B. Korn (Willkie Farr Gallagher LLP), Joseph E. Wolfson (Stevens & Lee) for Teva Pharmaceutical Industries, Ltd., and Teva Pharmaceuticals USA, Inc.

Companies: Vista Healthplan, Inc.; Pennsylvania Turnpike Commission; Pennsylvania Employees Benefit Trust Fund; District Council 37 Health & Security Plan; Cephalon, Inc.; Barr Laboratories, Inc.; Mylan Laboratories, Inc.; Teva Pharmaceutical Industries, Ltd.; Teva Pharmaceuticals USA, Inc.

Cases: Antitrust ConsumerProtection PennsylvaniaNews