Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Pa.: Court reconsiders ruling on defense expert in generic pharmaceuticals pricing antitrust litigation, (Feb 14, 2025)

By Martin A. Steinberg, J.D.

Previously excluded defense expert’s analysis permitted to refutes Plaintiffs’ experts.

In multi-district antitrust litigation over alleged price-fixing schemes involving numerous generic drugs and generic drug manufacturers, the federal district court in Philadelphia revisited a prior ruling and partially granted a motion to reconsider the court’s partial Daubert exclusion of two experts’ opinions and testimony about the End-Payer Plaintiffs’ (EPPs) motions for class certification in the clomipramine and clobetasol cases, or, in the alternative, to allow those experts to submit supplemental expert reports. The court granted the Defendants’ motion for reconsideration in part and denied their motion to permit supplemental reports. The EPPs allege that several pharmaceutical companies engaged in an unlawful scheme to control prices and market allocations of generic clobetasol and clomipramine prescriptions (In Re: Generic Pharmaceuticals Pricing Antitrust Litigation, No. 2:16-md-02724-CMR (E.D. Pa. Feb. 12, 2025)).

EPPs include employee welfare benefits funds, labor unions, private insurers, municipalities, and individual plaintiffs. They contend that they indirectly purchased generic pharmaceuticals manufactured by Defendants or provided reimbursements for some or all of the purchase price for generic clobetasol and clomipramine prescriptions. Clobetasol is a potent topical corticosteroid prescribed for severe inflammatory skin issues. Clomipramine is an antidepressant pill used to treat specific mental health issues, such as obsessive-compulsive disorder.

EPPs argue that Defendants, the manufacturers of generic clomipramine and clobetasol, engaged in anticompetitive conduct that was part of a larger conspiracy or series of conspiracies involving many generic pharmaceutical manufacturers and many generic pharmaceuticals to fix, maintain, and stabilize prices and rig bids of generic drugs through market and consumer allocations of generic pharmaceutical products.

Though the MDL cases involve over 200 generic prescription drugs, the court ordered the parties to begin proceedings to bring to trial, on parallel tracks, the EPP and DPP proposed class-action complaints as to clobetasol and clomipramine as bellwether cases. EPPs have subsequently moved for class certification in these cases. EPPs seek to certify the proposed classes under Federal Rule of Civil Procedure 23(a) and (b)(3) according to (1) antitrust laws, (2) consumer protection laws, and (3) common laws of unjust enrichment of particular states and territories. The three proposed classes for each drug comprise an Antitrust Damages Class, a Consumer Protection and Unfair Competition Damages Class, and an Unjust Enrichment Class.

Expert witnesses. EPPs and Defendants have proffered the opinions of several experts in econometrics and health care that bear on whether the proposed classes should be certified. Both parties have filed several motions to exclude the opinions of several experts under Rule 702 of the Rules of Evidence. The court held hearings on these Daubert motions on these experts in September and October 2024. During the hearings, the parties presented evidence and argument regarding Dr. McClave, Ms. Craft, Mr. Miller, and Dr. Lamb (EPPs’ witnesses) and Doctors Hughes, Trish, and Happe (Defendants’ witnesses). Defendants asked the court to reconsider and revise portions of its opinion granting EPPs’ motions to partially exclude the opinions of Dr. Erin Trish and Dr. James Hughes, arguing that the court did not apply the correct Daubert standard to these experts as rebuttal experts.

Defendants, however, failed to cite controlling precedent to demonstrate that the court’s decision was a clear error of law. Rebuttal experts need not provide an alternative analysis or methodology to be reliable, but expert opinions must still meet the Daubert standards regardless of whether they are offered in rebuttal. They still must ground their opinions in a reliable methodology for the opinions they present, including where they make affirmative statements and findings or propose alternative analyses as part of their critique. The court had previously found fault with Dr. Trish’s and Dr. Hughes’s analyses because they did not adequately support them to render them admissible under Daubert.

Dr. Erin Trish. Dr. Trish is offered to explain the drug supply chain, analyze the role of intermediaries (such as pharmacies and Pharmacy Benefit Managers (PBMs) in generic pricing), and review opinions by Plaintiffs’ experts on those topics. EPPs moved to exclude her report and testimony primarily on the theory that those opinions related to brand rebates, post-conspiracy materials, other pricing tools, spread pricing, and impact and pass-through of injury.

The court previously granted the motion to exclude because her opinions on spread pricing were methodologically unsound, and certain background materials were irrelevant in the present case because they relied on extraneous or prejudicial background material. First, the court concluded that Dr. Trish’s report and testimony lacked sufficient analysis and did not adequately connect her observations to the facts and circumstances of these cases. The court initially excluded Dr. Trish’s opinions on spread pricing because she did not provide a reliable basis to provide affirmative opinions that spread pricing led to or caused EPPs’ injury. However, these conclusory findings are not supported by Dr. Trish’s analysis. Defendants argued that PBMs “indisputably” increased end-payer drug costs, but the witness failed to demonstrate that PBMs reliably did so in this case.

Upon reconsideration, however, the court agreed with Defendants that segments of Dr. Trish’s opinion could be carved out from the excluded portions of her analysis because they support her critique of EPPs’ experts separate and distinct from her affirmative opinions on causation. She may do so where her opinions and testimony point out issues involving PBMs in direct response to EPPs’ expert reports, provided that her opinions are limited to introducing data and evidence that she argues these experts did not correctly consider in forming their opinions. Thus, Dr. Trish may opine that EPPs’ experts did not correctly integrate spread pricing analyses in their reports and testimony or that she disagrees with EPPs’ experts’ characterizations of the market.

Second, the court determined that Dr. Trish’s opinions and descriptions concerning brand drug rebates, post-class period materials, pending investigations, unenacted legislation, and “other” pricing tools, including specific fees charged to and by PBMs were either “irrelevant to the present matter or unduly prejudicial,” and thus unfit for the matter. The court determined that measures taken against PBMs were not tied to the issues at hand and, because those opinions would likely confuse the fact finder, those opinions were not fit for these proceedings. While experts may rely on specific materials in formulating an opinion, and accordingly did not exclude background material presented by various experts, including some of Defendants’ experts, that was sufficiently tied to the generic pharmaceutical industry, the material excluded in Dr. Trish’s report, however, was not. Thus, the court refused to reconsider the exclusion of this portion of the witness’s testimony.

Dr. James Hughes. Defendants pointed to no clear error of law, nor did they reveal additional facts that would lead the court to view Dr. Hughes’s testimony differently. Defendants presented Dr. Hughes to opine on class-wide injury and damages and whether the individualized inquiry is necessary to assess the antitrust injury and damages to the members of the proposed classes. The court excluded his opinions on injury because his deposition, reports, and opinions on third-party payors’ (TPP) injury offset through passthrough in the form of insurance premiums to end users demonstrated a fundamental misunderstanding of antitrust injury. Defendants requested reconsideration of the court’s opinion on his analyses, which they argue are based on individual transactions, and his opinions on clomipramine sales to CVS Pharmacy. Dr. Hughes’s report and testimony revealed a fundamental error in his analysis, rendering his conclusions on injury from the data wholly unreliable. Accordingly, Defendants’ motion for partial reconsideration of Dr. Hughes’s opinion is thus denied.

Supplemental reports. In the alternative, Defendants asked the court to accept supplemental reports from Dr. Trish and Dr. Hughes under Fed. R. of Civ. P. 16(b)(4) and 26(e). Defendants cite the Third Circuit’s opinion in Meyers v. Pennypack Woods, 559 F.2d 894 (3d Cir. 1977). That decision delineated the factors that a court may consider when determining whether to allow additional testimony outside of court-ordered deadlines: 1) prejudice or surprise to the opposing party; 2) the ability of the opposing party to cure the prejudice; 3) the disruption of the orderly and efficient trial of the case; 4) bad faith or willfulness; and 5) the importance of the evidence.

Upon considering the Pennypack factors, the court denied the request. Though there was no evidence of bad faith or willfulness, allowing supplemental reports at this stage would result in prejudice in additional costs and significant delay. This sprawling and complex MDL has been pending since 2016, and the Daubert ruling was a key step in a sequence of critical bellwether events: class certification, summary judgment, and the initial bellwether trials are set to begin in August 2025. The court has already held hearings on class certification, and summary judgment motions have been extensively briefed. Thus, Defendants’ motion for supplemental reports was denied.

The Case is No. 2:16-md-02724-CMR.

Judge: Rufe, C.

Attorneys: Joseph P. Guzzardo (Guzzardo and Associates LLC) for Alex Zachariah. Stephen R. Kovatis, Office of General Counsel, for Norristown State Hospital.

Companies: Norristown State Hospital

Cases: Antitrust PennsylvaniaNews