Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Pa.: Pharmaceutical companies must litigate pay-for-delay suit, despite interlocutory appeal, (Dec 18, 2015)

By Greg Hammond, J.D.

Two generic pharmaceutical companies were not entitled to a stay of three related pay-for-delay actions concerning the brand name drug Provigil, pending results of an interlocutory appeal of a class certification order granted by the federal district court in Philadelphia. In denying the stay, the district court concluded that the lack of irreparable injury to the two companies if the stay were denied, the harm the stay would cause the plaintiffs if granted, and the public’s interest in prompt resolution of the antitrust issue outweighed the generic pharmaceutical companies’ likelihood of success on the merits of their interlocutory appeal (King Drug Co. of Florence, Inc. v. Cephalon, Inc., December 17, 2015, Goldberg, M.).

Direct purchasers of the sleeping disorder medication modafinil—sold under the brand name “Provigil”—along with end payors and a generic competitor, filed a series of class action suits against pharmaceutical manufacturer Cephalon, Inc. and four generic drug manufacturers—Barr, Mylan, Teva, and Ranbaxy. The plaintiffs—including direct purchasers, generic pharmaceutical company Apotex, Inc., and individual consumers—claimed that the pharmaceutical defendants entered into four Hatch-Waxman reverse-payment settlement agreements that unlawfully delayed the market entry of generic Provigil in violation of the Sherman Act.

Upon Mylan and Ranbaxy’s request, the U.S. Court of Appeals in Philadelphia granted review of the trial court’s order certifying the Direct Purchaser Litigation Class. Mylan and Ranbaxy have now moved to stay all proceedings pending the appellate court’s interlocutory review.

The court denied the motion to stay, finding that although Mylan and Ranbaxy made a sufficient showing regarding the likelihood of success on the merits—in that the appeal of the Direct Purchaser Litigation Class certification order raises an arguably novel question of law concerning Supreme Court precedent, the remaining Nken factors weighed against a stay.

Irreparable injury. First, with regard to irreparable injury to the moving parties absent stay, the court determined that Mylan and Ranbaxy provided no convincing explanation as to how the appellate court’s resolution of whether the Direct Purchaser Litigation Class was properly certified could impact a trial involving non-class claims brought by Apotex or individual consumers. The court noted that if it were to agree to stay the trial concerning the direct purchaser plaintiffs, Mylan and Ranbaxy would still have to participate in a trial involving parties who have no involvement in the appeal. Further, the currently-scheduled trial will only involve issues concerning antitrust liability, and the issues raised on appeal will not impact what the direct purchaser plaintiffs must prove at the liability trial.

Injury to other parties. Next, the court concluded that the substantial harm that a stay would cause to the plaintiffs outweighed the harm Mylan and Ranbaxy claimed they would face absent a stay. In particular, the court noted that the initial complaints were filed nearly a decade ago, unavoidable delays have already occurred, the plaintiffs have already expended substantial amounts of time and resources preparing for the upcoming trial, and a delay of over a year would require duplication of these considerable efforts. This factor therefore strongly favored denying the motion to stay.

Public interest. Lastly, the court found that the public interest in prompt resolution of this antitrust matter outweighed the two concerns identified by Mylan and Ranbaxy, including that: (1) a stay is necessary to give effect to the appellate court’s determination that this appeal should be decided on an interlocutory basis; and (2) a stay is necessary to prevent confusion to the class. The court reasoned that proceeding to trial would not interfere with the purpose of providing interlocutory guidance on class certification issues prior to a final judgment. In addition, the Supreme Court’s ruling in Actavis provides clarity to the theories of liability that plaintiffs may pursue at trial and moots Mylan and Ranbaxy’s concerns regarding confusion.

The case is No. 2:06-cv-1797.

Attorneys: Andrew William Kelly (Odom & Des Roches LLP), Bruce E. Gerstein (Garwin Gerstein and Fisher LLP) and Daniel Berger (Berger & Montague, PC) for King Drug Co. of Florence, Inc. and J M Smith Corp. Joseph H. Meltzer (Kessler Topaz Meltzer & Check, LLP), Kevin B. Love (Hanzman Criden & Love, PA) and Lawrence Kendall Satterfield (Finkelstein Thompson LLP) for Vista Healthplan, Inc. and Pennsylvania Turnpike Commission. Brian J. Sodikoff (Katten Muchin Rosenmann LLP) and Edward A. Diver (Langer Grogan & Diver PC) for Apotex, Inc. Kevin Vanwart (Kirkland & Ellis LLP) for Cephalon, Inc. C. Fairley Spillman (Akin Gump Strauss Hauer & Feld LLP) and Daniel P. Margolskee (Cravath Swaine & Moore LLP) for Mylan Laboratories, Inc.

Companies: King Drug Co. of Florence, Inc.; J M Smith Corp.; Vista Healthplan, Inc.; Pennsylvania Turnpike Commission; Apotex, Inc.; Cephalon, Inc.; Mylan Laboratories, Inc.; Ranbaxy Pharmaceuticals, Inc.

Cases: Antitrust PennsylvaniaNews