Antitrust Law Daily Wrap Up, ANTITRUST NEWS: AAI challenges heightened pleading standards in pay-for-delay litigation, (Jan 4, 2016)

By Michael Menzhuber, J.D., LL.M.

The American Antitrust Institute (AAI) is urging the U.S. Court of Appeals in Philadelphia to reverse a federal district court decision, dismissing a complaint that charged Ranbaxy Laboratories Ltd. and Pfizer, Inc. with entering into an illegal reverse settlement agreement concerning Lipitor, a high blood pressure drug. (In re Lipitor Antitrust Litigation, Case Nos. 14-4202, 14-4203, 14-4204, 14-4205, 14-4206, 14-6202 and 14-4632).

The complaint challenged Pfizer’s reverse payment for delayed generic entry where the payment consisted primarily of the forgiveness of damages in separate patent litigation over a different drug. The federal district court in Trenton, New Jersey, held that the plaintiffs failed to demonstrate “the reliable foundation showing a reliable cash value of the non-monetary payment.”

In its amicus brief, the AAI and 48 law, economics, and business professors argued that—under ordinary pleading standards—the complaint plausibly alleged that the forgiveness of damages was worth hundreds of millions of dollars. According to the brief, the district court erred in requiring the plaintiffs, at the motion-to-dismiss stage, to provide evidentiary support typically considered at summary judgment or even at trial. Also, the district court required the plaintiffs to introduce evidence that the U.S. Supreme Court expected defendants to introduce in justifying payment.

These requirements, according to the brief, are inconsistent with the Supreme Court’s landmark decision in FTC v. Actavis, 133 S. Ct. 2223 (2013). The amicus brief cautioned that the decision would be undermined if “courts were to impose newfound excessive standards at the motion-to-dismiss stage that effectively make it all but impossible for plaintiffs to succeed.”

The appeal has been consolidated with the appeal in In Re Effexor XR Antitrust Litigation, which raises similar issues of heightened pleading standards.

The brief was written by AAI Advisory Board Members Michael Carrier and Steve Shadowen.

News: Antitrust