Antitrust Law Daily Wrap Up, ANTITRUST—S.D.N.Y.: Most testimony from Vyera expert blocked in trial over alleged control of Daraprim market, (Nov 19, 2021)

By Nicole D. Prysby, J.D.

The bulk of testimony offered by the former FDA chief counsel on behalf of Daraprim manufacturer Vyera was blocked as improper summary or because he was unqualified to offer opinions on business decisions made by generic drug manufacturers.

The federal district court in New York City blocked most of the testimony offered by a Food a ...

By Nicole D. Prysby, J.D.

The bulk of testimony offered by the former FDA chief counsel on behalf of Daraprim manufacturer Vyera was blocked as improper summary or because he was unqualified to offer opinions on business decisions made by generic drug manufacturers.

The federal district court in New York City blocked most of the testimony offered by a Food and Drug Administration (FDA) expert on behalf of Vyera Pharmaceuticals, LLC in a lawsuit alleging Vyera blocked generic competition to preserve a monopoly for its drug, Daraprim. The FTC and seven states alleged that Vyera engaged in an anticompetitive scheme to control the drug market for Daraprim, a branded drug used to treat toxoplasmosis. The court found the expert unqualified to offer opinions on the business decisions made by the generic drug manufacturers. In addition, much of the testimony was excluded by the court as improper summary or evaluation of witness credibility, motives, and state of mind. The expert may testify on the factors that the FDA considers when granting exemptions to an Import Alert, the FDA’s options in reacting to a specific request, and as to the complexity of the FDA approval process for generic drugs (FTC v. Vyera Pharmaceuticals, LLC, November 16, 2021, Cote, D.).

Background. The FTC and seven states filed a complaint alleging that Vyera, its parent company, Phoenixus, AG, and two of the companies’ former executives, Martin Shkreli and Kevin Mulleady, blocked generic competition to preserve a monopoly for the toxoplasmosis treatment Daraprim. The plaintiffs alleged that defendants entered restrictive contracts with U.S. drug distributers and the most viable suppliers of pyrimethamine, the active pharmaceutical ingredient (API) in Daraprim, to impede generic drug manufacturers in their efforts to obtain FDA approval for a generic competitor to Daraprim.

In earlier proceedings, the court ruled that the government’s expert, Dr. C. Scott Hemphill, was well qualified as an economist to testify that Vyera enjoyed 100 percent monopoly power over the Daraprim market after its acquisition of the drug.

Motion to exclude expert testimony largely granted. The plaintiffs motioned to exclude expert testimony offered by Sheldon Bradshaw on behalf of Vyera. Bradshaw’s testimony was intended to rebut the testimony of plaintiff’s expert Hemphill. Bradshaw is an FDA regulatory expert, who offered opinions related to FDA procedures in the review and approval of Abbreviated New Drug Applications (ANDAs). He offered his opinion that the manufacturers’ actions, not Vyera’s conduct in restricting the supply of Daraprim or FDA-approved API manufacturers, created the delays in the approval of generic companies’ ANDAs. For example, he opined that manufacturers “should have known” that the FDA would reject their ANDAs or their various requests during the ADNA process, and that certain requests not only had “essentially no chance of being approved” but also “delayed approval of the ANDA.”

Plaintiffs sought to exclude a significant portion of Bradshaw’s testimony regarding API procurement on the ground that he is unqualified, as he is not an expert on the pharmaceutical business but offers many opinions on those topics. Those opinions include judgments about the decisions the generic drug manufacturers made as they attempted to obtain samples of Daraprim and to find an API supplier, what they would have done if they had faced fewer obstacles in those efforts, and the reasons an API manufacturer had for declining to supply the API to those manufacturers. The court agreed with Plaintiffs that Bradshaw, an FDA regulation expert, is unqualified to offer opinions on the business decisions made by the generic drug manufacturers in pursuit of their ANDAs or by API suppliers.

Plaintiffs also sought to exclude Bradshaw’s testimony on the FDA’s hypothetical conduct. The court agreed in part. To the extent that Bradshaw offers opinions regarding the FDA’s options in treating or reacting to a specific request to the FDA, that may be a proper subject of his expert testimony. For example, he is qualified to opine on the factors that the FDA considers when granting exemptions to an Import Alert. Beyond that, his testimony must be stricken.

The court excluded additional portions of Bradshaw’s testimony on the ground that he improperly offers his evaluation of witness credibility, motives and state of mind. His testimony in the challenged passages was replete with conclusory opinions, sweeping characterizations of the hidden motives of the businesses he discusses, judgments about the truthfulness of their representations, assertions of what they knew and should have known, and extensive recitation of the record urging a particular interpretation of the actions of these businesses. To the extent Bradshaw offers opinions about the FDA’s options in reacting to a specific request to the FDA, that testimony would be within his area of expertise and likely admissible.

The Plaintiffs contended that any testimony offering an opinion on the FDA’s hypothetical conduct in a counterfactual world (a world without Vyera’s challenged conduct) usurps the role of the factfinder and must be stricken as inadmissible speculation. The court agreed in part. At least some of Bradshaw’s testimony on the FDA’s conduct in the but-for world is admissible, however, since it arises from his area of expertise. He may, for example, testify as to the complexity of the FDA approval process for generic drugs.

The court found that much of Bradshaw’s testimony was improper summary testimony that merely recounts facts in support of his views on matters beyond his expertise, or in support of an argument more appropriately made by counsel. In other words, Bradshaw’s construction of a narrative of events untethered to any admissible opinion must be excluded.

Finally, Bradshaw’s opinion comparing the FDA approval times of generic manufacturers’ ANDAs offer new opinions that were not included in his expert report and were excluded on that basis.

The case is No: 1:20-cv-00706-DLC.

Attorneys: James Harris Weingarten for the FTC. Amy Elizabeth McFarlane, Attorney General of the State of New York, for State of New York. Mark Michael Elliott (Phillips Nizer LLP) and Scott A. Stempel (Morgan, Lewis & Bockius LLP) for Vyera Pharmaceuticals, LLC and Phoenixus AG.

Companies: Vyera Pharmaceuticals, LLC; Phoenixus AG

Cases: Antitrust NewYorkNews GCNNews