PHILADELPHIA – A federal court in Philadelphia recently decided that end-payor plaintiffs (EPPs) failed to meet all qualifications for their putative class, in lawsuits claiming drug companies conspired in a pay-for-delay scheme over cholesterol treatment drug Niaspan.
Buyers of Niaspan filed a series of potential class action suits alleging that the drug’s manufacturer Kos Pharmaceuticals, and a generic drug maker Barr Pharmaceuticals, violated federal antitrust law by entering into a reverse payment agreement to delay market entry of a generic version of the drug.
The plaintiffs included the EPPs and direct purchasers of Niaspan, who claimed that the defendants’ conduct violated antitrust laws in 16 states, consumer protection laws in five states, unfair trade practices laws in seven states and unjust enrichment laws in 25 states.
The EPPs then filed a motion to certify its class certification featuring an overcharges class and an unjust enrichment class, each with two sub-classes – a third-party payor sub-class and a consumer sub-class.
U.S. District Court for the Eastern District of Pennsylvania Judge Jan E. DuBois concluded the plaintiffs’ method used to determine class-wide injury concealed uninjured class members, and the EPPs showed no alternative mass method to remove them. Nor did they persuade the Court that a single trial would be sufficient to navigate variations in state laws applicable to the action.
According to DuBois, the proposed class met prerequisite standards under Federal Rule of Civil Procedure 23(a) governing class actions as to numerosity, commonality, typicality and adequacy – but among other things, did not demonstrate an effective way to remove excluded purchases, such as consumers with identical co-pays for generic and brand drugs from the class.
The court also found that the EPPs did not satisfy predominance and superiority requirements of Rule 23(b)(3) and the ascertainability requirement.
On ascertainability, though the class definition was properly defined by objective criteria, DuBois ruled the EPPs failed to show “a reliable and administratively feasible mechanism for identifying class members” in applying exclusions to the purchase records, such as consumers with the same co-pays for generic and brand-name drugs.
The plaintiffs did not establish that pharmacy benefit managers (PBMs) could execute the exclusions necessary for the class, but even if it were possible, DuBois explained the plaintiffs’ proposed methodology would be “prohibitively expensive and thus, infeasible.”
Per DuBois, the EPPs’ proposed class also failed the predominance and superiority requirements necessary for certification, as individual questions would predominate the issue of antitrust injury. Though the EPPs could satisfy their burden of proof for showing common evidence of antitrust injury by establishing that each class member paid an overcharge, DuBois found the EPPs’ methodology to be flawed – as the expert witness’s model calculated an average overcharge fee, but did not address whether any or all individual class members were injured.
The EPPs did not show a non-individualized means of removing uninjured class members, such as brand loyalists, coupon users, and flat co-payers. In addition, DuBois said the EPPs’ claims for consumer protection, unfair trade practices statutes and unjust enrichment claims also failed the predominance requirement, because they failed to identify the substantive elements of each state law claim, discuss the variations between the state laws or propose a trial plan through which those same variations could be addressed.
The superiority requirement also failed according to DuBois, because the EPPs did not provide a record sufficient for the Court to conclude that variations in applicable state laws would be able to be handled in one trial.
U.S. District Court for the Eastern District of Pennsylvania case 2:13-md-02460
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com