Recently, Judge Goldberg in the Eastern District of Pennsylvania certified two classes of plaintiffs asserting antitrust claims based on alleged “product hopping” by the manufacturer of branded tablets treating opioid addiction.  In re: Suboxone (Buprenorphine Hydrochloride and Nalaxone) Antitrust Litig., 13-md-2445, 2019 U.S. Dist. LEXIS 166524 (E.D. Pa. Sept. 26, 2019).  While declining to certify a class of end payors seeking injunctive relief, the court nevertheless certified  (1)  a damages class of direct purchasers of Suboxone tablets under Rule 23(b)(3) and (2) an issues class of end payors certified under Rule 23(c)(4).  The court held that certification of the latter class would materially advance the litigation because the issue of alleged anticompetitive conduct—which focuses only on the conduct of defendants—is “wholly severable” from the issues of antitrust impact and damages, which could raise individualized issues. 

Factual Allegations

The district court’s decision offers a detailed account of plaintiffs’ factual allegations.  Defendant Reckitt Benckiser manufactured and marketed Suboxone, the only FDA-approved maintenance treatment for opioid addiction in tablet form.  In 2006, Reckitt began developing a new form of Suboxone—a sublingual film that would be bioequivalent to the tableted form but not automatically substitutable for it.  Unlike Suboxone tablets, which had no patent protection but only orphan drug exclusivity that would expire in 2009, the Suboxone film received a patent that did not expire until September 2023.

Plaintiffs allege “product hopping”—that Reckitt developed and launched the Suboxone film “[i]n order to prevent the vast majority of the Suboxone base from being automatically substituted with less expensive generic versions.”  But in order for its product hop to be successful, plaintiffs claim, Reckitt needed to “switch prescriptions to the new branded product”—the film— “before the generic versions of the original [tablet] enter[ed] the market.”  Plaintiffs allege that Reckitt “bought itself more time” to complete the “hop” to Suboxone film “by sabotaging the process” of FDA approval of the generic tablets.

Reckitt purportedly did so by attempting to destroy the market for its tablets, aggressively working to switch prescribing doctors to film by offering economic incentives for participating in the “hop.”  Additionally, Reckitt priced tablets higher than film, even though, plaintiffs allege, film is more expensive to produce than tablets.  Reckitt is also alleged to have raised baseless safety issues with respect to the tablets, including publicly announcing in September 2012 that it would discontinue sale of the tablets, only to keep them on the market until March 2013.

Plaintiffs also allege that Reckitt abused regulatory processes to delay generic entry.  The FDA had required Reckitt to perform a Risk Evaluation and Mitigation Strategy (REMS) to address the risk of pediatric exposure to Suboxone tablets.  After it approved Reckitt’s REMS in late 2011, the FDA further required that any manufacturers seeking approval of generic tablets participate in a Single Shared REMS program (SSRS) with Reckitt.  Plaintiffs allege that Reckitt manipulated this process by failing to collaborate and negotiate with generic manufacturers to establish the SSRS.  After the generic manufacturers sought to approve a generics-only SSRS, Reckitt filed a Citizen Petition to block approval of any ANDAs for Suboxone tablets, which the FDA eventually rejected.

Damages Class: Direct Purchasers

Judge Goldberg certified a class of direct purchasers of Suboxone tablets under Rule 23(b)(3).  Although plaintiffs enumerated a series of “core issues” to satisfy the commonality requirement, the court identified “at least one basic, common question”—namely, “whether Reckitt committed an antitrust violation that resulted in delayed generic entry and, in turn, higher prices of branded Suboxone tablets.”  The court then folded its commonality analysis into the “more stringent Rule 23(d)(3) predominance requirement,” as Third Circuit precedent instructs.  The bulk of the court’s analysis concerned the question of predominance.

As another court of the Eastern District of Pennsylvania has held, “what matters for purposes of the predominance determination is whether there are common questions, not common answers.”  Neither that court nor the In re Suboxone court contended with Wal-Mart v. Dukes, where the Supreme Court identified the need for “some glue” holding disparate allegations together, such that “examination of all the class members’ claims for relief will produce a common answer to the crucial question[.]” 

Judge Goldberg cited the Supreme Court’s decision in Amchem Products v. Windsor for the proposition that predominance is “readily met” in antitrust cases.  Here, the court found that the direct purchaser plaintiffs met their burden of showing:

• Allegation of antitrust violation is susceptible to common proof.  Direct purchaser plaintiffs met this burden by alleging, among other things, that Reckitt had a strategy in place to withdraw tablets; that Reckitt provided rebates on Suboxone film purchases and “sunset” rebates on the tablets; and that Reckitt increased the price of tablets shortly after the launch of the film.
• Antitrust impact.  Plaintiffs need only show that the “alleged conduct is a material cause of the [antitrust] injury,” as a court in the Southern District of New York held in In re Namenda Direct Purchaser Antitrust Litigation.  Reckitt pointed out a host of individualized inquiries it argued were related to the causation question—inquiries that showed clinics and wholesalers in the direct purchaser class were not similarly situated to each other or among themselves.  However, the court identified those concerns as questions directed to the merits of plaintiffs’ claims.  For purposes of class certification, it mattered only that every proposed class member was alleged to have paid more for the tablets—regardless of whether the decision to pay more was caused by Reckitt’s alleged representations.  Relying on the Third Circuit’s holding in In re Warfarin Antitrust Litigation, Judge Goldberg noted that “individual reliance on the misrepresentations was irrelevant to liability where Reckitt’s “alleged deceptive conduct arose from a broad-based, national campaign.”  Considering “the monopolist’s conduct taken as a whole rather than considering each aspect in isolation,” as Circuit precedent requires, the court emphasized that the direct purchasers had alleged that the anticompetitive conduct was not just supracompetitive tablet pricing, but also conduct such as Reckitt’s introduction of the film, the representation of allegedly false safety concerns, alleged efforts to delay generic entry.
• Damages.  The court found that plaintiffs’ expert sufficiently addressed damages by putting forth a “benchmark methodology, based on common, class-wide evidence” that could calculate the “but for” price of Suboxone tablets.  The court rejected Reckitt’s argument that plaintiffs’ methodology did not permit calculation of an individual class member’s damages: “Issues regarding allocation of individual damages are insufficient to defeat class certification.”

Injunctive Relief: End Payors

Noting that the end payors’ “request for injunctive relief has been somewhat fluid,” the court declined to certify a class under Rule 23(b)(2).  The end payors argued that if they prevailed they would seek to have Reckitt license its film technology to generic competitors, lower the price of the film, and issue corrective disclosures concerning the allegedly pretextual safety concerns Reckitt had raised.  Later, their proposed injunctive relief was amended to include only corrective disclosures.  Because the plaintiffs failed to show how this relief would be “beneficial” to the class as a whole, and because these plaintiffs had not shown that the prescriptions were written for film instead of tablets because of safety concerns, the court declined to certify the proposed class.

Issues Class: End Payors

End payors are indirect purchasers and cannot seek damages under the Sherman Act under the Supreme Court’s Illinois Brick decision, which was recently reaffirmed in Apple v. Pepper.  As a result, end payors sometimes seek creative ways to pursue class certification, such as the proposed class for injunctive relief discussed above.  Here, plaintiffs sought to certify an “issues class” which would resolve alleged core issues, leaving issues such as injury and damages to be resolved on an individualized basis based on claims under state unfair competition laws in states that have declined to follow Illinois Brick.

Considering the factors outlined in Gates v. Rohm and Haas Co., the court held that the proposed issues class was sufficiently cohesive for certification under Rule 23(c)(4).  Judge Goldberg again focused on Reckitt’s alleged conduct, rather than the end payors’ reliance on it: “Whether any individual class member relied on the deceptive conduct or was otherwise influenced by the deceptive conduct is completely separable from the common issue of whether Reckitt filed a baseless Citizen Petition and knowingly engaged in the deceptive conduct of manufacturing and disseminating false safety concerns about tablets in an intended effort to influence prescribing habits.” 

Because the question of Reckitt’s anticompetitive conduct—setting aside the question of end payors’ alleged injury as a result of it— “is a significantly complex question that will require copious amounts of witness testimony, documents, and expert analysis,” the court found that certification of an issues class to examine these facts would “materially advance the litigation,” as Gates requires.  Moreover, the fact that the end payors’ claims arise out of different states’ laws did not matter for certification purposes, because “the[] issues will utilize the same operative evidence to establish liability.”  The court did not explain how these common issues would predominate over individualized questions relating to injury and damages which may prove to be an interesting issue for the Third Circuit to consider down the road.