United States District Court For The Eastern District Of Pennsylvania Denies End-Payor Plaintiffs’ Motion For Class Certification In Pay-For-Delay MDL
On June 3, 2020, Judge Jan E. DuBois of the United States District Court for the Eastern District of Pennsylvania denied the End-Payor Plaintiffs’ (“EPPs”) motion for class certification in a multidistrict litigation (“MDL”) challenging the settlement practice of pay-for-delay. In re Niaspan Antitrust Litig., No. 13-MD-2460, 2020 WL 2933824 (E.D. Pa. June 3, 2020). The district court denied the EPPs’ motion for class certification because the EPPs failed to demonstrate, by a preponderance of the evidence, the requirements of ascertainability, predominance, and superiority.
Plaintiffs, consisting of two putative classes—Direct-Purchaser Plaintiffs (“DPPs”) and EPPs (collectively “Plaintiffs”)—brought this action against two pharmaceutical manufacturers alleging that defendants engaged in a “pay-for-delay,” or “reverse payment” settlement in violation of federal and state antitrust, consumer protection, unfair business practices, and unjust enrichment laws. Pay-for-delay settlements refer to a practice in which a brand-name drug manufacturer brings a patent-infringement action against a generic drug manufacturer and then settles the dispute with an agreement that compensates the generic drug manufacturer for its agreement to delay entering the market with a competing generic version of the brand-name drug. Plaintiffs allege that Kos Pharmaceuticals, Inc. (“Kos”), entered into anticompetitive settlement agreements with the generic manufacturer of the drug Niaspan, Barr Pharmaceuticals, Inc. (“Barr”), in March of 2005 in order to terminate patent-infringement litigation brought by Kos against Barr. Plaintiffs further allege that these settlements denied the putative class the opportunity to purchase generic Niaspan at an earlier date and prevented putative class members from enjoying the benefit of competition of prices for Niaspan during that time. Kos was later acquired by defendant AbbVie Inc. (“AbbVie”), and Barr was later acquired by defendant Teva Pharmaceuticals, Inc. (“Teva”).
The EPPs moved to certify four classes and subclasses: (1) a third party payor (“TPP”) overcharges subclass; (2) a TPP unjust enrichment subclass; (3) a consumer overcharges subclass; and (4) a consumer unjust enrichment subclass. In denying class certification, the district court concluded that the EPPs satisfied Rule 23’s prerequisites of numerosity, commonality, typicality, and adequacy, but failed to satisfy the requirements of ascertainability, predominance, and superiority. Specifically, the district court noted the “uphill battle” the EPPs faced in proving ascertainability—which demands that a class be sufficiently definite so that it is administratively feasible for the court to determine whether a particular individual is a member—observing that other courts had denied class certification in similar pay-for-delay cases on this same issue. Although the district court found that the proposed classes satisfied the first prong of ascertainability by demonstrating that the classes were “defined with reference to objective criteria,” the court concluded that the proposed classes did not satisfy the second prong because the EPPs failed to demonstrate by a preponderance of the evidence that they had “an administratively feasible mechanism for identifying class members which involves applying all class exclusions.”
As to the predominance requirement that questions of law or fact common to class members outweigh any questions affecting only individual members, the district court noted its “concern” regarding a “lack of common evidence of antitrust injury” and remarked “that the class contains, at minimum, substantial numbers of uninjured consumer brand loyalists, coupon users, and flat co-payers.” The district court was not satisfied that the EPPs could establish a non-individualized means of identifying these uninjured class members in a way that would protect defendants’ constitutional rights.” Finally, with respect to the superiority requirement, the district court briefly noted the EPPs failure to demonstrate how “a single class action proceeding under the 53 state laws arising from 26 jurisdictions would be superior to alternative available methods of adjudication.”
As noted by the district court, this order demonstrates the difficulty that end-payor plaintiffs face in meeting their class certification requirements.