199 F. Supp. 3d 662
D. Conn.2016Background
- MDL litigation challenging a large reverse-payment settlement resolving patent litigation over the antiplatelet drug Aggrenox (post-F.T.C. v. Actavis).
- Court focused discovery disputes on whether evidence should be limited to Aggrenox and its AB-rated bioequivalents rather than the broader antiplatelet drug market.
- Plaintiffs rely on Actavis theory that large, unjustified reverse payments suggest an intent to preserve supracompetitive prices and therefore anticompetitive effect.
- Defendants sought expansive discovery across other antiplatelet drugs to show competitive constraints and challenge claims of market power and supracompetitive pricing.
- Court examined market-power principles, the Cellophane fallacy, and whether direct proof of supracompetitive pricing in the product market obviates a broader market-definition inquiry.
- Court denied defendants’ discovery requests for data on other drugs, limited the relevant market to Aggrenox and its generic equivalents, and certified the order for interlocutory appeal under 28 U.S.C. § 1292(b).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Relevant market definition | Market for the alleged anticompetitive restraint is the product at issue (Aggrenox and AB-rated generics); market-power can be shown directly. | Must define a broader antiplatelet market; evidence of other drugs’ pricing and substitutability is relevant to market power and damages. | Relevant market is Aggrenox plus AB-rated bioequivalents; broader-market discovery is irrelevant. |
| Does proof of supracompetitive prices prove market power? | Yes — extraction of supracompetitive prices is evidence (and often direct proof) of market power and anticompetitive effect. | No — price differentials may reflect sunk/fixed costs (R&D) and require broader market analysis; brand pricing alone is insufficient. | Supracompetitive prices can be direct evidence of market power; sunk-cost arguments do not negate that fact for antitrust purposes. |
| Use of other drugs’ data (Cellophane fallacy) | Other drugs’ pricing effects are already reflected in Aggrenox’s market data; reliance on broader-market substitutes risks Cellophane error and confusion. | Data on substitutes is needed to show effective competitive constraint and to limit damages. | Evidence about other drugs is unnecessary and potentially misleading; substitution effects are ‘‘priced in’’ and discovery limited accordingly. |
| Interlocutory appeal (§1292(b)) | Immediate review appropriate given novel Actavis structuring and significant impact on case and other Actavis actions. | (Implicit) Appeal unnecessary; but substantial disagreement exists among courts. | Court certified the order for discretionary interlocutory appeal under §1292(b). |
Key Cases Cited
- F.T.C. v. Actavis, Inc., 133 S. Ct. 2223 (U.S. 2013) (supreme court guidance that large reverse payments can indicate anticompetitive intent; left rule-of-reason structuring to lower courts)
- United States v. Eastman Kodak Co., 63 F.3d 95 (2d Cir. 1995) (warning against Cellophane fallacy and limits of substitution evidence)
- Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451 (1992) (discussion of substitution, market power, and Cellophane fallacy)
- Nat’l Collegiate Athletic Ass’n v. Bd. of Regents of Univ. of Oklahoma, 468 U.S. 85 (1984) (market power defined as ability to raise prices above competitive level)
- Illinois Tool Works Inc. v. Indep. Ink, Inc., 547 U.S. 28 (2006) (patent does not necessarily confer market power)
- Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172 (1965) (requiring analysis of exclusionary power of an illegal patent claim via relevant market)
- Coopers & Lybrand v. Livesay, 437 U.S. 463 (1978) (standard for discretionary interlocutory appeal and appellate docket discretion)