583 F.Supp.3d 455
S.D.N.Y.2022Background
- Plaintiffs (direct purchasers, end-payors, and several retailers) allege that Forest (brand maker of Bystolic) entered into settlement and contemporaneous "side" agreements with seven generic manufacturers (Hetero, Torrent, Alkem/Indchemie, Glenmark, Amerigen, Watson, et al.) in 2012–2013 that postponed generic entry until September 17, 2021.
- The generics had filed ANDAs with Paragraph IV certifications; Forest sued for infringement, triggering statutory delays under Hatch‑Waxman; plaintiffs say Forest paid or transferred value to induce the generics to drop their challenges ("reverse payments" or pay‑for‑delay).
- Alleged side deals took varied forms: supply term sheets, patent assignments, collaboration/options, milestone and upfront payments, and financing/releases involving a Moksha8 intermediary.
- Plaintiffs claim these transfers were large relative to anticipated litigation costs and were pretextual (not fair value for services), causing supra‑competitive prices and market allocation.
- Defendants moved to dismiss for failure to state a claim and for lack of personal jurisdiction; the Court dismissed the Direct Purchaser, Retailer, and End‑Payor complaints without prejudice but granted leave to amend (DPP/Retailer/EPP to file amended complaints by Feb. 22, 2022).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs pleaded a large and unjustified reverse payment under Actavis | Alleged transfers (settlements + side deals) amount to large reverse payments that exceeded litigation costs and lacked legitimate justification | Payments reflect avoided litigation costs, fair-value services, or ordinary commercial deals; plaintiffs rely on group pleading and conclusory "information and belief" assertions | Dismissed: plaintiffs plausibly alleged large transfers but failed to plead factual support that payments were unjustified/explained; Actavis requires more factual showing of lack of procompetitive justification |
| Whether side agreements and settlements should be read holistically (linkage) | Forest admitted the side deals were connected to the Bystolic settlements; agreements executed contemporaneously support holistic review | Defendants urged courts to analyze each agreement in isolation and reject inferences of linkage | Court accepts plaintiffs’ allegation of linkage for pleading purposes but still dismissed on failure to plead unjustified transfers |
| Whether End‑Payor state‑law claims survive if federal antitrust claims fail | State claims are viable substitutes for federal claims and should proceed under state law | State claims rest on the same deficient factual foundation as federal claims; Illinois Brick bars federal indirect‑purchaser suits | Dismissed without prejudice: state claims largely mirror federal allegations and fail for the same reasons; plaintiffs may replead state claims with adequate factual detail |
| Personal jurisdiction (Teva Israel; Nonresident Defendants over non‑NY state claims) | Plaintiffs asserted jurisdictional facts in complaints | Defendants moved to dismiss for lack of personal jurisdiction | Court did not decide jurisdictional motions as moot after dismissing claims on the merits; jurisdictional motions denied without prejudice as moot |
Key Cases Cited
- FTC v. Actavis, 570 U.S. 136 (2013) (reverse‑payment settlements can violate antitrust law under the rule of reason when large and unjustified)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading requires factual allegations sufficient to state a plausible claim)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (context‑specific plausibility standard for pleadings)
- Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) (indirect purchasers lack federal antitrust standing)
- Fed. Trade Comm’n v. AbbVie Inc., 976 F.3d 327 (3d Cir. 2020) (discussing pleading standards for reverse‑payment claims post‑Actavis)
- In re Lipitor Antitrust Litig., 868 F.3d 231 (3d Cir. 2017) (analysis of reverse‑payment allegations and Actavis guidance)