331 F. Supp. 3d 152
S.D. Ill.2018Background
- Forest marketed Namenda IR (twice-daily) and later Namenda XR (once-daily); the '703 patent protected Namenda IR until 2015 while XR had exclusivity extending to 2029.
- Plaintiffs (direct purchasers) allege a two-part anticompetitive scheme: (1) reverse-payment settlements with generic manufacturers that delayed generic Namenda IR entry, and (2) a "hard switch" where Forest attempted to withdraw Namenda IR and convert patients to Namenda XR before generic entry.
- Key contested transaction: the July 21, 2010 Forest–Mylan package (including a Lexapro amendment and cash/contract terms) that Plaintiffs contend functioned as a large, unjustified reverse payment to delay entry.
- Plaintiffs proffered economic and industry experts (Elhauge, Lamb, Berndt, Thomas, Johnston) to model but‑for entry dates, competitive effects, and classwide damages; Defendants moved to exclude several expert opinions under Daubert and for summary judgment.
- The Court excluded DeLeon (supply/launch ipse dixit) but admitted Elhauge (with qualification), Lamb, Berndt, Thomas, and Johnston for purposes of opposing summary judgment and class certification.
- On the merits the Court denied Defendants' summary‑judgment motion (genuine factual disputes on reverse payments, causation, and hard‑switch injury persist) and granted Plaintiffs' motion to certify a 62‑member direct purchaser class.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Forest's settlement(s) (esp. Forest–Mylan) involved unlawful "reverse payments" that delayed generic entry | The Lexapro amendment, cash and deal structure overcompensated Mylan (exceeding avoided litigation costs) and thus were large, unjustified payments that delayed entry | Payments/contract terms were fair‑market procompetitive business arrangements compensating legitimate services and avoided liabilities (no illegal reverse payment) | Denied summary judgment — genuine disputes of material fact exist about whether payments were large/unjustified and linked to delayed entry; claim goes to trial |
| Whether expert evidence modeling but‑for earlier generic entry and damages is admissible | Experts (Elhauge, Lamb, Berndt, Johnston, Thomas) provide reliable economic, forecasting, and legal analyses to support but‑for entry dates, classwide impact, and patent‑litigation likelihood | Defendants attacked methodology, speculation, improper usurpation of factfinder, and failures to test forecasts | Court excluded DeLeon for lack of reliable foundation but largely admitted Elhauge (with caveat on stating what "would have" occurred), Lamb, Berndt, Thomas, Johnston; Daubert objections mostly go to weight not admissibility |
| Causation: can plaintiffs prove that the alleged reverse payments and hard switch were a material/but‑for cause of class members' overcharges | Experts model two but‑for worlds (no reverse payment; no hard switch); show generic price declines and substitution rates that would have produced classwide injury; Johnston and others support likelihood Mylan could have prevailed | Defendants contend causation is speculative, that other factors (e.g., patent strength, formulary shifts, injunction) explain outcomes, and that individualized purchaser choices preclude classwide proof | Denied summary judgment — plaintiffs presented sufficient evidence and expert analyses to create genuine issues on causation for a jury to resolve |
| Class certification: whether common questions predominate and classwide damages are manageable | Common liability issues (deal terms, announcements, forecasts), common economic proof of generic price effects and damages (Lamb models), and manageability support Rule 23(b)(3) class treatment | Defendants argue heterogeneity (large wholesalers vs. small; purchasers of brand vs. generic; Illinois Brick standing for non‑Forest generic purchasers) and individualized causation/damages defeat predominance and typicality | Court certified the 62‑member direct purchaser class — common issues (liability, causation, damages) predominate; non‑Forest generic purchasers found to have standing; manageability and superiority satisfied |
Key Cases Cited
- Daubert v. Merrell Dow Pharms., 509 U.S. 579 (1993) (trial courts act as gatekeepers over expert admissibility)
- General Elec. Co. v. Joiner, 522 U.S. 136 (1997) (courts may exclude expert opinion when analytical gap exists)
- Amorgianos v. Nat'l R.R. Passenger Corp., 303 F.3d 256 (2d Cir. 2002) (focus on methodology, not just conclusions, for expert admissibility)
- F.T.C. v. Actavis, Inc., 570 U.S. 136 (2013) (reverse‑payment settlements evaluated under rule of reason; payments must be "large and unjustified" to be unlawful)
- Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100 (1969) (plaintiffs need only show defendant's conduct was a material/substantial cause of injury)
- Comcast Corp. v. Behrend, 569 U.S. 27 (2013) (plaintiff's damages model must match theory of liability to satisfy predominance)
- Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) (limits antitrust recovery to direct purchasers)
- Anderson v. Liberty Lobby, 477 U.S. 242 (1986) (summary judgment standard requiring genuine dispute of material fact)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (moving party can satisfy summary judgment burden by showing absence of evidence for opponent)