Zetia (Ezetimibe) Antitrust v. Merck & Company, Inc.
7 F.4th 227
| 4th Cir. | 2021Background
- Merck developed ezetimibe (Zetia) and held an exclusivity patent through April 2017; Glenmark filed an ANDA in 2006 asserting the patent was invalid, prompting Merck to sue for infringement.
- Merck and Glenmark settled in 2010, allowing Glenmark to launch a generic in December 2016 (about four months before Merck’s exclusivity ended); Merck opted to discount the branded product rather than sell an authorized generic.
- Direct purchasers (a putative class of 35 sophisticated purchasers, including the three largest wholesalers) sued Merck and Glenmark under antitrust law, alleging the settlement was a reverse-payment agreement that delayed cheaper generic entry and inflated prices.
- The district court certified the 35-member class under Rule 23(a) and 23(b)(3); defendants appealed the certification order to the Fourth Circuit.
- The Fourth Circuit held the district court erred in its numerosity analysis because the court improperly evaluated the impracticability of multiple individual suits instead of the impracticability of joinder; it vacated and remanded for further proceedings.
- The Fourth Circuit affirmed the district court on adequacy of class representatives and on predominance (accepting class-wide averages as permissible common proof), and declined to reach plaintiffs’ waived challenge to dismissal of 23 additional companies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Numerosity under Rule 23(a)(1) | Class of 35 is sufficiently numerous; joinder impracticable given judicial economy, dispersion, and members’ incentives | Joinder practicable; district court improperly relied on the economics of separate lawsuits and potential multiple trials | Vacated: district court misapplied numerosity by assessing impracticability of multiple individual suits rather than joinder; remand required for correct analysis |
| Adequacy of class representatives | Named plaintiffs (FWK, Rochester, Castillo) can fairly and adequately represent class interests | Defendants argue conflicts, counsel-formation ties, and Castillo’s lack of injury/atypicality undermine adequacy | Affirmed: district court did not abuse discretion; no evident conflict or atypicality defeating adequacy |
| Predominance under Rule 23(b)(3) (including proving injury) | Class-wide and industry averages can show antitrust injury and predominance; common proof suffices | Defendants contend averages-based proof fails to show injury for all and that individualized inquiries will overwhelm common issues | Affirmed: common proof (including averages) may prove injury; even if some individualized questions arise, common issues predominate |
| Plaintiffs’ request to review dismissal of 23 companies | Plaintiffs asked appellate review for inclusion of 23 dismissed purchasers | Defendants relied on Plaintiffs’ failure to cross-appeal and district-court waiver rules | Denied: Plaintiffs waived the issue by failing to cross-appeal; Fourth Circuit declined to exercise pendant appellate jurisdiction |
Key Cases Cited
- FTC v. Actavis, 570 U.S. 136 (2013) (reverse-payment settlements can be anticompetitive)
- Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) (plaintiff bears burden to demonstrate Rule 23 requirements)
- Comcast Corp. v. Behrend, 569 U.S. 27 (2013) (need for evidentiary proof on classwide damages methodology)
- In re Modafinil Antitrust Litig., 837 F.3d 238 (3d Cir. 2016) (numerosity requires focus on joinder practicability, not risk of multiple lawsuits)
- EQT Prod. Co. v. Adair, 764 F.3d 347 (4th Cir. 2014) (standards for Rule 23(b)(3) review)
- Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147 (1982) (rigorous analysis required for Rule 23 requirements)
- Robidoux v. Celani, 987 F.2d 931 (2d Cir. 1993) (discussing impracticability and that "impracticable" does not mean impossible)
- Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 568 U.S. 455 (2013) (predominance inquiry in class actions)