ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS
Re: Dkt. No. 95
INTRODUCTION
In this multidistrict antitrust litigation, plaintiffs challenge in their consolidated complaints a settlement between Endo Pharmaceuticals Inc. (“Endo”), a distributor of the brand-name drug Lidoderm, Tei-koku Seiyaku Co., its manufacturer, and Watson Pharmaceuticals, Inc. (“Watson”) a generic drug manufacturer. Plaintiffs allege that when Endo and Teikoku agreed to drop their ongoing patent litigation against Watson, they offered consideration of $96 million in free product and deferred competition with Watson’s generic product worth $170 million in exchange for Watson’s agreement to delay introduction of its generic drug. As a result of this settlement, plaintiffs were allegedly unable to purchase the cheaper generic version of Lidoderm.
The central issue in defendants’ consolidated motion to dismiss is whether plaintiffs have plausibly pleaded that the settlement involved large and unjustified reverse payments that caused antitrust injury under the rule of reason analysis described in F.T.C. v. Actavis, Inc., - U.S. -,
I. PARTIES AND CLAIMS
A. Defendants
Endo is a Delaware corporation that markets and sells Lidoderm throughout the United States.
Watson Pharmaceuticals, Inc. was a Nevada corporation that marketed, produced, and distributed generic pharmaceutical products, including Lidoderm, starting in September 15, 2013.
B. Plaintiffs
The plaintiffs allegedly purchased generic and brand-name Lidoderm at supra-competitive prices. They are grouped into three categories based on their claims and relationship to the defendants; the direct purchaser plaintiffs (“DPPs”), entities that purchased Lidoderm directly from the defendants;
The DPPs bring two claims for violations of Section 1 and three claims for violations of Section 2 of the Sherman Antitrust Act, 15 U.S.C. §§ 1, 2. See DPP Compl. ¶¶ 153-189.
The Food and Drug Administration (“FDA”) must approve all new drugs before a company can begin sales in the United States. Hatch-Waxman Act, 21 U.S.C. § 355(a). To obtain FDA approval, the company must file a New Drug Application (“NDA”), which contains information about the safety and efficacy of the drug, the components of the drug, and any patents issued on the composition of the drug or methods for its use.
Generic drugs offer significant cost-savings, so Congress passed the Hatch-Wax-man Act in order to provide an additional streamlined FDA approval process. DPP Compl. ¶ 44; EPP Compl. ¶ 38; GEHA Compl. ¶ 33; see Pub.L. No. 98-417, 98 Stat. 1585 (1984).
In order to protect the brand-name drug manufacturer’s patent rights, the generic manufacturer must make one of four “paragraph” certifications (i) that no patent for the brand-name drug has been filed with the FDA (paragraph I); (ii) that the patent for the brand-name drug has expired (paragraph II); (iii) that the patent for the brand-name drug will expire on a .particular date and the generic company does not seek to market its generic product before that date (paragraph III); or (iv) that the patent for the brand-name drug is invalid or will not be infringed by the generic manufacturer’s proposed product (paragraph IV). 21 U.S.C. § 355(g)(2)(A)(vn).
After filing an ANDA with a paragraph IV certification, the generic manufacturer must send notice to the patent holder. § 355(j)(2)(B). This notice is treated as actual infringement, and triggers a forty-five day period during which the patent
The first party to file a paragraph IV ANDA receives a special benefit, a period of 180 days where the FDA will not grant any competing ANDA. § 355(j)(5)(B)(iv). This exclusivity period can be “worth several hundred million dollars” to the generic drug manufacturer, who typically earns most of the profits on the generic drug during this time. Actavis,
III. FACTUAL BACKGROUND
Lidoderm is the brand-name for an adhesive patch that contains the drug lido-caine, which is used to treat pain associated with post-herpetic neuralgia. DPP Compl. ¶ 1; EPP Compl. ¶ 1; GEHA Compl. ¶ 1. In 1998, Hind Health Care, Inc. (“Hind”) developed Lidoderm, submitted an NDA to the FDA, granted Endo an exclusive marketing and distribution license, and transferred full ownership of and responsibility for Lidoderm to Teikoku Seiyaku Co. or its wholly-owned subsidiary Teikoku Pharma USA. DPP Compl. ¶¶ 14, 15, 56, 57; EPP Compl. ¶¶ 64, 65, 67; GEHA Compl. ¶¶55, 56, 58. Lido-derm became a “blockbuster” drug that had no bioequivalent generic version until Watson released one in September 2013. DPP Compl. ¶ 3. Endo’s United States sales revenue for Lidoderm was $825 million in 2011 and $947 million in 2012. DPP Compl. ¶¶ 3,133; GEHA Compl. ¶ 4.
A. Endo Protects Lidoderm with Patents and a Citizen Petition
Initially, Hind identified two patents in the Lidoderm NDA: U.S. Patent Nos. 5,411,738 (“the '738 patent”) and 5,601,838 (“the '838 patent”). DPP Compl. ¶ 59; EPP Compl. ¶ 67; GEHA Compl. ¶58. Both the '738 and '838 patents (“the Hind Patents”) expired on May, 2, 2012. Id. After acquiring Lidoderm, Teikoku amended the NDA by identifying an additional patent, U.S. Patent No. 5,827,529 (“the '529 patent”), to be listed in the Orange Book for Lidoderm. DPP Compl. ¶¶ 60-64; EPP Compl. ¶¶ 68, 69; GEHA Compl. ¶¶ 59-63. The '529 patent will expire on October 17, 2015. Id.
In July, 2008, Endo was sued by LecTek Co. for infringing two patents; U.S. Patent Nos. 5,741,510 (“the '510 patent”) and 5,536,263 (“the '263 patent”). Endo settled this litigation in 2009, paying $23 million in exchange for exclusive licenses to use the '263 and '510 patents. DPP Compl. ¶ 66; EPP Compl. ¶¶ 72-75; GEHA Compl. ¶¶ 64, 65. One year later, Endo granted Teikoku a sublicense to use the '510 patent, who then submitted it for listing in the Orange Book for Lidoderm.
B. Watson Files an ANDA to Sell a Generic Version of Lidoderm
On November 13, 2009, Watson sought to market a generic version of Lidoderm and submitted an ANDA. DPP Compl. ¶¶ 72, 73; EPP Compl. ¶77; GEHA Compl. ¶ 70. Pursuant to a paragraph IV certification, Watson claimed that their generic drug would not infringe the '529 patent, and/or that the '529 patent was invalid and/or unenforceable. DPP Compl. ¶ 71; EPP Compl. ¶ 77; GEHA Compl. ¶71. Watson did not claim noninfringement of the Hind patents, indicating that it would begin marketing generic Lidoderm after those patents expired in May 2012. DPP Compl. ¶ 73; EPP Compl. ¶ 78; GEHA Compl. ¶ 73. Similarly, Watson did not address the Rolf '510 Patent because Tei-koku did not list it in the Orange Book until November, 2010. DPP Compl. ¶ 74; EPP Compl. ¶ 79; GEHA Compl. ¶74.
C. Endo Sues Watson for Infringing the '529 Patent
Shortly after Watson filed the ANDA, Endo/Teikoku sued Watson for infringing the '529 Patent. Endo Pharm. Inc., et al., v. Watson Labs., Inc. et al., Case No. 10-cv-00138,
In June 2011, Endo filed a second suit against Watson. Endo Pharm. Inc. v. Watson Labs., Inc., Case No. 10-cv-00575,
In early 2012, Judge Sleet of the District of Delaware conducted a bench trial in the first suit where, plaintiffs allege, “the evidence at trial was overwhelmingly in favor of Watson, exposing the '529 Patent to a determination that it was invalid or unenforceable and that the patent did not cover either the brand[name] product or Watson’s generic product.” DPP Compl. ¶ 79; EPP Compl. ¶ 85; GEHA Compl. ¶ 79. At trial, Watson argued that the '529 Patent was invalid because (i) Teikoku knew of prior art patents that disclosed a “hydro-gel transdermal patch formulation substantially similar to that claimed in the '529 patent,” (DPP Compl. ¶¶ 80, 81); and (ii) the PTO had rejected the '529 patent four times for a variety of reasons. DPP Compl. ¶ 82. Additionally, Watson argued that its generic did not infringe the '529 Patent because Judge Sleet had constructed the patent claims so the patent only covered products- containing “one and only one of the listed alternatives” and Watson’s generic Lidoderm contained three or four of the listed alternatives. DPP Compl. ¶¶ 84-88; EPP Compl. ¶¶ 87-95; GEHA Compl. ¶¶ 80-88.
D. Watson and Endo Settle
On May 28, 2012 — after the bench trial but before Judge Sleet issued his decision — Watson and Endo/Teikoku settled. DPP Compl. ¶ 93; EPP Compl. ¶ 103; GEHA Compl. ¶ 96. The settlement contained four key terms. First, Watson agreed to delay launching its generic Lido-derm until September 15, 2013; about a year after the FDA’s 30-month stay expired, and about one year before the '510 patent was due to expire and two years before the '529 patent was due to expire. DPP Compl. ¶ 94; EPP Compl. ¶ 104; GEHA Compl. ¶ 97. Second, Endo/Teiko-ku agreed to drop the pending lawsuits and not further amend the Citizen Petition. Third, Endo/Teikoku agreed to give Watson $96 million worth of brand-name Lidoderm patches to distribute or sell, with the condition that Watson honor Endo/Teikoku’s existing price-related contracts. DPP Compl. ¶¶ 95-99; EPP Compl. ¶ 106; GEHA Compl. ¶98. Fourth, Endo/Teikoku agreed not to release their authorized generic Lidoderm until seven and one half months after Watson began selling its generic version. DPP Compl. ¶ 99; EPP Compl. ¶ 111; GEHA Compl. ¶ 102. During this exclusivity period, Watson agreed to pay Endo/Teikoku a twenty-five percent royalty on the Gross Profit for sales of the generic Lidoderm. DPP Compl. ¶¶ 99-105; EPP Compl. ¶ 115; GEHA Compl. ¶ 11. Plaintiffs estimate that this term amounted to a payment of $170 million or more. DPP Compl. ¶¶ 107-115; EPP Compl. ¶ 113; GEHA Compl. ¶ 103.
Although the FDA approved Watson’s ANDA on August 23, 2012, Watson did not begin selling generic Lidoderm until September 15, 2013, pursuant to the parties’ agreement. DPP Compl. ¶ 142; EPP Compl. ¶ 80; GEHA Compl. ¶112. Endo/Teikoku was legally allowed to sell its authorized generic Lidoderm at any time; however it waited until May 2014, seven and one half months after Watson
LEGAL STANDARD
I. MOTION TO DISMISS
A motion to' dismiss is proper under Federal Rule of Civil Procedure 12(b)(6) where the pleadings fail to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). A complaint may be dismissed if it does not allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly,
II. SHERMAN ACT § 1: LEGAL STANDARD
Section 1 of the Sherman Antitrust Act provides that “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.” 15 U.S.C. § 1. Interpreted literally, this would forbid every contract, so the antitrust laws are primarily applied to agreements that have “genuine adverse effects on competition.” Actavis,
Before Actavis, circuits were split regarding what test to apply for reverse payment settlement agreements between brand-name and generic drug manufacturers. Some circuits applied the “scope-of-the-patent” test, which dismissed antitrust claims if the anticompetitive effects of the settlement fell “within the scope of the exclusionary potential of the patent.” See, e.g., FTC v. Watson Pharms.,
In Actavis, the Court rejected both alternatives and instead chose the “rule of reason” test in order to strike a balance “between the lawful restraint on trade of the patent monopoly and the illegal restraint prohibited broadly by the Sherman Act.” Actavis,
In Actavis, the Court held that, for a term to raise antitrust concerns: (i) the term must be a “payment”; (ii) the payment must be “reverse”; (iii) the reverse payment must be “large”; and (iv) the large reverse payment must be “unexplained.” Actavis,
First, such payments have the “potential for genuine adverse effects on competition.” Id. at 2234. The brand-name manufacturer can use them to purchase the exclusive right to sell the patented product, a right it purportedly already possesses. Id. If a generic manufacturer abandons a viable claim in exchange for a portion of the brand-name manufacturer’s monopoly profits, then the brand-name manufacturer is able to retain the monopoly profits that “would otherwise be lost in the competitive market.” Id. at 2235. Without this payment, the generic competitor would enter the market and vigorously compete. The benefits of this lost competition “would flow in large part to consumers in the form of lower prices.” Id. at 2234. The Court noted that this harm to competition does not occur in a “settlement on terms permitting the patent challenger to enter the market before the patent expires.” Id.
Second, a payment can be justified if it reflects “a rough approximation of the litigation expenses saved through the settlement” or “compensation for other services that the generic has promised to perform.” Id. at 2235-36. A settlement term that is justified by “traditional settlement considerations” does not harm competition. Id. at 2236. Thus, an “antitrust defendant may show in the antitrust proceeding that legitimate justifications are present.” Id.
Third, large payments that potentially “work unjustified anticompetitive harm” independently demonstrate that the paten-tee has the market power to “charge prices higher than the competitive level.” Id. Stated another way, if a brand-name manufacturer does not have the power to charge supracompetitive prices, it is unlikely “to pay large sums to induce others to stay out of its market.” Id. (citations omitted).
Fourth, “it is normally not necessary to litigate patent validity to answer the antitrust question,” because an “unexplained large reverse payment itself would normally suggest that the patentee has serious doubts about the patent’s survival.” Id. If the patentee has such doubts, that suggest that the intent behind the payment “is to maintain supracompetitive prices to be shared among the patentee and the challenger rather than face what might have been a competitive market — the very anti-competitive consequence that underlies the claim of antitrust unlawfulness.” Id. “In a word, the size of the unexplained reverse payment can provide a workable surrogate for a patent’s weakness.” Id. at 2236-37.
Fifth, the Court reiterated that it was not concerned with all patent infringement settlements. Id. For example, parties may settle by allowing “the generic manufacturer to enter the patentee’s market prior to the patent’s expiration, without the patentee paying the challenger to stay out prior to that point.” Id. at 2237. However, if the basic reason the parties prefer a reverse payment is “a desire to maintain and to share patent-generated monopoly profits, then, in the absence of some other justification, the antitrust laws are likely to forbid the arrangement.” Id.
With this guidance, the Supreme Court stated that lower courts should
Finally, to demonstrate standing under the Sherman Act, a private plaintiff ■ must prove that he or she suffered damages from the antitrust violation, which requires showing that there is a causal connection between the illegal practice and the private plaintiffs antitrust injury. Rebel Oil Co. v. Atl. Richfield Co.,
DISCUSSION
I. SHERMAN ACT § 1: REVERSE PAYMENT SETTLEMENT AGREEMENT
A. Step One: Was There a Reverse Payment?
A reverse payment has the “potential for genuine adverse effects on competition.” Actavis,
1. Is every settlement term that allows early entry protected from antitrust scrutiny?
The defendants argue that the two terms are protected from antitrust scrutiny because they allowed Watson to enter the market before it otherwise would have been able to. Mot. 16. As the Supreme Court noted, a patent infringement settlement does not raise antitrust concerns if it
Defendants’ argument mistakenly distinguishes between early-entry settlements, where the value to the generic manufacturer comes solely from the ability to enter the market with a competing product, and a reverse-payment term, where the value to the generic manufacturer comes from compensation from the patentee. Id. Defendants argue that the Court’s exception includes all terms that allow early-entry because they create competition that benefits customers, while the reverse payments do not. Id. Defendants argue that both terms in the challenged settlement were akin to early-entry settlements because they only provided value to Watson if it entered the market and sold $96 million worth of brand-name Lidoderm and then its own generic Lidoderm. Id.
The distinction between early-entry and reverse-payment settlements is not relevant, plaintiffs argue, because it rests on the argument that the two terms are pro-competitive, which is an affirmative defense to an antitrust claim that may not be raised in a motion to dismiss. Plaintiffs’ Consolidated Opposition to Defendants’ Joint Motion to Dismiss (“Oppo.”) 9 [Dkt. No. 103].
Even though some terms that allow early-entry are procompetitive and not subject to antitrust scrutiny as a matter of law, as defendants argue, here plaintiffs plausibly allege that the provision of brand-name product was not procompetitive because it did not “increase output, reduce price, or increase consumer choice.” DPP Compl. ¶ 98. The settlement prohibited Watson from directly competing with Endo because Watson agreed to honor Endo’s price-related contracts. DPP Compl. ¶¶ 95, 98. Moreover, plaintiffs specifically and plausibly allege that Watson in fact sold the brand-name Lidoderm at the same supracompetitive prices as Endo. DPP Compl. ¶ 98.
Defendants rely on Asahi Glass Co. v. Pentech Pharm, Inc.,
Plaintiffs have not cited, and I have not found any case where brand product is used as payment for the delay in a post-Actavis case. But here, plaintiffs have plausibly alleged that this term was not within the category of settlements that the Supreme Court declared was beneficial to consumers and exempt from antitrust scrutiny.
With respect to the no-authorized-generic term, plaintiffs plausibly allege that it not only failed to provide a procompetitive benefit, it caused actual harm and is the basis for several claims.
On this motion to dismiss, plaintiffs have plausibly pled that the no-authorized-generic and provision of brand-name Lido-derm terms were not beneficial to consumers despite the fact that Watson was allowed to enter the market before patent expiry. Thus they are not akin to the early-entry settlements that Actavis held were not subject to antitrust scrutiny.
2. Are non-monetary terms “payments” in the Actavis framework?
Defendants argue that Actavis is “limited to reverse payment settlements in which the branded company pays cash to the generic company.” Reply 5 (emphasis in original). Two district courts have granted motions to dismiss in post-Actavis cases on the grounds that the non-monetary settlement terms are not “payments.” See In re Loestrin,
I agree that in order to determine if a term is a large and unjustified payment, as Actavis requires, courts must be able to calculate its value. See In re Effexor XR,
Here, the parties’ own settlement states that the patentee (Endo/Teikoku) shall give the infringer (Watson) “Brand Product of value totaling twelve million dollars ($12,000,000) per month ... on the first business day of each month beginning January 1, 2013 and ending August 1, 2013 (for a total of eight (8) months).” DPP Compl. ¶ 95 (emphasis in original). Watson expected this term to generate close to $96 million from these sales, and plaintiffs allege that it did. Id. at ¶ 98. This term is not a complex, multifaceted payment; rather it is a simple transfer of a fungible product. Calculating its value is straightforward, and plaintiffs have plausibly alleged facts sufficient to support their calculations. Id. This payment is also reverse because it flowed from the patentee to the alleged infringer. DPP Compl. ¶ 97.
Endo/Teikoku’s agreement not to release an authorized generic that could compete with Watson during the 180-day exclusivity period is more complex. Defendants categorize this term as a partially exclusive license and argue that it is within the “right to exclude provided by the Patent Act.” Mot. 18. Then, they argue that plaintiffs failed to plausibly allege “an appropriate method of calculating the value of Endo’s agreement not to launch an authorized generic.” Reply to DPP 6. Plaintiffs rebut the argument that the no-authorized-generic agreement was an exclusive license because it was not “one where the patent holder turns over its patent rights to another, [who], having stepped into the shoes of the patent holder, alone practices the patented invention.” Oppo. 17 (citing Barnett v. Strom,
I agree with the courts who have held that a no-authorized-generic term can constitute a payment. See In re Niaspan,
Plaintiffs estimate the value of the no-authorized-generic agreement by calculating the difference between Watson’s projected revenues with the agreement and Watson’s projected revenues had it competed with Endo/Teikoku’s authorized generic from the start. DPP Compl. ¶ 109. Plaintiffs rely on a study conducted by the FDA to allege that it “is common in the pharmaceutical industry” for the first generic drug entering the market without competition to capture 80% of the brand-name’s, and set the price at 90% of the brand-name’s. DPP Compl. ¶¶ 110, 111 (citing Generic Competition and Drug Prices, http://www.fda.gov/AboutFDA/ CentersOffices/OfficeofMedical ProductsandTobacco/CDER/ucml29385. htm). In contrast, a generic drug entering the market with an authorized generic competitor will only take 40% of the market, and the resulting competition will drive the price down to 52% of the brand-name’s. Id. Applying these percentages to Endo’s publicly available sales information, Watson’s projected revenues for the seven and one half month period would be $278,437,500 with the agreement, but only $107,250,000 without the agreement. DPP Compl. ¶ 112. These calculations are not overly complicated, and they are plausible.
B. Step Two: Were the Reverse Payments Large and Unjustified?
Defendants argue that the complaints fail to establish that the free brand product and no-authorized-generic payments were large and unjustified because they didn’t plead the value of the litigation costs that were avoided by the settlement of the patent infringement cases. Reply 6. Defendants also allege that plaintiffs do not properly evaluate the no-authorized-generic agreement because they do not account for the 25% royalty that Watson was required to pay Endo for the sales on Watson’s generic during that period of exclusivity. Reply to DPP 6. The latter argument is incorrect, as plaintiffs’ valuations explicitly account for the 25% royalty. DPP Compl. ¶ 107.
In Actavis, the Court did not define “large.” At one extreme, a “large” payment could be “a sum even larger than what the generic would gain in profits if it won the paragraph IV litigation and entered the market.” Actavis,
The Supreme Court gave more guidance for “unjustified,” holding that a payment is justified when it reflects “traditional settlement considerations, such as
Here, Plaintiffs do not provide an estimate of. the avoided litigation costs; instead they argue that the payments at issue are so large — $266 million — that they have “no rational connection to, and far exceed, any approximation of the costs of continuing the patent litigation.” DPP Compl. ¶¶ 117, 117. Because this is a motion to dismiss, defendants are unable to show that their expected litigation costs or other services justified the alleged value of the terms. However, given the status of the underlying patent litigation — the first case was tried and submitted for a bench decision and the second case had proceeded past the pleading stage — the plaintiffs’ allegations that the payments were large and unjustified are plausible.
C. Step Three: Rule of Reason
The defendants argue that the settlement does not pass the rule of reason test because it was procompetitive as a matter of law, essentially rehashing their initial arguments that I rejected above. Mot. 7. Additionally, they contend that the outcome of the litigation and Watson’s ANDA was far from certain when Watson and Endo/Teikoku entered into the settlement. Id. They allege that the settlement allowed Watson to enter the market earlier than it would have if defendants had not settled because the pending litigation and regulatory obstacles, including the pending Citizen Petition, were too great to suggest otherwise. Id. They conclude that liability cannot be established without proof that the alleged payment caused Watson’s generic to enter later than it would have absent the payment. Id.
As discussed above, I have found that plaintiffs have plausibly pled the existence of large and unjustified reverse payments. As the Court stated, “the size of the unexplained reverse payment can provide a workable surrogate for a patent’s weakness, all without forcing the court to conduct a detailed exploration of the validity of the patent itself.” Actavis,
D. Step Four: Did the Settlement Cause Antitrust Injury?
Defendants argue that Watson would not have been able to enter the market before September 15, 2013, therefore the settlement did not cause an antitrust injury. Mot. 21. Plaintiffs respond with two theories of injury (i) Watson was able and willing to launch “at-risk” (as soon as it obtained FDA approval, but before the patent litigation was finally resolved); and (ii) the settlement would have allowed generic Lidoderm to enter the market even earlier if Endo/Teikoku had not purchased a delay with the two payments. DPP Compl. ¶ 122
Plaintiffs assert that Watson would have been able to launch at-risk as soon as it received FDA approval, which occurred on August 23, 2012. DPP Compl. ¶ 75, EPP Compl. ¶ 80, GEHA Compl. ¶ 75. At oral argument, defendants countered that this entry date is speculative, because the settlement affected the FDA’s decision to deny Endo’s Citizen Petition and approve Watson’s ANDA. Defendants’ argument relies on matters outside of the pleadings — namely what the FDA’s practice is when a patentee with a pending Citizen Petition settles with a generic manufacturer who has a pending ANDA. On a motion to dismiss, the Court reviews only plausible allegations in the complaints and matters subject to judicial notice. Plaintiffs’ assertion that Watson was able to enter the market on August 23, 2012 after it received FDA approval is plausible.
To demonstrate Watson’s willingness to enter the market at-risk, both parties cite to comments that Watson representatives made during an earning call. Oppo. 23, Mot. 23. Plaintiffs note that Watson was planning to launch at “the earliest possible time.”
Whether a generic manufacturer is willing to risk treble damages from a patent infringement suit by selling a generic drug at risk is a generally a factual issue.' In re Lipitor,
Also supporting the position that Watson was willing to launch at-risk is the fact that Watson had increased production capacity and procured the raw materials in preparation for a launch in 2012. DPP Compl. ¶ 124. Finally, the size of the payment Watson was able to obtain from Endo/Teikoku (over $200 million) also demonstrates Endo/Teikoku’s fear that Watson would have cleared the regulatory hurdles and launched its generic before September 15, 2013. See Actavis,
As an alternative theory of injury, plaintiffs allege that Endo/Teikoku used the two payments to purchase part or all of Watson’s 13 month delay (from August
In Actavis, the Supreme Court held that settlements with large unjustified reverse payments can violate the Sherman Act, even though the settlement allowed some early-entry. Actavis,
As discussed above, plaintiffs have plausibly alleged that the terms were large and unjustified reverse payments, which is sufficient to support plaintiffs’ theories of injury at this juncture. Defendants have not demonstrated procompetitive effects sufficient to offset the alleged injury to competition under the rule of reason analysis.
Defendants’ motion to dismiss the Section 1 claims is DENIED.
II. SHERMAN ACT § 1: PER SE TREATMENT OF THE NO-AUTHORIZED-GENERIC
Plaintiffs also argue that the no-authorized-generic term is an independent agreement not to compete that is per se illegal under Section 1. Oppo. 19. Defendants respond that the agreement is not per se illegal because it is not a naked agreement not to compete, and therefore must be evaluated under the rule of reason standard. Reply 10.
The per se standard was created to streamline antitrust claims in situations where the agreement has “such a predictable and pernicious anticompetitive effect, and such limited potential for procompeti-tive benefit” that courts may predict with confidence that the conduct is unreasonably anticompetitive every time it arises. Northern Pacific Ry. Co. v. United States,
III. SHERMAN ACT §2
A. Legal standard
Section 2 of the Sherman Antitrust Act provides that “[e]very person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony.” 15 U.S.C. § 2. A claim of monopoly has two elements: (i) monopoly power; and (ii) unlawful acts. United States v. Grinnell Corp.,
A plaintiff alleging attempted monopoly under Section 2 must demonstrate four elements: (i) specific intent to control prices or destroy competition; (ii) predatory or anticompetitive conduct directed at accomplishing that purpose; (iii) a dangerous probability of achieving “monopoly power”; and (iv) causal antitrust injury. Rebel Oil Co.,
B. Shared Monopoly
Defendants argue that all three Section 2 claims fail because, as a matter of law, they require plaintiffs to plead that a single entity possesses monopoly power. Mot. 24.
Plaintiffs do not cite any case where a court held a manufacturer and its distributor jointly liable for violating Section 2. A monopoly, by definition, consists of a single firm, and both monopolization and attempted monopolization are single-firm violations. See Rebel,
In some situations, two companies can “pool their capital and share the risks of loss as well as the opportunities for profit ... such joint ventures [are] regarded as a single firm competing with other sellers in the market.” Texaco, Inc. v. Dagher,
The most analogous case is In re Well-bwtrin XL Antitrust Litigation, where the plaintiffs brought a monopoly claim against the producers and distributors of a brand-name drug. Case No. 08-mdl-2431,
Here a monopolization or attempted monopolization claim cannot stand against both Endo and Teikoku. Plaintiffs allege that Endo markets and sells Lidoderm in the United States, while Teikoku manufacturers Lidoderm in Japan. DPP Compl. ¶¶ 13-14. However, unlike Wellbutrin XL, plaintiffs do not allege that either Endo or Teikoku individually has market power in the United States over Lidoderm, instead referring to Endo/Teikoku. See, e.g., DPP Compl. ¶ 130141.
Defendants argue that the conspiracy to monopolize claim must fail for the same reason, as the conspiracy must “allege specific intent by Defendants to empower one of them with monopoly power.” Standfacts Credit Servs.,
It is plausible that plaintiffs could allege either that Endo possessed market power within the United States, as it was the sole distributor of Lidoderm in the United States, or that Teikoku possessed market power within the United States because it controlled the production and the primary patents. DPP Compl. ¶ 57. Plaintiffs may also be able to allege specifically that Endo and Teikoku conspired to give one or the other monopoly power, but those allegations are missing from the existing complaints.
The motion to dismiss the three monopoly claims is GRANTED with LEAVE TO AMEND.
IV. STATE LAW CLAIMS
Defendants move to dismiss the state law claims asserted by GEHA and the
I will address the defendants’ remaining challenges to the state law claims in turn.
A. Article III Standing
Defendants argue that the claims of GEHA and the EPPs arising under the common law of each state must be dismissed because the plaintiffs fail to plead adequate factual allegations to establish their standing to assert each state’s laws. At its core, defendants’ argument is that GEHA cannot bring claims under any law other than Missouri — where it resides— and the EPPs can bring claims under only the laws of the eight states where an EPP resides. As discussed below, I agree the issue should be resolved at this juncture, reject defendants unduly narrow concept of standing, find that GEHA has alleged standing only for its claims under Missouri law, and agree that the EPPs fail to allege sufficient facts to support standing for specific states where no EPP was injured.
1. Whether Standing to Pursue State Law Claim Claims Should be Decided Now
Standing is a “necessary element of federal-court jurisdiction under Article III” and a “threshold question in every federal case.” Thomas v. Mundell,
Plaintiffs argue that only the standing of the named plaintiff needs to be shown at this juncture, and that the standing of absent class members is irrelevant. Oppo. 29.
The Ninth Circuit has confirmed that district courts can address “the issue of standing before it addresse[s] the issue of class certification.” Easter v. Am. W. Fin.,
2. EPPs Standing
Defendants do not dispute that the EPPs have standing to pursue claims under the laws of eight states where the EPPs reside or have a principal place of business.
With respect to the twenty states that the EPPs do not assert any connection to, I GRANT the motion to dismiss with leave to amend as to the claims under the following states’ laws: Alaska, District of Columbia, Hawaii, Idaho, Iowa, Louisiana, Maryland, Michigan, Mississippi, Montana, Nebraska, New Mexico, Oklahoma, Oregon, Puerto Rico, Utah, Vermont, Virginia, Washington, and Wyoming. If the EPPs have facts to allege to show their named plaintiffs have a sufficient connection to any of these states, they may include those facts in an amended pleading.
With respect to the twenty-two states with only an “attenuated” connection to the EPPs, I find that the EPPs' have alleged adequate facts to demonstrate standing. As an initial matter, I reject defendants test — whether the EPPs reside in a particular state — as unduly narrow. The EPPs do not need to reside in a particular state to have standing to assert claims under that state’s laws. The question is whether the EPP was harmed in a particular state by either its own purchase of a Lidoderm or generic patch or by its reimbursement of a purchase of a Lidoderm or generic patch in that state.
As noted above, the EPPs include health and welfare benefits plans who allege that they have “indirectly purchased, paid and/or provided reimbursement for Lidoderm and/or the generic version of Li-doderm” in the following thirty states: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Kansas, Kentucky, Maine, Massachusetts, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, West Virginia and Wisconsin. EPP Compl. ¶¶ 9-16. These allegations of purchase or reimbursement in those states are adequate to demonstrate standing. See, e.g., In re Flonase Antitrust Litig.,
Defendants argue the “vague” allegation that the Plans indirectly purchased or provided reimbursement for Lidoderm and the generic in these states “is far from sufficient, given the complex and varied ways in which health plans may provide pharmacy benefits to their members.” Reply 19-20. I disagree. This is not a motion to dismiss under Rule 9(b) that
Therefore, defendants’ motion to dismiss the EPPs’ claims under the laws of is Alabama, Arizona, Arkansas, Colorado, Connecticut, Delaware, Florida, Georgia, Kansas, Kentucky, Maine, Missouri, Nevada, New Hampshire, New Jersey, North Carolina, North Dakota, South Carolina, South Dakota, Tennessee, Texas and Wisconsin is DENIED.
3. GEHA Standing
a. GEHA’s Claims in States Other than Missouri
Defendants assert that GEHA’s complaint must be dismissed in its entirety because GEHA resides and has its principal place of business in Missouri and has failed to adequately allege that it purchased or reimbursed any of its covered participants in any particular state. Mot. 30. In its Amended Complaint, GEHA alleges that it “provid[es] benefits to nearly 1.5 million covered lives with federal employee members residing in all 50 states as well as the District of Columbia and Puerto Rico.” GEHA Compl. ¶ 21. GEHA then alleges that it “purchased a significant amount of branded Lidoderm at monopoly prices during the relevant time period,” but does not indicate in which states or territories it made those purchases. Id. ¶ 22; see also ¶ 122 (“GEHA has spent a significant amount on purchases of Lidoderm therapy during the relevant time period.”). Later on in its Amended Complaint, GEHA asserts claims for monopolization under the laws of 25 states (id. ¶ 130); claims for attempted monopolization under the laws of 25 states (id. ¶ 138); claims for conspiracy to monopolize under the laws of 28 states (id. ¶ 150); and claims for conspiracy and combination in restraint of trade under the laws of 28 states (id. ¶ 158).
Similar to the conclusion with respect to the EPPs, I agree that where a health plan alleges that it purchased or reimbursed purchases for allegedly overpriced drugs in specific states, a health care plan has standing to assert claims in each of those states. See, e.g., In re Flonase,
However, reviewing GEHA’s Amended Complaint, there is no direct allegation that GEHA purchased and/or reimbursed its members for purchase of Lidoderm or its generic in any specific states. Its claims under the laws of states — other than Missouri — are DISMISSED with leave to amend.
b. GEHA’s Missouri Claims
Defendants also move to dismiss GEHA’s consumer protection and unjust enrichment claims under Missouri law. Mot. 31.
GEHA does not address In re Actimmune. Moreover, each of its arguments miss the point. It accurately states that corporations are included as persons under the statute, but does not link the corporation’s purchase to its own personal, family or household use. It cites inapposite cases recognizing that a direct contractual transaction between a plaintiff and defendant is not required and that, under the broad language of the statute, indirect purchasers can sue upstream manufacturers. Gibbons v. J. Nuckolls, Inc.,
Finally, GEHA relies on Sheet Metal Workers Local 441 Health & Welfare Plan v. GlaxoSmithKline, PLC,
B. Failure to State a Claim under Certain State Antitrust Laws
Defendants raise specific challenges to the EPPs’ ability to state claims under four state’s laws
1. Illinois
Defendants argue that under the Illinois Antitrust Act only the Illinois Attorney General may bring a class action asserting indirect purchaser antitrust claims. See 740 111. Comp. Stat. Ann. § 10/7(2). Defendants note that courts have dismissed indirect purchaser class action claims asserted in federal court under Illinois law for this reason. See, e.g., In re Wellbutrin XL Antitrust Litig.,
The EPPs do not address the adverse cases, but instead rely on an argument those courts rejected; that the prohibition of non-Attorney General indirect purchaser class actions applies only to actions brought in the state courts of Illinois and to import that prohibition into an action pending in federal court would violate Rule 23 and is contrary to the Rules Enabling Act. Oppo. 31-32; see also 740 111. Comp. Stat. Ann. § 10/7 (“no person shall be authorized to maintain a class action in any court of this State for indirect purchasers asserting claims under this Act, with the sole exception of this State’s Attorney General, who may maintain an action par-ens patriae as provided in this subsection.” (emphasis added)); Shady Grove Orthopedic Associates, P.A. v. Allstate Ins. Co.,
The EPPs contend that the Supreme Court decision in Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co.,
2. Massachusetts
Defendants argue that Massachusetts has not repealed Illinois Brick Co. v. Illinois,
The EPPs respond that as employee health and welfare plans, a munici
The Massachusetts statute at issue focuses on the plaintiff “Any person who engages in the conduct of any trade or commerce and who suffers any loss of money or property, real or personal, as a result of the use or employment by another person who engages in any trade or commerce of an unfair method of competition or an unfair or deceptive act or practice” may sue under the statute. ALM GL ch. 93A, § 11. Plaintiffs note that Massachusetts’ courts have struggled with identifying the line between “a consumer claim and a business claim for purposes of G.L. c. 93A, §§ 9 and 11.” Frullo v. Landenberger,
Ultimately, the choice appears to turn on whether a given party has undertaken the transaction in question for business reasons, or has engaged in it for purely personal reasons (such as the purchase of an item for personal use). While the character of the transaction will not always be easy to identify, the distinction is consistent with the language of the respective statutory sections. Whereas a defendant must be engaged in trade or commerce, i.e., acting in a business context, to be liable under either § 9 or § 11, a plaintiff who acts in a business context has a cause of action exclusively under § 11. Thus, any transaction in which the plaintiff is motivated by business considerations gives rise to claims only under the statute’s business section. That a transaction may be an isolated one not in the normal course of business does not insulate it from the reach of G.L. c. 93A, § 11.
Id. at 821,
Because the EPPs at issue — the City of Providence and the Iron Workers — were acting in trade or commerce when they indirectly purchased or reimbursed their employee or members, they cannot state a claim under § 9 of the Massachusetts consumer protection statute for antitrust injury. As the indirect purchaser claim is barred under § 11, the EPPs’ Massachusetts consumer protection act claim must be DISMISSED with prejudice.
3. Puerto Rico
Defendants assert that Puerto Rico has not repealed Illinois Brick by statute, and therefore, the indirect purchaser antitrust claims under Puerto Rico law must be dismissed. Plaintiffs respond that Puerto Rico’s Antitrust Act (PRAA) does not distinguish between direct and indirect purchasers but provides that “[a]ny person” injured by antitrust violations may sue. 10 L.P.R.A. § 268. Plaintiffs also rely on Rivera-Muniz v. Horizon Lines Inc.,
Defendants rely on two decisions from this District. In the first, In re TFT-LCD Antitrust Litig.,
Finally, in the most recent decision, a district court considered all three cases— In re TFT-LCD, SRAM and Rivera-Muniz-and held that “in light of the fact that Puerto Rico antitrust law has been interpreted in accordance with federal antitrust law, which does not allow claims from indirect purchasers following Illinois Brick, and in the absence of evidence showing that Puerto Rico has repealed Illinois Brick — this Court dismisses the claims arising under the Puerto Rico law.” In re Nexium (Esomeprazole) Antitrust Litig.,
I realize that the court in Rivera-Muniz first noted that the “PRAA is modeled after federal antitrust statutes” and then relied solely on Pressure Vessels of P.R., Inc. v. Empire Gas de P.R.,
Because neither Rivera-Muniz nor Pressure Vehicles addressed Illinois Brick, I agree with the weight of authority and find that the claims under Puerto Rico’s statute must be DISMISSED with prejudice.
4. Rhode Island
Defendants assert that while Rhode Island passed an Illinois Brick repealer statute in 2013, the statute is not retroactive and, therefore, the indirect purchaser antitrust claims under Rhode Island law must also be dismissed. Mot. 33; R.I. Gen. Laws.§ 6-36-7(d); Hydro-Mfg. v. Kayser-Roth Corp.,
Plaintiffs respond that the repealer statute is simply a procedural statute— conferring standing on residents to sue for indirect antitrust violations — which can be applied retroactively. See Pion v. Bess Eaton Donuts Flour Co.,
In absence of any authority that is to the contrary, I find that the Rhode Island statute conveyed substantive rights; allowing indirect purchasers to sue on claims they had no standing to before. The conclusion that the statute does not apply retroactively is supported by the language of the law itself; that “it shall take effect upon passage.” Finally, plaintiffs argue that claims arising after July 15, 2013 are still viable. However, the conduct at issue — the allegedly anticompetitive settlement agreement — was entered into in May 2012. The fact that damages may have continued to occur from that conduct after the enactment of the repealer law, does not make the conduct itself actionable. See, e.g., State v. Lead Ind. Assn., Inc., Case No. 99-5226,
Therefore, the EPPs antitrust claims under Rhode Island are DISMISSED with prejudice.
C. EPPs’ Unjust Enrichment Claims
Defendants argue that to the extent the EPP’s unjust enrichment claims are based or wholly tethered to their state law antitrust claims, they must be dismissed for the same reasons as the underlying antitrust claims. Reply 41-42.
1. Standing
As an initial matter, while the EPPs assert unjust enrichment claims based on the laws of 48 states (all except Indiana and Ohio) and the District of Columbia and Puerto Rico, as discussed above the EPPs do not have standing to pursue any claims under the laws of jurisdictions where they do not reside or allege purchase or reimbursement. Therefore, the EPPs claims for unjust enrichment under the following 20 jurisdictions’ laws are DISMISSED with leave to amend: Alaska, District of Columbia, Hawaii, Idaho, Iowa, Louisiana, Maryland, Michigan, Mississippi, Montana, Nebraska, New Mexico, Oklahoma, Oregon, Puerto Rico, Utah, Vermont, Virginia, Washington, and Wyoming.
2. Illinois Brick End Run
Defendants argue that the EPPs cannot use unjust enrichment to circumvent the Illinois Brick ban on indirect purchaser claims in states where there has been no Illinois Brick repealer, and therefore the unjust enrichment claims under those specific jurisdictions must be dismissed.
The EPPs rely on three cases to argue that courts have rejected so strict an interpretation of Illinois Brick and have allowed unjust enrichment cases despite the lack of an Illinois Brick repealer. See, e.g., King Drug Co. of Florence v. Cephalon, Inc.,
Defendants respond these three cases are outliers; that the lead case, In re Cardizem, did not discuss Illinois Brick, and the other two cases simply rely on In re Cardizem. Defendants contend that the “overwhelming majority” of courts have found that Illinois Brick bars unjust enrichment claims absent repealer, including a decision from this District. See, e.g., In re TFT-LCD Antitrust Litig.,
I agree with the majority of courts who have directly addressed this issue and find that the EPPs cannot circumvent the Illinois Brick prohibition absent authority from 'the courts of those states that would allow unjust enrichment claims to proceed.
3. Challenges to Sufficiency of Unjust Enrichment Claims
For the unjust enrichment claims that are not barred by Illinois Brick, defendants argue the EPPs fail to state claims under specific state laws because: (i) the EPPs received the benefit of their bargain;
I find that defendants — in omitting substantive state-by-state analysis from their briefing and asking the Court instead to conduct that analysis by reviewing a list of cases provided in appendices — have not properly raised their arguments. They may try again. Defendants’ motion to dismiss the unjust enrichment claims based on the substantive elements of each relevant jurisdiction’s law is DENIED without prejudice to being raised in a subsequent motion.
4. Unjust Enrichment under California Law
Finally, defendants move to dismiss the EPPs’ unjust enrichment claim
The EPP claim for unjust enrichment under .California law is DISMISSED with prejudice.
CONCLUSION
Defendants’ motion to dismiss the DPPs’ Section 1 Sherman Act claims is DENIED as to Claim One (rule of reason) and GRANTED with prejudice as to Claim Two (per se). The motion to dismiss the DPPs’ Section 2 Sherman Act claims (monopoly, attempt, and conspiracy to monopolize) is GRANTED with leave to amend.
Defendants’ motion to dismiss the EPP and GEHA claims regarding monopoly are DISMISSED with leave to amend. Defendants’ motion to dismiss the EPP state law claims for states where they have not alleged a sufficient connection (Alaska, District of Columbia, Hawaii, Idaho, Iowa, Louisiana, Maryland, Michigan, Mississippi, Montana, Nebraska, New Mexico, Oklahoma, Oregon, Puerto Rico, Utah, Vermont, Virginia, Washington, and Wyoming) is GRANTED with leave to amend. The EPP state law antitrust claims under the laws of Florida, Illinois, Massachusetts, Puerto Rico, and Rhode Island are DISMISSED with prejudice. Defendants’ motion to dismiss the EPP state law antitrust claims based on insufficient allegations is DENIED.
Defendants’ motion to dismiss the EPP unjust enrichment claims under Alaska, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Kentucky, Louisiana, Maryland, Massachusetts, Missouri, Montana, New Jersey, Oklahoma, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Texas, Virginia, Washington, and Wyoming is GRANTED and those claims are DISMISSED with prejudice.
The motion to dismiss the EPP unjust enrichment claims for the remaining states is DENIED without prejudice.
The motion to dismiss GEHA’s claims as to states other than Missouri is GRANTED with leave to amend. GEHA’s consumer protection and unjust enrichment claims under Missouri law are DISMISSED with prejudice.
In the Order Following Case Management Hearing (Dkt. No. 47) I required the parties to complete the Rule 26(f) conference within 14 days of issuing this ruling,
IT IS SO ORDERED.
Notes
. Lidoderm is the brand name for an adhesive patch that contains the drug lidocaine. DPP Compl. ¶ 1; EPP Compl. ¶ 1; GEHA Compl. ¶ 1.
. Watson acquired Actavis, Inc. in January, 2013. DPP Compl. ¶ 17; EPP Compl. ¶ 22; GEHA Compl. ¶ 27. During this acquisition process, Watson changed its name to Actavis, Inc. Id.
. The DPPs are (i) Droguería Betances, Inc.; (ii) Rochester Drug Co-Operative, Inc.; and (iii) American Sales Company, LLC; and (iv) Cesar Castillo, Inc. DPP Compl. ¶¶ 9-12.
. The EPPs are: (i) Allied Services Division Welfare Fund; (ii) City of Providence; (iii) International Union of Operating Engineers Local 49 Health and Welfare Fund; (iv) International Union of Operating Engineers Local 132 Health and Welfare Fund; (v) Iron Workers District Council of New England Welfare Fund; (vi) NECA-IBEW Welfare Trust Fund; (vii) United Food and Commercial Workers Local 1776 & Participating Employers Health and Welfare Fund; (viii) Welfare Plan of the International Union of Operating Engineers Locals 137, 137A, 137B, 137C, 137R; (ix) Irene Kampanis; and (x) Steven Roller. EPP Compl. ¶¶ 9-18.
. The DPPs claim that defendants violated . the Sherman Act because they: (i) foreclosed the market by agreeing to delay the release date for Watson’s generic lidocaine patch by 13 months, DPP Compl. ¶¶ 153-159; (ii) foreclosed the market by agreeing to delay the release date for Endo’s authorized-generic lidocaine patch by seven and one half months, DPP Compl. ¶¶ 160167; and (iii) conspired to maintain Endo/Teikoku’s monopoly in the United States market for lido-caine patch 5 percent. DPP Compl. ¶¶ 168— 176. Additionally, they claim that Endo/Tei-koku violated the Sherman Act because they: (iv)monopolized the market for lidocaine patch 5 percent, DPP Compl. ¶¶ 177-183; and (v) attempted to monopolize the market for lidocaine patch 5 percent. DPP Compl. ¶¶ 184-189.
. The EPPs claim that, by entering into the agreement with Watson, Endo/Teikoku violated state laws because they: (i) entered into a contract, combination, and conspiracy that restrained trade, EPP Compl. ¶¶ 162-170; (ii) conspired to monopolize the market for Lido-derm, EPP Compl. ¶¶ 171-183; (iii) violated California’s Unfair Competition Law because they engaged in unfair and unlawful practices, EPP Compl. ¶¶ 184-192; and (iv) were unjustly enriched. EPP Compl. ¶¶ 193205.
. GEHA claims that, by entering into the settlement with Watson, Endo/Teikoku violated state laws because they: (i) monopolized the market for Lidoderm, GEHA Compl. ¶¶ 125-
.Brand-name drug manufacturers are responsible for including in their FDA applications the patent numbers for any patents which (i) claim the approved drug or its approved uses; and (ii) for which "a claim of patent infringement could reasonable be asserted if a person not licensed by the owner engaged in the manufacture, use, or sale of the drug.” 21 U.S.C. § 355(b)(1), (g)(7)(A)(iii).
. A generic can be substituted for the brand-name drug by a pharmacist, and many states require pharmacists to do so. DPP Compl. ¶ 43; EPP Compl. ¶ 52; GEHA Compl. ¶ 44. According to plaintiffs, generic drugs typically capture 90% of sales upon their release, and are priced 85% lower than the brand-name drug. DPP Compl. ¶44; EPP Compl. ¶ 51; GEHA Compl. ¶ 44/ Therefore, the presence of a generic in the market greatly benefits consumers; however it also reduces the brand-name’s manufacturer’s revenue.
. Watson’s ANDA included a paragraph IV certification. DPP Compl. ¶ 72; EPP Compl. ¶ 77; GEHA Compl. ¶ 71.
. The '510 Patent was not listed in the Orange Book when Watson filed its ANDA in September 2009. DPP Compl. ¶ 70; EPP Compl. ¶ 77; GEHA Compl. ¶ 74.
. Other than the'510 patent, none of the Rolf patents were ever listed in the Orange Book
. A Citizen Petition is a request that the FDA change a policy or take specific action in order to address public safety issues regarding a specific ANDA. 21 U.S.C. § 355(q). The FDA typically addresses active Citizen Petitions before approving the related ANDA. Id., § 355(q)(l)(A).
. Defendants request that I take judicial notice of the Citizen Petition and two amendments to that petition because they are public documents that are posted on the FDA website and not reasonably subject to dispute. Defendant’s Consolidated Request for Judicial Notice In Support of Joint Motion to Dismiss Plaintiffs’ Complaints [Dkt. No. 92]. Defendants also argue the petition and its amendments are appropriately reviewed under the doctrine of incorporation, as the plaintiffs’ complaints rely on the Citizen Petition. Id. Plaintiffs object to this request on the grounds that the contents of the petition are subject to dispute and because the Citizen Petition is not central to the claims plaintiffs assert, and therefore, not appropriate for incorporation by reference. Dkt. No. 104. The Federal Rules of Evidence allow courts to take judicial notice of a fact if it is "not subject to reasonable dispute in that it is ... capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed. R. Evid 201(b). Defendants here cite to the Citizen Petition to establish the fact that it was pending with the FDA — not for the truth of the matters asserted therein. I GRANT the Request for Judicial Notice for the Citizen Petition and its amendments on this limited basis. See W. Sugar Coop. v. Archer-Daniels-Midland Co., Case No. 11-cv-3473,
. The second suit did not trigger another automatic stay.
. See Apple iPod iTunes Antitrust Litig. v. Apple, Inc., Nos. C 05-00037 JW, C 07-06507 JW,
. At oral argument, defendants argued that the fact that Watson maintained the supra-competitive price was irrelevant because antitrust analysis focuses on the number of competitors in a market. However, plaintiffs make a different point. Plaintiffs allege that the provision of $96 million of brand product was a large and unjustified payment made in
.At oral argument, defendants argued that the settlement required Endo/Teikoku to give Watson free Lidoderm in 2013, and then to continue giving brand product in 2014 and 2015 or until the FDA approved Watson’s ANDA. See Request for Judicial Notice Ex. A at 10. They assert this demonstrates that Endo/Teikoku’s intent was to allow Watson to enter the market before FDA approval (even if the FDA delayed approval of Watson's generic through 2015) rather than to compensate Watson for delaying release of its generic until September 15, 2013. I do not find this argument persuasive for three reasons. First, the 2013 term is different than the 2014 and 2015 terms because it is not contingent on FDA approval of Watson's ANDA. Second, the size of the payment suggests that this justification is not plausible. Third, the settlement states that the parties intent regarding the "Brand Product provided by Endo/Teiko-ku to Watson’s Wholesaler Affiliate hereunder is a good-faith bargained-for resolution of the claims at issue in the Litigation,” not to allow Watson to enter the market despite FDA approval. DPP Compl. ¶ 97.
. This conclusion is in accordance with the FTC, which has taken the position that free brand product, when given in exchange for an agreement to delay a generic, can allow a brand-name -manufacturer to share its monopoly profits. See In re Lamictal, Case No. 14-1243 (3rd Cir. April 28, 2014),
. At least one court has found that a six month no-authorized-generic agreement was not anticompetitive under the rule of reason test. See, e.g., In re Lamictal,
. At oral argument, defendants urged me to follow Judge Sheridan’s analysis in In re Lipitor. In that case, the alleged nommonetary payments were "(i) the forfeiture of Pfizer's claim for damages in the Accupril II litigation in exchange for Ranbaxy’s payment of $1 million; and (ii) foreign patent litigation settlements permitting Ranbaxy to launch generic Lipitor in at least eleven non-U.S. markets prior to patent expiration.” In re Lipitor,
. See also Time Ins. Co. v. Astrazeneca AB, Case No. 14-4149,
. In re Lamictal, the only post-Acfavis case defendants cite on this point, does not analyze whether a license can be a payment. Rather, it reiterates the fact that Actavis only mentions "monetary payments,” and categorically declines to "extend the holding of Actavis to the non-monetary facts before it.” In re Lamictal,
. The specific and plausible valuations provided in the complaints distinguishes this case from In re Effexor, where the district court agreed that non-cash payments could constitute reverse payments under Actavis but held that the pleadings in that case did not provide sufficient, plausible allegations to make those valuations. In re Effexor XR.,
. Plaintiffs allege that Judge Sleet had "rejected Endo's claim construction position, strengthening Watson's defense to Endo/Tei-koku's infringement claims,” and that the "evidence at trial was overwhelmingly in favor of Watson.” DPP Compl. ¶ 79. Specifically, they allege that Judge Sleet had indicated that the '529 patent only covered products containing "one and only one” substance from two different categories, while "Watson’s generic Lidoderm product contained at least four water-soluble high-molecular-weight substances, and three water-retaining agents.” Id. at ¶¶ 8788 (emphasis in original).
. At oral argument, defendants contended that the timeline demonstrated that Watson would not have entered the market before September 15, 2013 without the settlement. Their presentation focused on three distinct hurdles: the patents, the patent litigation, and the FDA proceedings. The first-expiring patent expired in 2014, and the last expired more than two years later. DPP Compl. ¶ 94. The litigation could have continued for many years because Endo/Teikoku could have appealed any decision, and the second case had just begun. Similarly, the Citizen Petition had been pending for six years. Plaintiffs respond that they are not relying as a theory of injury on the argument that Watson would have prevailed in the patent litigation and entered the market without encumbrance before September 15, 2013. Thus defendants’ arguments that plaintiffs must prove that Watson would have prevailed in the litigation or surmounted all three hurdles are inappo-site. Reply 8. The three barriers identified by defendants do not undermine the theories of injury asserted by plaintiffs for the reasons discussed below.
. Defendants request that I take judicial notice of three Watson earnings calls because they are public documents and were incorporated by reference in the complaints. Defendants’ Request for Judicial Notice [Dkt. 92]. Plaintiffs object to this request on the grounds that the contents of the earning calls are not central to their claim. Plaintiffs’ Opposition to Defendants’ Request for Judicial Notice [Dkt. 104]. The "incorporation by reference” doctrine applies to situations in which the plaintiff's claim depends on the contents of a document. Knievel v. ESPN,
. Watson’s concerns about the Citizen Petition are not relevant when considering whether Watson would have launched at-risk because an at-risk launch cannot occur until the regulatory hurdles are cleared. As discussed above, plaintiffs have plausibly alleged that the regulatory hurdles (including the Citizen Petition and the ANDA) would have been and were cleared on August 23, 2012.
. See, e.g., In re Nexium,
. See, e.g., In re Effexor XR,
. Plaintiffs assert three claims under Section 2: conspiracy to monopolize, (DPP Compl. ¶¶ 168176); monopolization, (DPP Compl. ¶¶ 177-183); and attempted monopolization. (DPP Compl. ¶¶ 184-189).
. See also American Institute of Intradermal Cosmetics, Inc. v. Society of Permanent Cosmetic Professionals, Case No. 12-cv-06887,
. At least one court in this district and one in the Southern District have reached opposite conclusions. See In re Actimmune Mktg. Litig.,
. These states are: California, Illinois, Massachusetts, Minnesota, New York, Pennsylvania, Rhode Island and West Virginia. Mot. 29 n. 17.
. The twenty states are: Alaska, District of Columbia, Hawaii, Idaho, Iowa, Louisiana, Maryland, Michigan, Mississippi, Montana, Nebraska, New Mexico, Oklahoma, Oregon, Puerto Rico, Utah, Vermont, Virginia, Washington, and Wyoming.
. The twenty-two states are: Alabama, Arizona, Arkansas, Colorado, Connecticut, Delaware, Florida, Georgia, Kansas, Kentucky, Maine, Missouri, Nevada, New Hampshire, New Jersey, North Carolina, North Dakota, South Carolina, South Dakota, Tennessee, Texas and Wisconsin.
. In re Skelaxin (Metaxalone) Antitrust Litig.,
. GEHA has also voluntarily withdrawn the following claims: (i) antitrust, monopolization and unjust enrichment claims under the laws of Puerto Rico; and (ii) consumer protection claims under the laws of Hawaii and Kansas. Government Employees Health Association's Memorandum of Law in Opposition to Defendants' Joint Motion to Dismiss the Complaint at 1, n. 2, 3. These claims are DISMISSED as to GEHA.
. Defendants contend that GEHA cannot bring antitrust claims under Missouri law; an argument GEHA does not dispute. Mot. 31.
. The In re Actimmune Mktg. Litig. court relied on In re Express Scripts, Inc., Pharmacy Ben. Mgmt. Litig., Case No. 1672,
. GEHA also relies generally on a case from this District interpreting the Michigan consumer protection statute that — unlike Missouri's — does not contain language that "re
. Because the claims have been dismissed with leave to amend, I need not reach whether GEHA has stated claims under the consumer protection statutes of other states’ laws. See Mot. 34-41.
. Defendants also challenged the EPPs antitrust claims under Florida law, but the EPPs voluntarily withdrew their Florida antitrust claims in their Opposition. Oppo. 31, n.80. It is DISMISSED with prejudice.
. For this reason, I decline to follow In re Lithium Ion Batteries Antitrust Litig., No. 13-MD-2420 YGR,
. In Illinois Brick, the Supreme Court held that indirect purchasers of goods produced by firms engaged in anticompetitive conduct were too remote from that conduct to be regarded as injured within the meaning of the Clayton Act.
. The EPPs argue that indirect purchasers can bring antitrust under § 9. Ciardi v. F. Hoffmann La Roche, Ltd.,
. Defendants also argue that plaintiffs’ complaint failed to allege fraud and deception under § 11. See Reply 26. However, there is no fraud or deception claim alleged in the EPPs Complaint, therefore, the Court need not reach this argument.
. The same district court rejected a request to certify the question of whether indirect purchasers have standing to the Puerto Rico Supreme Court, finding that because "the Puerto Rico Supreme Court has unequivocally rejected limitations to private antitrust standing under PRAA, this court must deny Defendants’ motion for certification.” Rivera-Muniz v. Horizon Lines Inc., Case No. 09-CV-2081,
. Plaintiffs also rely on In re Processed Egg Prods. Antitrust Litig.,
.Defendants challenge the unjust enrichment claims for following "benefit of the bargain" jurisdictions: Arizona, Arkansas, California, the District of Columbia, Florida, Illinois, Iowa, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Oregon, Rhode Island, South Carolina, and Utah. Defendants argue that courts in these jurisdictions "reject unjust enrichment claims when 'parties voluntarily have negotiated, entered into and fully performed their bargain.' " Mot. 43 (quoting In re New Motor Vehicles Canadian Exp. Antitrust Litig.,
. Defendants challenge the unjust enrichment claims for the following "consideration” states Florida, Kansas, Massachusetts, Missouri, Nevada, New Hampshire, South Dakota, Tennessee, Utah, Vermont, and Wisconsin.
. Defendants challenge the unjust enrichment claims for the following "direct benefit" jurisdictions: Alabama, Arizona, the District of Columbia, Florida, Georgia, Idaho, Kansas, Maine, Maryland, Michigan, Missouri, New Jersey, New York, North Carolina, North Dakota', Pennsylvania, Rhode Island, South Carolina, Texas, and Utah.