Counsel with Kirkland & Ellis helped Sun Pharmaceutical Industries prevail in its defense of two motions for class certification and on summary judgment in a decadelong antitrust multidistrict litigation over the cholesterol drug Lipitor, where potentially more than $10 billion was at stake.
A group of Lipitor purchasers that included retailers, wholesalers, health insurance companies, and consumers sued Ranbaxy Laboratories, an affiliate of Sun Pharmaceutical, and Pfizer, alleging that a settlement reached in 2008 delayed competition by preventing a generic version of the drug from launching until November 2011. The cases were consolidated into a single action, In re Lipitor Antitrust Litigation, before U.S. District Judge Peter Sheridan for the District of New Jersey. The plaintiffs in the present action, which included direct payors, end purchasers, and opt-out retailers, sought to certify two classes of direct and indirect purchasers of brand name and generic Lipitor, according to one of the three opinions issued in the case Thursday.
Sun Pharmaceutical moved for summary judgment, raising a causation defense that argued the plaintiffs could not show that the settlement agreement in the 2008 case caused the alleged delayed entry of generic Lipitor to the market because the Food and Drug Administration would not have approved the drug any sooner, according to the opinion.
“Defendant argues that plaintiffs have failed to provide any evidence that [the] FDA would have approved Ranbaxy’s Lipitor ANDA (abbreviated new drug application) any earlier—that is, on November 29, 2011—had the November 30, 2011 launch date set forth in the disputed settlement agreement been different,” Sheridan wrote.
The plaintiffs argued that extensive documentary evidence existed that Ranbaxy would have obtained FDA ANDA approval earlier than Nov. 30, 2011, if the administration had a different launch date to target. However, Sun Pharmaceutical’s motion for summary judgment argued that undisputed evidence existed that Ranbaxy’s manufacturing facilities in India faced significant regulatory challenges that prevented the FDA from reviewing and approving the generic Lipitor product to launch any sooner than it actually did, according to the opinion.
Sheridan said that in order for the plaintiffs to have standing to sue, they must show the harm they say they experienced—classwide overcharges due to a delay in the availability of generic Lipitor equivalent. The judge held that the plaintiffs did not create a genuine issue of material fact and that it was more likely than not that the FDA would have completed its review any sooner and approved Ranbaxy’s ANDA before Nov. 30, 2011.
Counsel for Sun Pharmaceutical and Ranbaxy, Devora W. Allon, a partner with Kirkland & Ellis in New York, said that the plaintiffs hired a regulatory expert to say that the FDA moves as fast as it can and that if there had been an earlier target date, the administration would have met that date.
“We said that is really speculation, and instead of focusing on expert testimony, we just focused on the factual record,” Allon said. “And I think you see in the judge’s decision that is where he focuses.”
Sheridan ultimately found that expert speculation could not get around what really happened, Allon said.
“What actually happened was that we wanted the FDA to move quickly,” Allon said. “The FDA did not really care and went through its process. So the plaintiffs just did not have any evidence that they would have moved faster in some alternative universe.”
The Kirkland team also included partners Jay P. Lefkowitz, who argued the summary judgment motion, and Alexandra I. Russell, who opposed the direct purchasers’ class certification motion. Allon argued in opposition to the end payers’ class certification.
Two motions to certify putative classes made up of millions of Lipitor purchasers were also before the New Jersey district court. The proposed classes were divided into end payers and direct purchaser payers. Sun Pharmaceutical opposed class certification for both classes.
As for the end-payers class, Sheridan’s memorandum opinion said that it is divided into two classes—third-party payers and a consumer class. The end payers alleged that Ranbaxy engaged in a “reverse payment settlement” with Pfizer and Warner-Lambert, which delayed the release of generic Lipitor.
The judge denied class certification for two reasons: first, there was no genuine issue of material fact as to causation, an essential element to the cause of action. Second, even if summary judgment were denied and the court found that there was a genuine issue of material fact, class certification would be denied because the end payers failed to meet the ascertainability requirement.
The direct-purchase payers alleged that Ranbaxy, Pfizer and Warner-Lambert engaged in a settlement agreement that led to restraint of generic Lipitor competition, resulting in classwide antitrust impact in the form of overcharges, according to the memorandum opinion.
Sheridan found that the direct-purchase payers failed to satisfy the causation element. The judge also found that the plaintiffs failed to prove joinder was impracticable. Citing another case, In re: Niaspan Antitrust Litigation in the U.S. District Court for the Eastern District of Pennsylvania, Sheridan said that the court faced “the prospect of individual plaintiffs represented by dozens of different attorneys with the potential for a multitude of summary judgment briefs espousing an array of arguments and additional complications at trial.”
Sheridan said this case presented the opposite situation in Niaspan, with the court ruling on a single summary judgment motion on an issue of causation that is binding across the prospective classes.
Allon said she represented Teva Pharmaceuticals in the Niaspan case, which was appealed to the U.S. Court of Appeals for the Third Circuit.
“We argued to Judge Sheridan that the Niaspan precedent really controlled here, and as you can see, his decision cited Niaspan several times,” Allon said. “It was gratifying to have litigated the case that established the precedent and then to see that precedent apply.”
Counsel for the end payers, Kenneth A. Wexler, of Wexler Boley & Elgersma in Chicago, declined to comment on pending litigation.
Bruce E. Gerstein of Garwin Gerstein & Fisher in New York and Thomas M. Sobol of Hagens Berman Sobol Shapiro in Boston represented the direct purchasers. Neither attorney immediately responded to requests for comment.