Amphastar Pharmaceuticals, Inc. et al v. Momenta Pharmaceuticals, Inc. et al

Filing 148

Judge Nathaniel M. Gorton: ENDORSED ORDER entered. MEMORANDUM AND ORDER. For the foregoing reasons, defendants; motion to dismiss (Docket No. 17 ) is DENIED.So ordered. (Franklin, Yvonne)

United States District Court
District of Massachusetts
)
AMPHASTAR PHARMACEUTICALS, INC. )
and INTERNATIONAL MEDICATION
)
SYSTEMS, LTD.,
)
)
Plaintiffs,
)
)
v.
)
)
MOMENTA PHARMACEUTICALS, INC.
)
and SANDOZ INC.,
)
)
Defendants.
)
)

Civil Action No.
16-10112-NMG

MEMORANDUM & ORDER
GORTON, J.
This is an antitrust case in which plaintiffs Amphastar
Pharmaceuticals, Inc. (“Amphastar Pharmaceuticals”) and
International Medication Systems, Ltd. (“IMS”)(collectively,
“Amphastar” or “plaintiffs”) allege that defendants Momenta
Pharmaceuticals, Inc. (“Momenta Pharmaceuticals”) and Sandoz
Inc. (“Sandoz”)(collectively, “Momenta” or “defendants”)
restricted trade and prevented competition in the manufacture
and sales of the generic drug enoxaparin.
Pending before the Court is Momenta’s motion to dismiss the
complaint (Docket No. 17), which will be treated as a motion to
dismiss the amended complaint pursuant to the parties’
stipulation.

For the following reasons, the motion to dismiss

will be denied.
-1-

I.

Background and Procedural History
A.

The Parties

Plaintiff Amphastar Pharmaceuticals is a pharmaceutical
company located in California which develops, manufactures and
sells pharmaceutical products including generic enoxaparin
throughout the United States.

Enoxaparin is an anti-coagulant

used to prevent blood clots.
Plaintiff IMS is a wholly-owned subsidiary of Amphastar
Pharmaceuticals with a principal place of business in
California.

It manufactures the active pharmaceutical

ingredient in Amphastar’s generic enoxaparin.
Defendant Momenta Pharmaceuticals is the assignee of United
States Patent No. 7,575,886 (“the ‘886 patent”) which concerns a
testing process used in manufacturing enoxaparin.

Momenta

Pharmaceuticals acts as the contract laboratory for defendant
Sandoz and is a Delaware corporation with its principal place of
business in Massachusetts.
Defendant Sandoz distributes, markets and sells generic
enoxaparin products throughout the United States.

It is a

Colorado corporation with its principal place of business in New
Jersey.

It allegedly entered into a profit-sharing, contractual

relationship with Momenta which rendered it the exclusive
licensee of the ‘886 patent.

-2-

B.

The Alleged Conduct

In November, 2003, defendants entered into a Collaboration
and License Agreement (“Collaboration Agreement”) to develop,
market and sell “enoxaparin sodium injection” in the United
States.

The Collaboration Agreement granted an exclusive

license of the ‘886 patent, which had not yet issued, to Sandoz.
Plaintiffs claim that the agreement “heavily” incentivized anticompetitive behavior by requiring Sandoz to make “milestone
payments”, profit sharing payments and royalty payments to
Momenta Pharmaceuticals for the privilege of remaining the sole
source of generic enoxaparin in the United States.
In or before February, 2007, the United States
Pharmacopeial Convention (“USP”) commenced the process for
establishing a drug standard to test enoxaparin products.

The

USP is a scientific and impartial nonprofit organization which
sets uniform standards for the identity, strength, quality and
purity of medicines, food ingredients and dietary supplements.
USP policy prohibits it from favoring one manufacturer over
another during the standard-setting process and requires its
committee members to disclose any conflicts of interest.

A

member with a conflict cannot attend the final discussion,
deliberation or vote on the conflicted issues.

-3-

Sanofi-Aventis (“Aventis”) proposed the standard known as
USP Method <207> (“the 207 Method”) to the USP.

Dr. Zachary

Shriver (“Dr. Shriver”), an employee and director of Momenta
Pharmaceuticals who would later be named as an inventor on the
‘886 patent, served as Momenta’s representative on the USP panel
tasked with developing and approving the USP standard for
enoxaparin.

Sandoz also participated in the panel discussions.

The amended complaint alleges that Dr. Shriver and
defendants learned, during the USP’s consideration of the 207
Method, that Aventis had a pending patent application containing
claims which would read on the 207 Method.

Defendants

purportedly demanded that Aventis abandon its patent application
so that any member of the public could practice the enoxaparin
standard adopted by the USP.

Plaintiffs proffer that demand as

evidence that defendants were “very familiar” with the 207
Method and the USP policy on conflicts of interest.
In November, 2008, the USP convened a panel meeting which
commenced with a review of the USP policy on conflicts.

Momenta

Pharmaceuticals presented the 207 Method in a “detailed”
presentation to the USP.

USP staff reported that it was “not

aware of any patent issue that may cover the test”.

Plaintiffs

allege that neither Dr. Shriver, who was present at the meeting,
nor any other representative of the defendants disclosed to the
USP the conflicts posed by their own pending application for the
-4-

‘886 patent and the Collaboration Agreement.

Plaintiffs assert

that no other USP panel member knew that the ‘886 patent, which
eventually issued in August, 2009, would cover the use of the
207 Method.
In December, 2009, the USP approved and adopted the 207
Method as its enoxaparin standard after Aventis agreed to
abandon its patent application.

The USP convened two more panel

meetings in March and April of 2011.

Plaintiffs claim that Dr.

Shriver and another Momenta representative participated in the
meetings and continued to violate their duty to disclose their
and the defendants’ conflicts of interest to the USP.
Sandoz was the first entity to receive approval from the
United States Food and Drug Administration (“FDA”) to sell
generic enoxaparin in the United States in July, 2010.
Defendants thus became the sole source of generic enoxaparin
until Amphastar also received FDA approval to sell enoxaparin
September, 2011.

Plaintiffs allege that 1) the FDA required

them to comply with the 207 Method as a condition of approval,
2) the 207 Method included steps protected by the patented
method, 3) the ‘886 patent excluded unlicensed competitors from
receiving FDA approval and thus 4) the ‘886 patent excluded new
entrants from the market.
Two days after Amphastar received FDA approval, Momenta
commenced an action in this Court alleging that Amphastar
-5-

infringed the ‘886 patent.

Amphastar claims that the lawsuit

prevented it from selling generic enoxaparin in the relevant
market.
C.

Procedural History

Amphastar initiated this antitrust action by filing a
complaint in the Central District of California in September,
2015.

The complaint alleges violations of 1) federal antitrust

law, i.e., the Sherman Act, 2) California antitrust law, i.e.,
the Cartwright Act and 3) California state law on unfair
business practices.

Amphastar amended the complaint in

December, 2015 to replace “Sandoz, Pharmaceuticals, Inc.” with
“Sandoz Inc.” as a named defendant.
The amended complaint asserts that Momenta engaged in anticompetitive conduct by executing the Collaboration Agreement,
failing to disclose conflicts to the USP and commencing a patent
infringement suit against Amphastar for using the 207 Method
selected by the USP and required by the FDA.

The amended

complaint alleges that the anti-competitive conduct kept the
price of generic enoxaparin artificially high which, in turn,
cost consumers “billions of dollars in overcharges”.
Under Amphastar’s theory of antitrust liability, 1) the
relevant product market is defined as the United States market
for generic enoxaparin or, alternatively, enoxaparin, 2) generic
entry into the market results in substantial reductions in
-6-

price, 3) price-sensitive consumers of generic enoxaparin treat
different brands of generic enoxaparin as reasonable substitutes
and 4) generic manufacturers consider the prices set by other
generic manufacturers as directly affecting their own prices.
In December, 2015, Momenta filed a motion to dismiss this
action and a separate motion to transfer it from the Central
District of California to the District of Massachusetts based
upon the “substantial overlap” of issues, claims, witnesses and
evidence between the instant case and the prior patent case
pending in this Court.
to transfer.

The California court allowed the motion

The case was transferred to the District of

Massachusetts and assigned to this Session in January, 2016 but
Amphastar filed a writ of mandamus to the Ninth Circuit Court of
Appeals (“the Ninth Circuit”) to appeal that transfer on
personal jurisdictional grounds.

That petition was denied in

May, 2016.
In July, 2016, this Court allowed Momenta’s motion to
dismiss, reasoning that Amphastar’s claims were precluded by the
Noerr-Pennington doctrine.

Amphastar appealed that order to the

First Circuit Court of Appeals which reversed and remanded the
case in March, 2017, directing this Court to consider
defendants’ alternative arguments for dismissal.

The parties

submitted supplemental memoranda in that regard in April and
May, 2017.
-7-

II.

Momenta’s Motion to Dismiss
A.

Legal Standard

To survive a motion to dismiss for failure to state a claim
under Fed. R. Civ. P. 12(b)(6), a complaint must contain
“sufficient factual matter” to state a claim for relief that is
actionable as a matter of law and “plausible on its face.”
Ashcroft v. Iqbal, 556 U.S. 662, 667 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

A claim is

facially plausible if, after accepting as true all nonconclusory factual allegations, the court can draw the
reasonable inference that the defendant is liable for the
misconduct alleged. Ocasio-Hernandez v. Fortuno-Burset, 640 F.3d
1, 12 (1st Cir. 2011).

A court may not disregard properly pled

factual allegations even if actual proof of those facts is
improbable. Id.

Rather, the relevant inquiry focuses on the

reasonableness of the inference of liability that the plaintiff
is asking the court to draw. Id. at 13.
When rendering that determination, a court may not look
beyond the facts alleged in the complaint, documents
incorporated by reference therein and facts susceptible to
judicial notice. Haley v. City of Boston, 657 F.3d 39, 46 (1st
Cir. 2011).

-8-

B.

Sherman Act Violations

Amphastar alleges that defendants violated the Sherman Act
by (1) entering into an agreement in restraint of trade which
blocked it from selling generic enoxaparin and (2) wrongfully
acquiring monopoly power by deceiving the USP into adopting a
standard which they later claimed was covered by defendants’
patent.

Defendants respond that Amphastar has failed to plead

facts establishing that their conduct caused Amphastar’s injury.
Furthermore, defendants suggest that Amphastar does not
sufficiently allege a restraint of trade because (1) the 207
Method is not mandatory and (2) there are no plausible
allegations that Momenta intended to induce the USP into
approving the 207 Method.
1. Causation
First, defendants contend that the Amphastar has failed to
plead facts sufficient to demonstrate that it suffered an
antitrust injury as a result of defendants’ conduct.

They claim

that Amphastar has not adequately alleged a causal connection
between the USP proceedings and Amphastar’s decision to adopt
the 207 Method because Amphastar first filed its Abbreviated New
Drug Application (“ANDA”) in 2003 in which it was required to
describe the quality control procedures it would use to confirm
that its generic enoxaparin had the appropriate structural
characteristics.

Defendants note that Amphastar adopted the 207
-9-

Method before it was approved by the USP and did not amend its
ANDA after the USP approved the 207 Method.
Amphastar emphasizes in its response that, although it
submitted the ANDA in 2003, that initial application was
“inconsequential” because the FDA did not approve the
application until 2011.

In the intervening years between the

application and the approval, the USP adopted the 207 Method.
As a result of that adoption, Amphastar suggests, the FDA
conditioned its 2011 approval on Amphastar’s compliance with the
207 Method.

By contrast, had the USP not adopted Method 207,

Amphastar would not have been required to comply with it for FDA
approval and defendants would not have had the market power to
exclude Amphastar.
A plaintiff in an antitrust case must demonstrate that
there is a causal connection between the defendant’s illegal
practice and the antitrust injury. Sullivan v. Nat’l Football
League, 34 F.3d 1091, 1103 (1st Cir. 1994).

A plaintiff need

not prove that the antitrust violation was the “sole cause of
their injury, but only that it was a material cause”. Id.
(citing Engine Specialties, Inc. v. Bombardier Ltd., 605 F.2d 1,
13 (1st Cir. 1979)).

An antitrust violation can constitute a

material cause even where an injury has additional independent
causes. See e.g., In re Nexium (Esomeprazole) Antitrust Litig.,
42 F. Supp. 3d 231 (D. Mass. 2014) (internal citation omitted)
-10-

(noting that the material cause condition has been interpreted
as a proximate cause requirement).

The First Circuit has noted

that causation questions are “peculiarly within the competence
of the factfinder” and should be left for the jury. Peckham v.
Cont’l Cas. Ins. Co., 895 F.2d 830, 837 (1st Cir. 1990)
(“Causation questions of this sort are normally grist for the
jury’s mill.”).
Amphastar has sufficiently alleged that defendants’ actions
before the USP while that organization was considering the
proposed standards for enoxaparin were a material cause of
Amphastar’s antitrust injury.
misplaced.

Momenta’s focus on the ANDA is

While defendants suggest that Amphastar must allege

facts supporting an inference that Amphastar adopted the accused
procedures as a result of the USP proceedings, the alleged
antitrust injury need not have been caused by Amphastar’s
adoption of the 207 Method but rather by the FDA’s approval made
contingent on Amphastar’s adoption of the USP’s official test
method to test for its enoxaparin.
Amphastar alleges that Momenta’s deceptive conduct in front
of the USP led to the approval of the 207 Method and the
subsequent exclusion of Amphastar from the marketplace.

The

adoption of the 207 Method by the USP made the FDA’s approval of
the sale of enoxaparin by Amphastar conditional on its use of an
infringing procedure.

Accordingly, Amphastar has adequately
-11-

pled that the defendants’ conduct at the USP was a material
cause of the antitrust injury.
2. Restraint of Trade
Defendants contend that Amphastar fails to allege a
restraint of trade sufficient to support an antitrust claim
because the 207 Method is not mandatory and defendants do not
demonstrate that Momenta intentionally deceived the USP.
According to defendants, while all manufacturers of generic
enoxaparin must use a process that assures that the drug has the
structural characteristics in the Enoxaparin Monograph, the 207
Method was not included in that monograph and was therefore not
mandatory.

Defendants request that the Court take judicial

notice of eight documents that purportedly show that the method
was not mandatory.
As a preliminary matter, Amphastar quibbles with the
introduction of extrinsic documents and contends that the Court
cannot take judicial notice of the documents for the purpose of
establishing the truth of the statements therein.

As the Court

stated in its July, 2016 Memorandum and Order in this case, it
construes defendants’ request as pertaining to the existence of
the documents and the statements therein but not to acceptance
of the truth of such statements.1

1

The Court will take judicial

The First Circuit Court of Appeals did not address in its
opinion this Court’s ruling on defendants’ request to take
-12-

notice of the existence of the documents identified by
defendants. See e.g., Torrens v. Lockheed Martin Servs. Grp.,
Inc., 396 F.3d 468, 473 (1st Cir. 2005) (taking judicial notice
of the existence of a document but not for the truth of the
statements made therein).
Section 2 of the Sherman Act makes it illegal to
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.
15 U.S.C. § 2.

To state a monopolization claim under § 2, a

plaintiff must adequately allege that defendant (1) has monopoly
power in the relevant market and (2) has engaged in illicit
“exclusionary practices” with “the design or effect of
protecting or enhancing its monopoly position”. Sterling Merch.,
Inc. v. Nestle, S.A., 656 F.3d 112, 125 (1st Cir. 2011) (quoting
Coastal Fuels of P.R., Inc. v. Caribbean Petroleum Corp., 79
F.3d 182, 195 (1st Cir. 1996) (internal citation omitted)).
Amphastar has articulated a cognizable claim that
defendants wrongfully acquired monopoly power by deceiving the
USP into adopting the 207 Method that defendants later asserted
was covered by the ‘886 patent.

The complaint contains

allegations establishing that the USP adopts standards that are

judicial notice. Amphastar Pharm., Inc. v. Momenta Pharm., Inc.,
850 F.3d 52 (1st Cir. 2017).
-13-

enforced by the FDA and plausibly alleges that the 207 Method is
mandatory.
While defendants contend that the USP and the FDA made
clear that some unspecified alternative to the 207 Method would
be permitted, there remain fact-intensive questions about the
feasibility, availability and even existence of such
alternatives. See e.g., Hosp. Auth. of Metro. Gov’t of Nashville
v. Momenta Pharm., Inc., 244 F. Supp. 3d 705, 716 (M.D. Tenn.
2017) (finding that “the effect of the testing requirement on
the market for enoxaparin depends on the relative feasibility of
those other tests [and] the likelihood that they would be
considered adequate alternatives to Method <207> under the USP
standards”).

Amphastar has plausibly alleged that it was

required to use the 207 Method to obtain and maintain its
generic enoxaparin approval from the FDA.

The existence of

alternatives is a factual question inappropriate for resolution
on a motion to dismiss.
Defendants also suggest that Amphastar has failed to state
an antitrust claim because Momenta opposed the adoption of the
207 Method and, therefore, Amphastar cannot demonstrate that
Momenta intentionally deceived the USP.

In the complaint,

Amphastar alleges that defendants intentionally failed to
disclose the ‘886 patent to the USP thereby contravening the
conflict rules put in place by the USP.
-14-

Those allegations are

sufficient, if proven, to establish that defendants
misrepresented their interest at the USP in order to secure
market power.
Intentional misrepresentations designed to deceive a
standard-setting organization can constitute an antitrust
violation. See Broadcom Corp. v. Qualcomm, Inc., 501 F.3d 297,
314 (3d Cir. 2007).

The Third Circuit Court of Appeals outlined

the contours of such a violation, holding that
[d]eception in a consensus-driven private standard-setting
environment harms the competitive process by obscuring the
costs of including proprietary technology in a standard and
increasing the likelihood that patent rights will confer
monopoly power on the patent holder.
Id.

By incorporating patented technology into a standard, the

patent-holder obtains market power because adoption of the
standard eliminates alternatives to the patented techonolgy. Id.
(citing Am. Society of Mech. Eng’rs, Inc. v. Hydrolevel Corp.,
456 U.S. 556, 559 (1982)).

Amphastar has alleged facts

sufficient to support its claim that Momenta intentionally
deceived the USP to obtain market power.
C.

Compulsory Counterclaim

Momenta contends that Amphastar’s antitrust claims are
compulsory counterclaims that Amphastar was required to raise in
the patent infringement suit between the parties, Momenta
Pharm., Inc. et al. v. Amphastar Pharm., Inc. et al., 11-cv11681 (D. Mass.) (“the patent case”).
-15-

Momenta suggests that

because Amphastar’s antitrust claims are predicated on Momenta’s
assertion of the ‘886 patent and its prosecution of the patent
case, Amphastar was required to raise them in that action.
Under Fed. R. Civ. P. 13,
[a] pleading must state as a counterclaim any claim that—at
the time of its service—the pleader has against an opposing
party if the claim: (A) arises out of the transaction or
occurrence that is the subject matter of the opposing
party’s claim; and (B) does not require adding another
party over whom the court cannot acquire jurisdiction.
Fed. R. Civ. P. 13(a).

In Mercoid Corp. v. Mid-Continent Inv.

Co., 320 U.S. 661, 671 (1944), the Supreme Court held that a
claim for antitrust damages was a permissive, rather than a
compulsory, counterclaim to a prior claim of patent
infringement.

The Court determined that although the antitrust

claim could have been asserted in the patent suit under Fed. R.
Civ. P. 13(b), it did not follow “that the failure to do so
renders the prior judgment res judicata as respects it”. Id.
The First Circuit, applying Mercoid, has held that
a counterclaim for treble damages is permissible in nature
so that failure by a defendant to plead it in a prior
patent suit does not bar a subsequent independent suit by
him under the anti-trust laws.
Fowler v. Sponge Prods. Corp., 246 F.2d 223, 227 (1st Cir.
1957).
Momenta urges this Court to limit Mercoid to its facts and
adopt methods of distinguishing its holding endorsed by two
other circuit courts.

The Second Circuit Court of Appeals has
-16-

drawn a distinction between antitrust claims that rely on misuse
of a valid patent as opposed to antitrust claims based on patent
invalidity. Critical-Vac Filtration Corp. v. Minuteman Intern.,
Inc., 233 F.3d 697, 703 (2d Cir. 2000).

Because invalidity

defenses in patent cases are generally related to the underlying
patent infringement claims, the Court determined that the
Mercoid exception to Fed. R. Civ. 13(a) did not apply because
Mercoid involved an antitrust claim based on misuse of a valid
patent. Id. at 703-04.
Amphastar’s antitrust claims do not implicate the validity
of the ‘886 patent.

Instead, Amphastar claims that defendants

conspired to deceive the USP and relies on a theory of misuse of
a valid patent.

Momenta’s insistence that the patent

misuse/patent validity distinction applies is, therefore,
tenuous. But cf. Eon Labs., Inc. v. Smithkline Beecham Corp.,
298 F. Supp. 2d 175, 181 (D. Mass. 2003) (finding that where an
antitrust claim was based on patent invalidity the patent
misuse/patent validity distinction from Critial-Vac applied).
Although Momenta is correct that the facts underlying
Amphastar’s equitable defenses in the patent case are entwined
in the antitrust claims in this case, the Court is bound by
Fowler and, accordingly, the patent case does not bar a
subsequent independent suit under the antitrust laws. Fowler,
246 F.2d at 227.
-17-

D.

Conspiracy

Defendants contend that Counts 1 and 3 of the complaint
must be dismissed because Amphastar fails to plead facts
supporting a plausible inference that Sandoz joined an antitrust
conspiracy.

Instead, defendants suggest, Amphastar makes a

conclusory statement that Sandoz entered into a collaboration
agreement with Momenta and acted in concert during the USP
proceedings.

Amphastar responds by stressing that the complaint

sufficiently alleges an unlawful conspiracy by describing the
terms of a collaboration and license agreement which would
provide financial incentive for defendants to remain the sole
providers of generic enoxaparin in the market.
Section 1 of the Sherman Act prohibits, in relevant part,
“contract[s], combination[s] in the form of trust or otherwise,
or conspirac[ies] in restraint of trade or commerce”. 15 U.S.C.
§ 1.

To state a claim under Section 1, an antitrust plaintiff

must present either direct or circumstantial evidence of
defendants’ “conscious commitment to a common scheme designed to
achieve an unlawful objective”. Evergreen Partnering Grp., Inc.
v. Pactiv Corp., 720 F.3d 33, 43 (1st Cir. 2013) (citing
Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 764
(1984)).
Amphastar plausibly alleges that the collaboration
agreement between Sandoz and Momenta created financial
-18-

incentives for the companies to exclude other producers of
generic enoxaparin from the marketplace.

It purportedly

documented specific milestone payments for maintaining their
status as the sole providers and Sandoz’s participation in the
USP meetings concerning the 207 Method. See e.g., Coalition for
ICANN Transparency, Inc. v. VeriSign, Inc., 611 F.3d 495, 503
(9th Cir. 2010) (finding that the plaintiff adequately pled the
existence of a conspiracy by demonstrating that defendant had
the intent to restrain trade by entering into a contract).
Accordingly, Amphastar has alleged facts sufficient to support
their claims under Section 1 of the Sherman Act.

ORDER
For the foregoing reasons, defendants’ motion to dismiss
(Docket No. 17) is DENIED.

So ordered.

/s/ Nathaniel M. Gorton_____
Nathaniel M. Gorton
United States District Judge
Dated March 19, 2018

-19-