Federal Trade Commission et al v. Vyera Pharmaceuticals, LLC et al

Filing 605

MEMORANDUM OPINION AND ORDER. The October 20, 2021 motion by the Plaintiffs to strike portions of the trial testimony of John S. Russell is granted. (Signed by Judge Denise L. Cote on November 18, 2021) (ST)

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Case 1:20-cv-00706-DLC Document 605 Filed 11/18/21 Page 1 of 8 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------- X : FEDERAL TRADE COMMISSION, STATE OF NEW : YORK, STATE OF CALIFORNIA, STATE OF : OHIO, COMMONWEALTH OF PENNSYLVANIA, : STATE OF ILLINOIS, STATE OF NORTH : CAROLINA, and COMMONWEALTH OF : VIRGINIA, : : Plaintiffs, : -v: : VYERA PHARMACEUTICALS, LLC, AND : PHOENIXUS AG, MARTIN SHKRELI, : individually, as an owner and former : director of Phoenixus AG and a former : executive of Vyera Pharmaceuticals, : LLC, and KEVIN MULLEADY, individually, : as an owner and former director of : Phoenixus AG and a former executive of : Vyera Pharmaceuticals, LLC, : : Defendants. : : -------------------------------------- X APPEARANCES: For plaintiff Federal Trade Commission: James H. Weingarten Markus H. Meier Bradley S. Albert Amanda Triplett Armine Black Daniel W. Butrymowicz J. Maren Schmidt Lauren Peay Leah Hubinger Matthew B. Weprin Neal J. Perlman Federal Trade Commission 600 Pennsylvania Avenue, NW Washington, DC 20580 For plaintiff State of New York: 20cv00706 (DLC) MEMORANDUM OPINION AND ORDER Case 1:20-cv-00706-DLC Document 605 Filed 11/18/21 Page 2 of 8 Amy E. McFarlane Jeremy R. Kasha Elinor R. Hoffman Saami Zain Office of the New York Attorney General Antitrust Bureau 28 Liberty Street, 20th Floor New York, NY 10005 Bryan Lewis Bloom Freshfields Bruckhaus Deringer US LLP 700 13th St. NW 10th fl. Washington, DC 20005 For plaintiff State of California: Michael D. Battaglia Office of the Attorney General of California 455 Golden Gate Avenue, Suite 11000 San Francisco, CA 94102 For plaintiff State of Ohio: Beth Ann Finnerty Derek M. Whiddon Office of the Ohio Attorney General 150 E. Gay Street, 22nd Floor Columbus, OH 43215 For plaintiff Commonwealth of Pennsylvania: Joseph Betsko Pennsylvania Office of Attorney General Strawberry Square, 14th Floor Harrisburg, PA 17120 For plaintiff State of Illinois: Richard S. Schultz Office of the Attorney General of Illinois 100 W. Randolph Street, 11th Floor Chicago, IL 60601 For plaintiff State of North Carolina: K.D. Sturgis Jessica V. Sutton North Carolina Dept. of Justice Consumer Protection Division 114 West Edenton Street Raleigh, NC 27603 2 Case 1:20-cv-00706-DLC Document 605 Filed 11/18/21 Page 3 of 8 For plaintiff Commonwealth of Virginia: Sarah Oxenham Allen Tyler T. Henry Office of the Attorney General of Virginia 202 North Ninth Street Richmond, VA 23219 For defendants Vyera Pharmaceuticals, LLC and Phoenixus AG: Stacey Anne Mahoney Sarah E. Hsu Wilbur Morgan, Lewis & Bockius LLP 101 Park Avenue New York, NY 10178 Scott A. Stempel William Cravens Melina R. Dimattio Morgan, Lewis & Bockius LLP 1111 Pennsylvania Avenue, NW Washington, D.C. 20004 Steven A. Reed Morgan, Lewis & Bockius LLP 1701 Market Street Philadelphia, PA 19103 Noah J. Kaufman Morgan, Lewis & Bockius LLP One Federal Street Boston, MA 02210 Michael M. Elliott Rachel J. Rodriguez Phillips Nizer LLP 485 Lexington Avenue New York, NY 10017 Michael L. Weiner Dechert LLP (NYC) 1095 Avenue of the Americas New York, NY 10036-6797 For defendant Martin Shkreli: Christopher H. Casey Andrew J. Rudowitz Jeffrey S. Pollack Sarah O'Laughlin Kulik 3 Case 1:20-cv-00706-DLC Document 605 Filed 11/18/21 Page 4 of 8 James Manly Parks Duane Morris LLP 30 South 17th Street Philadelphia, PA 19103 Sarah Fehm Stewart Duane Morris, LLP (NJ) One Riverfront Plaza, Suite 1800 Newark, NJ 07102-3889 For defendant Kevin Mulleady: Kenneth R. David Marc E. Kasowitz Albert Shemtov Mishaan Nicholas Anthony Rendino Kasowitz, Benson, Torres LLP (NYC) 1633 Broadway New York, NY 10019 DENISE COTE, District Judge: The United States Federal Trade Commission and seven States (collectively, “Plaintiffs”) have moved to strike portions of the expert testimony of John S. Russell offered on behalf of defendants Vyera Pharmaceuticals, LLC, its parent company Phoenixus AG (together, “Vyera”), Martin Shkreli, and Kevin Mulleady (collectively, “Defendants”). For the following reasons, the motion is granted. Trial in this antitrust action is scheduled to commence on December 14, 2021. The direct testimony of witnesses under the parties’ control, including their experts, is being received by affidavit. The parties exchanged those affidavits on October 20 and filed their Daubert motions on the same date. This Opinion is the final in a series of Opinions addressing those motions. 4 Case 1:20-cv-00706-DLC Document 605 Filed 11/18/21 Page 5 of 8 Familiarity with the most recent such Opinion is presumed and its recitation of the legal standard is incorporated herein. Fed. Trade Comm'n v. Vyera Pharms., LLC, No. 20CV00706 (DLC), 2021 WL 5336949 (S.D.N.Y. Nov. 16, 2021). In this motion, the Plaintiffs seek to strike the following paragraphs from the affidavit of defense expert John S. Russell: 11.iii, 11.vi, 66-92, and 125-144. Their motion is granted. Background Russell is the Managing Partner for ASDO Consulting Group. His firm provides consulting and advisory services to early stage and midsize life science companies, institutional investors, and healthcare data providers. Russell holds an M.A. in microbiology. He worked from 1973 to 1985 with Eli Lilly in sales, marketing and pricing; from 1985 to 1995, in marketing and sales at its subsidiary IVAC Corporation; and from 1996 to 2002, in marketing and sales at Otsuka America Pharmaceutical Inc. Russell is offered as a rebuttal witness to Plaintiffs’ experts Edward V. Conroy and James Bruno, who have testified respectively about defendant Vyera’s Daraprim distribution system and supply agreements with API suppliers. Russell identifies seven opinions he is prepared to offer at trial. 5 The Case 1:20-cv-00706-DLC Document 605 Filed 11/18/21 Page 6 of 8 Plaintiffs challenge two of those seven opinions and those portions of his report associated with those two opinions. The two opinions at issue are: 1 1. There are numerous examples of procurement companies that were able to provide quotes, and when commissioned to do so, purchase Daraprim. Based on my review of this evidence, I conclude that Daraprim samples were available to generic manufacturers. 2. Generic manufacturers successfully found alternative sources for pyrimethamine. It is clear that pyrimethamine API was available, as Cerovene, InvaTech, Fera, Mylan, and Teva were able to acquire API. The Plaintiffs seek to strike the paragraphs in the body of the affidavit that contain the support for these two opinions. Russell explains in those paragraphs that these opinions are based on his review of the evidence. 2 The paragraphs provide no independent expert analysis, but instead recite a chronology of the events at issue in this litigation which he believes are relevant. Discussion The Plaintiffs contend that the Defendants have not shown that Russell is qualified to provide an expert opinion on the topic of RLD procurement or API sourcing. Additionally, they have moved to strike this material on the ground that it is These two opinions are stated, respectively, in paragraphs 11.iii and 11.vi of Russell’s affidavit. 1 These corresponding passages are, for example, paragraphs 70, 92, and 144. 2 6 Case 1:20-cv-00706-DLC Document 605 Filed 11/18/21 Page 7 of 8 simply a factual narrative untethered to any admissible expert opinion and improperly invades the province of the factfinder. The Plaintiffs are correct. Each ground is an independent basis for striking the identified material. In his deposition, Russell frankly admitted that he had no direct experience in either area at issue in these sections of his affidavit. During his work with pharmaceutical companies and in his current job as a consultant, he has never been involved in the acquisition of RLD. While he has had more experience with researching API manufacturers, that experience has been too limited and sporadic to qualify him as an expert in the evaluation of API supplier capabilities and the assessment of alternative API suppliers. The body of his affidavit devoted to these topics is simply a summary of facts that the Defendants wish to argue are relevant to the decisions the fact finder must make at trial. This is not proper expert testimony. In opposing this motion, the Defendants admit that Russell’s report contains summaries of facts. They argue that those summaries should be accepted because they are relevant, they are helpful as a rebuttal of opinions offered by the Plaintiffs’ experts, and they are summaries of “objective facts.” None of these arguments succeeds. Unless facts provide context to or support for admissible expert opinions, they must 7 Case 1:20-cv-00706-DLC Document 605 Filed 11/18/21 Page 8 of 8

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