APOTEX, INC. v. CEPHALON, INC. et al
MEMORANDUM OPINION. SIGNED BY HONORABLE MITCHELL S. GOLDBERG ON 5/18/2017. 5/19/2017 ENTERED AND COPIES MAILED AND E-MAILED.(amas)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
CEPHALON, INC., et al.,
May 18, 2017
This antitrust case involves allegations that four reverse-payment settlement agreements
entered into by a brand-name drug manufacturer and four generic drug companies constitute
antitrust violations under the Sherman Act.1 Apotex, Inc., a generic competitor, and other
Plaintiffs claim that these settlement agreements were created and signed with the purpose of
delaying the market entry of generic versions of the brand-name pharmaceutical, Provigil.
Defendants maintain that the agreements were legitimate settlements of Hatch-Waxman patent
litigation and contained procompetitive terms.
A liability trial is currently scheduled for June 5, 2017. As a result of various settlements
and the procedural postures of the other related cases, the only plaintiffs in that trial are Apotex
These agreements were entered into by Defendant, Cephalon, Inc. (“Cephalon”), the brandname manufacturer of Provigil, and the following Defendant generic drug manufacturers: Barr
Pharmaceuticals, Inc. (“Barr”); Mylan Laboratories, Inc. and Mylan Pharmaceuticals, Inc.
(collectively “Mylan”); Teva Pharmaceutical Industries, Ltd. and Teva Pharmaceuticals USA,
Inc. (collectively “Teva”); and Ranbaxy Laboratories, Ltd. and Ranbaxy Pharmaceuticals, Inc.
(collectively “Ranbaxy”) (collectively referred to as the “Generic Defendants”).
and a group of owners and operators of retail pharmacies who filed their own separate actions.
Over the course of this litigation, these plaintiffs have been referred to as “Individual Plaintiffs,”
“Retailer Plaintiffs,” “Opt-Out Plaintiffs” and “Merchant Plaintiffs.” The only defendants in the
June trial are Mylan and Ranbaxy.
This Opinion addresses Mylan and Ranbaxy’s motion challenging the damages analysis
set forth by Apotex’s expert, Dr. Hal Singer, under Federal Rule of Evidence 702 and Daubert v.
Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993).2 For the reasons that follow,
Defendants’ motion will be granted in part and denied in part.
FACTUAL AND PROCEDURAL BACKGROUND
A. Hatch-Waxman Administrative Framework
The Drug Price Competition and Patent Term Restoration Act of 1984, Pub. L. No. 98-
417, commonly known as the Hatch-Waxman Act, is designed to encourage the development
and marketing of generic versions of approved drugs. It allows generic manufacturers to file an
Abbreviated New Drug Application (“ANDA”) when seeking approval from the Food and Drug
Administration (“FDA”) to market a generic version of an approved drug. See Caraco Pharm.
Labs., Ltd. v. Forest Labs., Inc., 527 F.3d 1278, 1282 (Fed. Cir. 2008).
ANDA filers must submit one of four certifications addressing any and all patents
covering the brand-name drug, certifying either: (1) that the relevant patent information has not
been filed with the FDA; (2) that such patent has expired; (3) the date that such patent will
expire; or (4) “that such patent is invalid or will not be infringed by the manufacture, use, or sale
of the new drug for which the application is submitted.” Id. at 1282-83 (quoting 21 U.S.C.
The Daubert motion challenging Dr. Singer’s damages analysis was filed by all Defendants.
However, Cephalon, Teva and Barr have since settled with Apotex and the Retailer Plaintiffs.
(See Dkt. 06-1797, Doc. No. 503; Dkt. 06-2768, Doc. No. 1057.)
§ 355(j)(2)(A)(vii)). “If a generic drug company seeks to market a generic version of a listed
drug before the expiration of the Orange-Book-listed patents3 covering that drug, it must file a
certification under 21 U.S.C. § 355(j)(2)(A)(vii)(IV), i.e. a ‘Paragraph IV certification.’” Id. at
1283 (citing Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661, 676 (1990)).
Filing a Paragraph IV ANDA constitutes an act of patent infringement, often prompting
the patent holder to file a lawsuit. However, as an incentive to generic companies to challenge
weak patents, the first applicant to file an ANDA with a Paragraph IV certification is entitled to a
180-day period of exclusivity for its generic drug beginning on the first day it markets its drug
commercially. Federal Trade Commission v. Actavis, Inc., 133 S. Ct. 2223, 2228-29 (2013).
When a patent holder files an infringement lawsuit within forty-five days of a Paragraph
IV ANDA filing, the FDA is barred from approving the generic company’s ANDA for a period
of 30 months. 21 U.S.C. § 355(j)(5)(B)(iii). If the case is resolved during the 30-month stay, the
FDA will take action on the ANDA consistent with the court’s judgment. Actavis, 133 S. Ct. at
2228. If the case is still ongoing at the end of the 30-month period, the FDA may grant final
approval on the ANDA, at which point the generic company will have to decide whether to sell
its drug “at risk” of incurring damages should the Paragraph IV litigation result in a judgment
favorable to the patent holder. Id.
B. Factual History
In 1997, Cephalon was issued U.S. Patent No. 5,618,845, covering specific formulations
of modafinil, the active pharmaceutical ingredient (“API”) in Provigil. Cephalon was granted a
The FDA publishes a list of all patents covering a drug under which a claim of patent
infringement could reasonably be asserted in the “Approved Drug Products with Therapeutic
Equivalence Evaluations” publication, also known as the Orange Book. Caraco Pharm. Labs.,
Ltd., 527 F.3d at 1282.
reissue patent on modafinil, U.S. Patent No. RE 37,516 (“the RE ‘516 patent”), in 2002, which
was scheduled to expire October 6, 2014.4
Modafinil is a wakefulness-promoting agent used to treat narcolepsy and other sleep
disorders. On December 24, 2002, the Generic Defendants each filed an ANDA seeking to
market generic versions of Provigil, and each filed a Paragraph IV certification with the FDA
indicating that Cephalon’s RE ‘516 patent was either invalid or the generic products did not
infringe the patent. Because each of the Generic Defendants filed ANDAs on the first possible
day, all were eligible to share the 180-day first filer exclusivity. On March 28, 2003, Cephalon
sued the Generic Defendants for patent infringement, (the “Paragraph IV litigation”), triggering
an automatic thirty-month stay on the approval of their ANDAs.
The Paragraph IV litigation between Cephalon and the Generic Defendants settled
between December 2005 and February 2006, while the Generic Defendants’ motions for
summary judgment were pending. All of the settlement agreements included a provision by
which Cephalon granted the Generic Defendants a license to market their generic modafinil
products on a “date certain”—April 6, 2012. Also, all of the settlement agreements provided that
the Generic Defendants could enter the market earlier than the date certain if: (1) Cephalon
licensed any other generic manufacturer to market generic modafinil prior to the date certain;
(2) another generic decided to launch “at risk”; or (3) if a judgment declared that generic
modafinil may be sold without infringing the RE ‘516 patent (“the Contingent Launch
Provisions”). Through a series of contemporaneous agreements reached at or around the time of
settlement, Cephalon paid the Generic Defendants a total of approximately $300 million.
As a result of studying Provigil’s effects on children, Cephalon also received an additional six
months of pediatric exclusivity on Provigil, extending Cephalon’s exclusivity period through
April 6, 2015.
Apotex alleges that had the Paragraph IV litigation continued, the RE ‘516 patent would
have been declared invalid, not infringed by the Generic Defendants’ products, and
unenforceable due to Cephalon’s fraud in the procurement of the patent. Apotex explains that
due to the Generic Defendants maintaining the 180-day first filer exclusivity while agreeing to
stay off of the market through 2012, a “bottleneck” was created, preventing Apotex and other
generic drug companies from entering the market. Apotex has challenged the settlements and
Cephalon’s enforcement of the RE ‘516 patent as violations of Sections 1 and 2 of the Sherman
C. Procedural History
In addition to the antitrust challenges to the enforcement of Cephalon’s patent and the
settlements, Apotex also sought declaratory judgments that the RE ‘516 patent was invalid, that
Cephalon had procured the patent by fraud, and that the patent was not infringed by Apotex’s
generic Provigil product. After holding two bench trials, I entered judgment in favor of Apotex
on the patent claims, finding: (1) that the RE ‘516 patent was invalid pursuant to the on-sale bar,
and also for derivation, obviousness and lack of written description; (2) that the RE ‘516 patent
was unenforceable due to Cephalon’s fraud on the PTO; and (3) that Apotex’s generic product
did not infringe Cephalon’s patent. See Apotex, Inc. v. Cephalon, Inc., 2011 WL 6090696 (E.D.
Pa. Nov. 7, 2011) affirmed Apotex Inc. v. Cephalon, Inc., 500 Fed. Appx. 959 (Fed. Cir. 2013)
(unpublished); Apotex, Inc. v. Cephalon, Inc., 2012 WL 1080148 (E.D. Pa. Mar. 28, 2012).
After several rulings on the parties’ motions for summary judgment and various
settlements, Apotex’s remaining antitrust claims relating to the reverse-payment settlement
agreements are as follows: (1) illegal agreements in restraint of trade against all Defendants in
violation of Section 1 of the Sherman Act, and (2) conspiracy to monopolize against all
Defendants in violation of Section 2 of the Sherman Act.5
D. The Damages Opinions of Apotex’s Expert, Dr. Hal Singer
Dr. Singer has provided three alternate damages calculations in support of Apotex’s
1. Calculation 1
Damages Calculation 1 measures the lost profits Apotex allegedly suffered as a result of
being unlawfully barred from the market by Defendants’ conduct. (Singer Rep., Apr. 26, 2011,
¶¶ 87-88.) It assumes that in the but-for world, absent any settlement agreement with Cephalon,
the Generic Defendants would have launched their generic Provigil products in either June or
December 2006. Due to the 180-day exclusivity granted to the Generic Defendants as first filers,
Dr. Singer then assumes that Apotex would have entered the market with its generic product 180
days later—on either December 21, 2006 or June 22, 2007. (Singer Rep. ¶¶ 70, 73; Singer Supp.
Rep., Dec. 20, 2013, ¶ 35.) Dr. Singer opines that Apotex would have entered the market as the
fifth generic entrant. (Singer Rep. ¶ 79.) He further relies upon contemporaneous projections
maintained by Apotex in the normal course of business, to determine that Apotex would have
captured 20 percent of the market for generic Provigil during this initial damages period. (Id. at
¶¶ 85-86, 88.)
Dr. Singer’s opinion also factors in the September 2009 FDA Import Alert against two of
Apotex’s manufacturing sites, which prohibited Apotex from selling pharmaceuticals
As a result of the settlement with Cephalon, the following claims brought by Apotex are no
longer part of the case: 1) Walker Process fraud against Cephalon in violation of Section 2 of the
Sherman Act; (2) sham litigation against Cephalon in violation of Section 2 of the Sherman Act;
and (3) tortious interference with prospective business relations against Cephalon.
manufactured at those facilities. The Import Alert ban was lifted on July 1, 2011, at which time
Apotex was permitted to resume producing pharmaceuticals for sale from those manufacturing
locations. Acknowledging that Apotex could not have marketed generic Provigil during this time
in the but-for world, Dr. Singer excludes any lost profits that may have otherwise occurred
during the period in which the Import Alert was in effect. (Singer Supp. Rep. ¶ 22; Fahner Rep.,
Exs. A, B.)
Relying upon the testimony of an Apotex executive, Mr. Gordon Fahner, Dr. Singer
assumes that sales of generic Provigil would have resumed in September 2011, two months after
the Import Alert was lifted. Further acknowledging that the Import Alert would have affected
Apotex’s relationships with its customer base, Dr. Singer opines that Apotex would have
maintained a 7.5 percent market share upon re-launch. (Singer Supp. Rep. ¶ 33.)
Calculating the estimated sales and profits that Apotex would have earned in the but-for
world during the initial damages period (December 2006 through September 2009) and the reentry damages period (September 2011 through November 2013), Dr. Singer determines that
Apotex suffered a total of $113.2 million in lost profits.6 (Id. at ¶¶ 38-39.)
2. Calculation 2
In addition to the lost profits assessment set forth above, Dr. Singer provides a second
damages calculation that was created at the request of counsel for Apotex. This second
calculation modifies Calculation 1 to “assume[ ] that (a) first filers will be held to their
contractual agreement with Cephalon not to enter until April 2012, and (b) Apotex would have
entered the market and captured its anticipated profits as the fifth entrant plus the but-for profits
Dr. Singer also provides an alternate calculation in which the initial damages period extends
from June 2007 through September 2009, in the event that the jury finds that Apotex would not
have entered the market until June 2007. (See Singer Supp. Rep., Appx. 3, ¶ 11.)
of the first four generic entrants.” (Singer Exp. Rep. ¶ 89 (emphasis in original).) According to
Dr. Singer, “[s]uch a theory of damages prevents defendants from keeping the overwhelming
majority of their illegally obtained profits.” (Id.) Notably, Dr. Singer provides very little
explanation regarding how Apotex would be entitled to the profits of the Generic Defendants.
Using these parameters, Dr. Singer opines that Apotex suffered lost profits in the amount of
$455.8 million in Calculation 2. (Singer Supp. Rep. ¶¶ 38-39.)
3. Calculation 3
Finally, Dr. Singer presents a third damages model, which was also prepared at the
request of counsel, “under a legal theory in which Apotex would have been the first firm to enter
at-risk.” (Id. at ¶ 35.) This damages model is described as including, in addition to the lost profits
described in Calculation 1, the lost profits that Apotex would have experienced if Apotex was
not “subject to the 180-day exclusivity ‘bottleneck,’ but instead . . . entered as the sole generic
competitor in December 2006.” (Id. at ¶ 36.) Using data from Teva’s real-world launch as the
sole first filer in 2012, Dr. Singer projects lost profits in the amount of $155.9 million in
Calculation 3. (Id.)
E. Defendants’ Motion to Exclude Damages Testimony of Dr. Singer
Defendants raise a number of challenges to Dr. Singer’s damages opinions under Federal
Rule of Evidence 702 and Daubert. Defendants challenge Dr. Singer’s first damages calculation,
arguing that: (1) Dr. Singer’s assumption about Apotex’s initial market entry date is speculative
and contrary to the evidence; (2) his assumption about Apotex’s re-launch date is unreasonable;
(3) his market share assumption for the initial damages period is unreasonable; and (4) his
market share assumption for the re-entry period is unreasonable. Defendants further challenge
Dr. Singer’s Calculations 2 and 3, arguing that they lack factual support and that they measure
damages in excess of lost profits, and thus, are contrary to the law.
For the reasons that follow, I find that Dr. Singer’s Damages Calculation 1 meets the
requirements of Daubert and Rule 702, and therefore will be permitted at trial. However, I agree
with Defendants that Calculations 2 and 3 do not fit the facts of the case and are contrary to the
law on antitrust damages, and thus, will be excluded.
Rule 702 governs the admissibility of expert testimony, and states:
A witness who is qualified as an expert by knowledge, skill,
experience, training, or education may testify in the form of an
opinion or otherwise if: (a) the expert’s scientific, technical, or
other specialized knowledge will help the trier of fact to
understand the evidence or to determine a fact in issue; (b) the
testimony is based on sufficient facts or data; (c) the testimony is
the product of reliable principles and methods; and (d) the expert
has reliably applied the principles and methods to the facts of the
Rule 702 “embodies a trilogy of restrictions on expert testimony: qualification, reliability
and fit.” Schneider ex rel. Estate of Schneider v. Fried, 320 F.3d 396, 404 (3d Cir. 2003)
(quoting In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 741-43 (3d Cir. 1997)). In evaluating
whether an expert opinion is admissible, the district court acts as a gatekeeper, excluding opinion
testimony that does not meet these requirements. Id. The burden is on the party offering the
evidence to establish admissibility by a preponderance of the evidence. Padillas v. Stork-Gamco,
Inc., 186 F.3d 412, 418 (3d Cir. 1999).
An expert is qualified if he or she has specialized knowledge “greater than the average
layman.” Waldorf v. Shuta, 142 F.3d 601, 625 (3d Cir. 1998) (quoting Aloe Coal Co. v. Clark
Equip. Co., 816 F.2d 110, 114 (3d Cir. 1987)). This requirement is interpreted liberally, as “a
broad range of knowledge, skills, and training qualify an expert.” Schneider, 320 F.3d at 404.
Reliability requires that an expert’s opinion is based upon “‘methods and procedures of
science’ rather than on ‘subjective belief or unsupported speculation.’” In re Paoli, 35 F.3d at
742 (quoting Daubert, 509 U.S. at 590). In considering whether an expert’s method is reliable,
courts should consider: (1) whether it is based upon testable hypotheses; (2) whether the method
has been subject to peer review; (3) the known or potential error rate; (4) “the existence and
maintenance of standards controlling the technique’s operation”; (5) whether it is generally
accepted; (6) the relationship of the technique to other methods that have been deemed reliable;
(7) the expert’s experience or qualification with the technique or method; (8) non-judicial uses
the method has been put to; and (9) all other relevant factors. Id. at 742 n.8.
The reliability requirement is not to be applied “too strictly” and is satisfied as long as the
expert has “good grounds” for his or her opinion. Holbrook v. Lykes Bros. S.S. Co., Inc., 80 F.3d
777, 784 (3d Cir. 1996). “Proponents of expert testimony do not have to ‘prove their case
twice—they do not have to demonstrate to the judge by a preponderance of the evidence that the
assessments of their experts are correct, they only have to demonstrate by a preponderance of the
evidence that their opinions are reliable.’” In re DVI, Inc. Sec. Litig., 2014 WL 4634301, at *5
(E.D. Pa. Sept. 15, 2014) (quoting In re Paoli, 35 F.3d at 744) (emphasis in original).
There also must be a “valid scientific connection” or “fit,” between the facts of the case
and the expert’s opinion. Daubert, 509 U.S. at 591-92; see also Holbrook, 80 F.3d at 777. This
requirement ensures that the opinion is relevant and will “assist the trier of fact to understand the
evidence or to determine a fact in issue.” Daubert, 509 U.S. at 591. Finally, “[v]igorous crossexamination, presentation of contrary evidence, and careful instruction on the burden of proof
are the traditional and appropriate means of attacking shaky but admissible evidence.” Id. at 596
(citing Rock v. Arkansas, 483 U.S. 44, 61 (1987)).
“An antitrust plaintiff who is excluded from the relevant market by anticompetitive
activity is entitled to recover his lost profits.” Dolphin Tours, Inc. v. Pacifico Creative Svc., Inc.,
773 F.2d 1506, 1511 (9th Cir. 1985). In antitrust cases, “the jury may not render a [damages]
verdict based on speculation or guesswork” but “may make a just and reasonable estimate of the
damage based on relevant data.” Bigelow v. RKO Radio Pictures, 327 U.S. 251, 264 (1946). An
antitrust plaintiff’s proof of damages need not be exact because “[t]he most elementary
conceptions of justice and public policy require that the wrongdoer shall bear the risk of the
uncertainty which his own wrong has created.” Id. (citing Package Closure Corp. v. Seal-Right
Co., 141 F.2d 972, 979 (2d Cir. 1944)).
However, “the burden is placed upon the plaintiff to show that the damage claimed was
in fact caused by the unlawful acts of the defendant and did not result from some other factor,
such as . . . lawful competition by the defendant.” R.S.E., Inc. v. Pennsy Supply, Inc., 523 F.
Supp. 954, 964 (M.D. Pa. 1981) (citing Van Dyk Research Corp. v. Xerox Corp., 631 F.2d 251
(3d Cir. 1980)). The United States Court of Appeals for the Third Circuit has held that a failure
to consider the probable effects of lawful competition and changed economic conditions will
lead to a damages award that is based on speculation and guesswork. See Coleman Motor Co. v.
Chrysler Corp., 525 F.2d 1338, 1353 (3d Cir. 1975).
A. Defendants’ Challenges to Calculation 1
Defendants challenge Dr. Singer’s first damages calculation for two primary reasons:
(1) the market entry dates for both the initial damages period and the re-entry damages period are
unreliable and unreasonable; and (2) the market share projections are speculative and not
supported by the record. Apotex responds that the generic entry dates and market projections
used in Dr. Singer’s damages analysis are well-supported by contemporaneous documents,
expert and lay witness testimony, and real world experience with the launch of generic Provigil.
1. The Initial Market Entry Date
As described above, Dr. Singer assumes that in the but-for world, the Generic Defendants
would have launched their generic Provigil products in either June 2006 or December 2006. He
then assumes that Apotex would have launched immediately after the 180-day period of
exclusivity that is granted to first filers expired—that is, either December 21, 2006 or June 22,
2007. Apotex defends these opinions urging that experts are permitted to “make the assumptions
of fact necessary to render a sound opinion, so long as such assumptions have a reasonable basis
in the available record and are disclosed to the finder of fact.” Brill v. Marandola, 540 F. Supp.
2d 563, 568 (E.D. Pa. 2008); see also Elcock v. Kmart Corp., 233 F.3d 734, 754-55 (3d Cir.
2000) (assumptions used to support damages calculations must be based on a proper factual
Defendants’ position is that Dr. Singer’s assumptions regarding the initial entry dates by
the Generic Defendants are not supported by the record, and that Dr. Singer provides no
independent explanation for why at-risk entry was likely in the but-for world. According to
Defendants, Dr. Singer’s failure to provide an independent analysis as to the likelihood of at-risk
entry renders his opinions unreliable and inadmissible.
Regarding the initial entry dates, Apotex explains that the Generic Defendants “would
launch in June 2006 under two well-supported scenarios: (1) the invalid ‘516 patent was never
issued, listed in the Orange Book, and/or enforced against the Generic Defendants; or
(2) Cephalon had still sued the Generic Defendants based on the ‘516 patent, but one or more of
the Generic Defendants’ pending motions for summary judgment had been granted before June
2006.” (Apotex Resp., p. 7.) Both Apotex and Dr. Singer cite the report of another Plaintiffs’
expert, John R. Thomas, for support. Mr. Thomas opines that, as a regulatory matter, the Generic
Defendants would have been eligible for final FDA approval on their generic Provigil products
in June 2006 in the absence of the RE ‘516 patent, or if summary judgment had been granted
prior to June 2006. (See Thomas Rep. ¶¶ 117-18.)7
In its initial response, Apotex argued that the first scenario—a world in which the ‘516
patent never issued—was supported by its Walker Process and sham litigation claims. However,
as noted above, Apotex has since settled with Cephalon and, therefore, the Walker Process and
sham litigation claims are no longer at issue. Consistent with this reality, Apotex recently
conceded that there is no factual basis for Dr. Singer’s assumption that the Generic Defendants
would have entered the market in June 2006 if the ‘516 patent never issued. (See Tr. May 12,
2017.) As such, I need only resolve Defendants’ challenge to the second scenario which is based
on an assumption that one or more Generic Defendants would have obtained a favorable
summary judgment ruling prior to June 2006. Generic Defendants primarily argue that there is
no factual basis in the record to support this assumption.
In response, Apotex notes (1) Cephalon did not oppose the Generic Defendants’
statements of fact submitted in support of their motions for summary judgment; (2) the summary
judgment motions were pending and fully briefed shortly before the Paragraph IV litigation
settled; and (3) internal corporate documents indicate that the Generic Defendants expected to
Mr. Thomas opined that Cephalon’s various FDA exclusivities would have lapsed on June 24,
2006. (See Thomas Rep. ¶ 117.)
launch their generic Provigil products in June 2006. Based upon this evidence, particularly the
timing of the events, Apotex argues that a reasonable jury could infer that the impetus behind the
settlement agreements was a reasonable expectation that summary judgment would be granted in
the Generic Defendants’ favor.
In light of the foregoing, I conclude that Apotex has proffered evidence which could
support its contention that the Generic Defendants’ motions for summary judgment would have
been granted before June 2006. While the evidence Apotex identifies certainly does not compel
such a finding, it would be inappropriate to resolve the parties’ disputes about what the evidence
proves at this juncture. If a damages trial does occur, Defendants are free to explore the
foundation for the June 2006 entry date through cross-examination and may present argument to
the jury. Additionally, if necessary, Defendants may reassert their objection to the June 2006
entry date at trial, at which time I will be better suited to address the objection with a developed
trial record. As it is premature to make such a fact-intensive determination, Defendants’
challenge to Calculation 1 to the extent that it assumes that the Generic Defendants would have
launched in June 2006 will be denied.
As noted above, Calculation 1 is based on two different dates on which the Generic
Defendants would have launched—June 2006 and December 2006. Regarding the second launch
date—December 2006, I also conclude that facts in the record, if accepted, could provide a
reasonable basis for Dr. Singer’s assumption that, absent the settlement agreements, the Generic
Defendants would have entered the market at-risk in December 2006. Mr. Thomas’s opinion that
the 30-month stay would have expired in December 2006 and that the Generic Defendants would
have been eligible, as a regulatory matter, to enter the market at-risk at that time are not
challenged by Defendants.
Indeed, Apotex has pointed to a number of facts that would support a finding that the
Generic Defendants would have launched at-risk at the conclusion of the 30-month stay. (See
Pls.’ Comb. Stat. of Uncontested Facts ¶¶ 97-136; Apotex Resp., Exs. H-K); see also King Drug
Co. of Florence, Inc. v. Cephalon, Inc., 88 F. Supp. 3d 402, 421-22 (E.D. Pa. 2015) (denying
Ranbaxy’s motion for summary judgment on causation due to genuine dispute of material fact on
likelihood of at-risk launch). Any facts indicating otherwise would be appropriate grounds for
cross-examination. Accordingly, I also disagree with Defendants’ assertion that Calculation 1
should be excluded to the extent that it assumes that the Generic Defendants would have entered
the market in December 2006.
In addition to the foregoing challenges, Defendants also object to Dr. Singer’s
assumption that Apotex would have launched 181 days after the initial entry by the Generic
Defendants. Defendants argue that Cephalon would have sued Apotex for patent infringement in
the but-for world when Apotex converted its ANDA to include a Paragraph IV certification,
which was a necessary step for Apotex to enter the market. If that occurred, Apotex would be
subject to its own 30-month stay on the approval of its ANDA, which would largely negate
Apotex’s damages during this initial entry period. (See Singer Dep., July 27, 2011, p. 131.)
Defendants argue that failing to account for this 30-month stay is unreasonable, as
antitrust law requires Dr. Singer to presume, for purposes of his damages analysis, that
Defendants would have responded rationally to Apotex’s attempt to enter the market. (Defs.’ Br.,
p. 8 (citing Dolphin Tours, 773 F.2d at 1511).) In support of its assertion that Cephalon would
have unquestionably sued Apotex for patent infringement in the but-for world had it tried to
enter the market 181 days after the Generic Defendants, Defendants point out that Cephalon
actually did sue two other non-first filers that sought generic entry in the real world—Carlsbad
and Sandoz. See Complaint, Cephalon, Inc. v. Sandoz, Inc., No. 04-cv-2458 (D.N.J. May 26,
2004); Complaint, Cephalon, Inc. v. Carlsbad Tech., Inc., No. 05-cv-1089 (D.N.J. Feb. 24,
Apotex responds that there exists a sufficient factual basis for the assumption that
Cephalon would not have sued Apotex for patent infringement in the but-for world. I agree.
If the jury finds antitrust liability based on the reverse-payment settlement agreements,
there is sufficient evidence in the record to support Dr. Singer’s assumption that Cephalon would
not have sued Apotex for patent infringement when it attempted to enter the market.8 Indeed,
Cephalon had the opportunity to sue Apotex in the real world when Apotex filed its Paragraph
IV certification, but it declined to do so. (Thomas Rep. ¶ 123.) Further, Dr. Singer stated at
deposition that economically speaking, he was “fairly confident . . . that the cost benefit calculus
does not work in favor of suing.” (Singer Dep., July 27, 2011, p. 132.) This is because
“[a]ccording to Cephalon’s own plans they thought they would accede about 90 percent of the
market in a very short period of time, and the notion that they would then get any benefit out of
suing Apotex to slow down the fifth entrant by 180 days seems to fail on a cost benefit calculus.”
(Id. at p. 123.) Because there is a rational factual basis underlying Dr. Singer’s assumptions
regarding the initial entry dates, I find that his opinions on these matters are admissible. Crossexamination is the appropriate means of challenging this expert testimony.
Plaintiffs filed a motion in limine seeking to preclude Defendants from presenting evidence or
arguing that Cephalon would have sued Apotex in the but-for world. I denied this motion without
prejudice because I could not resolve the issues raised therein without considering actual pieces
of evidence or argument and the context in which they were presented. (See Doc. No. 1050, Or.
Jan 20, 2016.) In denying the motion, I noted that Plaintiffs are free to renew their objections at
the trial as the record develops. That said, if Plaintiffs elicit from Dr. Singer testimony that
Cephalon would not have sued Apotex in the but-for world, Defendants’ evidence and argument
to the contrary are certainly relevant. In the event that Defendants do seek to present such
evidence and argument, Plaintiffs may renew their other objections at the appropriate time.
2. The Re-Entry Date
Next, Defendants challenge Dr. Singer’s assumption that, after the FDA lifted the Import
Alert on July 1, 2011, Apotex would have re-launched generic Provigil only two months later in
September 2011. Dr. Singer bases this assumption on the lay opinion of Gordon Fahner,
Apotex’s Vice President of Business Operations and Finance. Citing In re TMI Litigation, 193
F.3d 613 (3d Cir. 1999), Defendants argue that Dr. Singer’s reliance on Mr. Fahner is
impermissible because Dr. Singer did not assess the reliability of Mr. Fahner’s opinion.
Pursuant to Federal Rule of Evidence 701, Mr. Fahner opines that in the but-for world
generic Provigil would have been a top priority for re-launch and likely would have been
launched in August 2011. Defendants filed a motion challenging Mr. Fahner’s lay opinions,
arguing he lacked personal knowledge and that his opinions were not helpful to the jury. I
considered Defendants’ challenges to Mr. Fahner’s testimony and determined that his opinion as
to generic Provigil’s re-launch date in the but-for world is admissible.9 (See Doc. No. 896.) In
resolving the motion to exclude Mr. Fahner’s testimony, I found that “Apotex adequately
demonstrated that Mr. Fahner possessed the requisite experience and personal knowledge under
Rule 701 to offer an opinion as to the likely date that generic modafinil would have been relaunched in the but-for world.” (Id. at ¶ 15.) As I have already considered the admissibility and
reliability of Mr. Fahner’s opinion and because Mr. Fahner will be subject to cross-examination,
I do not find that Dr. Singer’s reliance on Mr. Fahner’s opinions is unreasonable.
The motion was originally referred to Magistrate Judge David R. Strawbridge for disposition.
Judge Strawbridge initially granted Defendants’ motion to exclude Mr. Fahner’s opinions.
However, Apotex objected to the ruling, and I partially reversed Judge Strawbridge’s order,
finding that Mr. Fahner’s opinion as to generic Provigil’s re-launch date in the but-for world was
Further, I find that Dr. Singer’s assumption is distinguishable from the cases cited by
Defendants. For example, in In re TMI Litigation, a personal injury action arising out of the
nuclear meltdown at Three Mile Island, one expert had reviewed the testimony of an entire team
of experts, then on the basis of that review, “offered an opinion as to the radiation dose to which
Three Mile Island area residents were exposed as a result of the reactor accident.” 193 F.3d at
714. The expert assumed that the effects that other dose experts had described were actually
caused by radiation, and he assumed that those other experts’ estimates as to how much radiation
was required to produce those effects were correct. Id.
Nonetheless, the testifying expert had also acknowledged significant flaws in the
methodologies of some of the experts he had relied upon and had testified at deposition that an
appropriate analysis on his part would include an “assessment of the strengths and weaknesses of
the available evidence.” Id. at 715. In light of all of the above, the court found that the expert’s
“failure to assess the validity of the opinions of the experts he relied upon together with his
unblinking reliance on those experts’ opinions, demonstrates that the methodology he used to
formulate his opinion was flawed under Daubert as it was not calculated to produce reliable
results.” Id. at 716.
Here, Dr. Singer relied upon Mr. Fahner for part of his damages assessment model—the
start date of the re-launch period. Mr. Fahner’s opinions do not have any other effect on Dr.
Singer’s opinions, and certainly do not make up the building blocks of Dr. Singer’s economic
analysis, unlike the expert described in In re TMI Litigation. In light of my determination that
Mr. Fahner’s opinion meets the standard for admissibility set forth in Rule 701, there is no
concern that Dr. Singer has assumed the correctness of a completely unreliable opinion. The jury
will be able to assess Mr. Fahner’s credibility and the reliability of his opinion when he testifies.
Therefore, I disagree with Defendants’ position that Dr. Singer’s opinions should be excluded for
assuming a re-launch date of September 2011.
3. The Initial Market Share Projection
Defendants further challenge Dr. Singer’s reliance upon Apotex’s internal business
projections in determining that Apotex would have captured 20 percent of the modafinil market
during the initial damages period. Because Dr. Singer projects that Apotex would have been the
fifth entrant in the market following a 180-day period of exclusivity for the Generic Defendants,
Defendants argue that a 20 percent market share is unreasonable on its face, as it “assumes away
the well-recognized first mover advantage that first filers enjoy.” (Defs.’ Br., p. 9.) Defendants
point out that in the actual world, the fifth generic entrant only received 2.9 percent of the
modafinil market share. (Stangle Rebuttal Rep., Jan. 29, 2014, ¶ 98.) Further, Defendants assert
that Apotex’s Chairman, Bernard Sherman, testified at deposition that the forecasts were
“worthless” and “of no value.” (Sherman Dep., pp. 110, 300.) According to Defendants, because
Dr. Singer conducted no independent economic assessment of Apotex’s projected but-for market
share, his reliance on the business projections renders his damages opinions inadmissible.
Defendants rely upon ZF Meritor, LLC v. Eaton Corp., 696 F.3d 254 (3d Cir. 2012) in
support of this argument. There, an expert assessed the plaintiff’s lost profits by considering the
revenues that the plaintiff would have earned in the but-for world. However, the expert’s analysis
of the plaintiff’s but-for revenues were derived entirely from a one-page set of profit and volume
projections maintained by the plaintiff, and the expert did not know “the circumstances under
which such projections were created or the assumptions on which they were based.” Id. at 29192. The Third Circuit recognized that “internal projections for future growth often serve as
legitimate bases for expert opinions” because “businesses are generally well-informed about the
industries in which they operate and have incentives to develop accurate projections.” Id. at 292
(internal quotation marks and citations omitted).
However, in order to rely upon the estimates of others in creating a hypothetical reality,
the Third Circuit held that “the expert must explain why he relied on such estimates and must
demonstrate why he believed the estimates were reliable.” Id. (citations omitted). Because the
expert was generally not familiar with who created the projections or how they were created, the
defendant was prevented from effectively cross-examining the expert. Id. at 293. Thus, the
exclusion of the expert’s testimony was affirmed. Id. at 293.
I am not persuaded that Dr. Singer’s reliance on Apotex’s market share projections is
comparable to the expert’s reliance in ZF Meritor. Dr. Singer’s expert reports and deposition
testimony demonstrates that he considered the reliability of the market projections, that he
understood how they were created, and that he will be able to provide detailed explanations as to
why he found their use appropriate. Dr. Singer reviewed a series of Apotex’s internal projections
for modafinil market share created between December 2002 and February 2008. (Defs.’ Br., Ex.
1.) Over time, the projected market share increased from an initial low of 5 percent to a
maximum of 25 percent. Dr. Singer understood that the increase in market share was due to
pharmaceutical supply agreements executed between Apotex and two large customers:
McKesson, a major drug wholesaler, and ExpressScripts, a major mail-order pharmacy. (Apotex
Resp., Exs. L-M; Singer Rep. ¶ 86; Singer Supp. Rep., Appx. 3, ¶ 6.) According to Dr. Singer,
“by at least one estimate, McKesson alone enjoyed a 34 percent share of the wholesale
distributor industry in 2004.” (Singer Rep. ¶ 86.) Indeed, even Defendants’ expert, Dr. Ordover,
recognized that McKesson and ExpressScripts ordered substantial amounts of Provigil during the
initial damages period. (Ordover Rep., June 10, 2011, Ex. 3.)
Dr. Singer’s report also demonstrates that he considered the deposition testimony of
Tammy McIntire Stefanovic, Apotex’s former President, regarding the use of the market share
projections. (Id. at ¶ 86 n. 123-25.) Ms. Stefanovic reviewed and signed off on the market share
forecasts relied upon by Dr. Singer, and generally explained how they were created. (Stefanovic
Dep., pp. 62-63, 77, 261-62.) In short, Dr. Singer was clearly more informed about how the
market share projections were created than the expert in ZF Meritor. (See Singer Dep., July 27,
2011, p. 212 (in speaking with Ms. Stefanovic, Dr. Singer concluded that Apotex “had a
reasonable grasp on – on calculating market shares”).)
While Defendants make much of the statements by Apotex’s Chairman, Bernard
Sherman, that the forecasts were “worthless” and “of no value,” Defendants take these
statements out of context. Mr. Sherman’s statements that aspects of the projection were
“worthless” were in reference to the potential cost and profit margins, not market share. (See
Sherman Dep., pp. 108, 110.) The only issues Mr. Sherman raised as to the market share portion
of Apotex’s projections is that they may be too low, which would undervalue, not overvalue,
Apotex’s damages. (Id. at pp. 111, 114-15, 235; see also Singer Dep., July 27, 2011, pp. 209-10
(demonstrating that Dr. Singer considered Mr. Sherman’s deposition, and concluded that
Sherman believed a 20 or 25 percent market share was too conservative).)
Whether Dr. Singer relied on the best data in forming his opinions is a question for the
jury. See Manpower, Inc. v. Ins. Co. of Pa., 732 F.3d 796, 809 (7th Cir. 2013). “Assuming a
rational connection between the data and the opinion—as there [is] here—an expert’s reliance on
[allegedly] faulty information is a matter to be explored on cross-examination; it does not go to
admissibility.” Id. (citing Walker v. Soo Line R.R. Co., 208 F.3d 581, 589 (7th Cir. 2000)).
Therefore, I find that Dr. Singer’s reliance on the initial market share projections created by
Apotex is not unreasonable.
4. The Re-Entry Market Share Projection
Dr. Singer also relied upon Apotex’s internal projections in determining that Apotex
would have maintained a 7.5 percent market share during the re-launch period (i.e. the period of
time after the Import Alert was lifted.) In making this assumption, Dr. Singer reviewed
contemporaneous market share projections prepared by Apotex, and averaged 10 a 2011 forecast
showing a 5 percent market share projection and a 2013 forecast showing a 10 percent market
share projection. His report explains that he “adjust[ed] [his] estimates of Apotex’s market share
to 7.5 percent during this re-entry period (from 20 percent during the initial damages period) due
to uncertainty whether the supply agreements comparable to those pertaining to the initial
damages period would have remained in effect during the FDA import alert and the extent to
which pre-import alert market share could be recaptured.” (Singer Supp. Rep. ¶ 33, n.83.)
Defendants raise many of the same challenges to this re-launch market share assumption
as those raised with respect to the initial market share projections—namely that Dr. Singer did
not conduct an independent economic assessment of Apotex’s projected but-for market share,
which renders his opinions inadmissible under ZF Meritor. Additionally, Defendants argue that
Dr. Singer did not appropriately take into account the challenges that Apotex would face in
capturing market share following the Import Alert when assessing the re-entry market share.
Dr. Singer explained during deposition that averaging market share assumptions in this manner
is “a fairly common thing to do, and because each month is being treated the same, [he is] fairly
confident that had [he] done a step function, five five five and then ten ten ten, [he is] pretty
confident it wouldn’t have made a difference.” (Singer Dep., Feb. 28, 2014, pp. 198-99.)
Defendants provide no evidence indicating that averaging market shares in this manner is
uncommon for economists or otherwise improper.
For many of the reasons recited above, I disagree with Defendants’ position. Both market
share projections were created by Apotex in the normal course of business,11 and economists
often rely upon such contemporaneous business documents in assessing damages. See ZF
Meritor, 696 F.3d at 292.12 Just as Dr. Singer considered the reliability of the initial entry market
share projections and made a determination that their use was appropriate in calculating
Apotex’s damages, he also considered the reliability of the re-entry market share projections.
During deposition, Dr. Singer explained that he and/or his staff communicated with Apotex
regarding the re-entry projections, and sought to understand why the market share during the reentry period differed from the prior projections. They also discussed how the Import Alert
Defendants attempt to argue that Dr. Singer’s review of the 2011 and 2013 market share
projections was deficient because he did not independently verify with Apotex that the
projections were prepared for the same purpose and used in the same manner as the initial entry
market share projections described above. Dr. Singer explained that after reviewing various
depositions and speaking with Apotex employees, he understood that the initial market share
projections were created in Apotex’s day-to-day business operations, and were used to make
various decisions about market entry and opportunities. (Singer Dep., Feb. 28, 2014, pp. 183-84.)
He explained that he understood the 2011 and 2013 market share projections to be used in the
same fashion, but could not recall independently verifying that understanding with Apotex
employees. (Id. at pp. 184-86.) However, there is no indication in the record that the creation or
purpose of the 2011 and 2013 market share projections somehow differed from the projections
created by Apotex between 2002 and 2008. Therefore, I do not find that exclusion on this ground
Defendants also cite to Legendary Art, LLC v. Godard, 2012 WL 3550040 (E.D. Pa. Aug. 17,
2012). Unlike Dr. Singer, the expert in Legendary Art performed absolutely no independent
assessment as to the reliability of a business projection. Id. at *1. Further, the business projection
in that case provided the backbone for the expert’s entire damages assessment, including
expected profits and losses, in a market with which the expert had no familiarity. Id. at *1, 4.
Here, Dr. Singer has testified as an expert in several antitrust cases involving the pharmaceutical
industry, and he is relying upon Apotex’s assessment for one piece of his overall analysis.
Indeed, the majority of his economic analysis has not been challenged as unreliable by
Defendants. Finally, the court in Legendary Art had numerous reasons to question the accuracy
of the business records that the expert relied upon. Id. at *2, 4. Therefore, I find Dr. Singer’s
analysis to be distinguishable.
affected Apotex’s relationship with its customers. (Singer Dep., Feb. 28, 2014, pp. 187-88, 199200.) The fact that the market share projections are considerably lower following the Import
Alert demonstrates that Apotex considered the impact of that event on business relationships.
(See id. at pp. 199-201.)
As with the initial market share projections, Defendants may have reason to believe that
Dr. Singer could have based his re-entry market share assumption on “better” evidence. That,
however, is not grounds for exclusion. “Again, to the extent that there are facts in dispute which
[Dr. Singer] should or should not have relied upon . . . a jury will be given the opportunity to sort
through these facts and apply their conclusions in assessing each of the parties’ respective expert
damages witnesses.” Aetna Inc. v. Express Scripts, Inc., 261 F.R.D. 72, 81-82 (E.D. Pa. 2009).
B. Defendants’ Challenges to Calculations 2 and 3
Calculation 2 adopts the assumptions made by Dr. Singer in Calculation 3, and builds
upon them, providing for even greater damages. Therefore, if the assumptions that underlie
Calculation 3 render it inadmissible, Calculation 2 would also be inadmissible. Therefore, I will
address the challenges to Calculation 3 first.
Dr. Singer’s third damages calculation, prepared at the request of counsel, modifies
Calculation 1 to assume that Apotex would have entered the market as a first filer “in order to
capture market share during the exclusivity period.” (Singer Supp. Rep. ¶ 36.) “In this scenario,
Apotex would not have been subject to the 180-day exclusivity ‘bottleneck,’ but instead would
have entered as the sole generic competitor in December 2006.” (Id.) Dr. Singer explains that
“[p]art of what makes the [ ] challenged conduct offensive is the . . . bottleneck that’s created,
not just the settlement itself but the generic defendants agreeing to get out of the market and
maintaining their exclusivity rights.” (Singer Dep., Feb. 28, 2014, p. 265.) Therefore, Calculation
3 models a but-for world in which the Generic Defendants settled with Cephalon, but agreed to
waive their 180-day period of exclusivity, opening the door for other generic companies, such as
Apotex, to enter the market. For this scenario, Dr. Singer models Apotex’s lost profits on the
real-world launch of Teva’s generic Provigil product in 2012. (Singer Supp. Rep. ¶ 36.)
Defendants argue that Calculation 3 does not fit the facts of the case and is contrary to the
law. First, they note that Dr. Singer provides no factual basis to support Apotex’s theory that the
Generic Defendants would have agreed to settle in the but-for world, while also surrendering
their exclusivity rights. (Singer Dep., Feb. 28, 2014, p. 265 (“Q: Are you opining on a rationale
of why the generic defendants might surrender their exclusivity rights in the but-for world? A:
No.”).) Defendants note that antitrust damages models “must presume the existence of rational
economic behavior in the hypothetical free market.” Dolphin Tours, Inc., 773 F.2d at 1511.
Further, Defendants assert that Calculation 3 measures damages in excess of those attributable to
allegedly illegal conduct.
Apotex responds that the bottleneck caused by the Generic Defendants maintenance of
their 180-day exclusivity period during settlement of the Paragraph IV litigation is a critical
aspect of their theory of liability that has been argued since the inception of this case. According
to Apotex, Calculation 3 does nothing more than model “a scenario in which Generic Defendants
waived these periods when they settled the patent case,” alleviating the anticompetitive
bottleneck, and allowing Apotex to enter the market in December 2006. (Apotex Resp., p. 18.)
I agree with Defendants that the record does not support Dr. Singer’s assertion that the
Generic Defendants would have agreed to stay off of the market through 2012, while
simultaneously forfeiting their first filer rights of 180 days of exclusivity. As I found in granting
Defendants’ motions for summary judgment on Plaintiffs’ claims for overall conspiracy, the
record demonstrates that it was in each Generic Defendants’ independent economic self-interest
to maintain its period of exclusivity and enter into the contingent launch provisions, such that if
any competitor entered the market, each Generic Defendants’ economic interests would be
protected. King Drug Co. of Florence, Inc. v. Cephalon, Inc., 2014 WL 2813312, *13-14 (E.D.
Pa. June 23, 2014). Dr. Singer essentially admits that he is unaware of any factual basis to
support a scenario where the Generic Defendants would agree to forfeit their 180 days of
exclusivity. (See Singer Dep., Feb. 28, 2014, pp. 265-68.) As antitrust lost profits damages
scenarios must presume the existence of rational economic behavior in the hypothetical free
market, this lack of factual basis renders Calculation 3 inadmissible.
Even more troubling is that Dr. Singer’s Calculation 3 measures lost profits in excess of
those stemming from the alleged anticompetitive activity. “In economic terms, the amount of
damages is the difference between what the plaintiff could have made in a hypothetical free
economic market and what the plaintiff actually made in spite of the anticompetitive practices.”
Id. (citing Bigelow, 327 U.S. at 264). “It is a requirement that an antitrust plaintiff must prove
that his damages were caused by the unlawful acts of the defendant.” MCI Commc’n Corp. v.
Am. Tel. & Tel. Co., 708 F.2d 1081, 1161 (7th Cir. 1983) (citing 15 U.S.C. § 15) (emphasis in
original). When recreating a but-for world to establish antitrust damages, a plaintiff must create a
world “characterized by the absence of the . . . challenged practices.” Allied Orthopedic
Appliances, Inc. v. Tyco Healthcare Grp., L.P., 247 F.R.D. 156, 165 (C.D. Cal. 2007).
While Apotex is correct that it has consistently alleged that the bottleneck created by the
settlement agreements had a significant anticompetitive effect, it was not just the statutorilygranted 180-day period of exclusivity that created that bottleneck. The bottleneck was instead
allegedly created by the Generic Defendants maintaining 180-day exclusivity while
simultaneously agreeing to stay off of the market through 2012. This combination of allegedly
illegal delay and first filer exclusivity is what prevented Apotex from challenging the RE ‘516
patent and entering the market on an earlier date. See King Drug Co. of Florence, Inc., 2014 WL
2813312, at *7-8 (first filer exclusivity combined with agreement to stay off of the market and
Apotex’s inability to seek declaratory judgment under the law at the time created the bottleneck).
Simply put, standing on its own there is nothing inherently anticompetitive about first
filer exclusivity. Indeed, first filer exclusivity is provided for under the Hatch-Waxman Act in
order to “encourage generic entry and challenges to drug patents.” In re K-Dur Antitrust Litig.,
686 F.3d 197, 204 (3d Cir. 2012) vacated on other grounds, Upsher-Smith Labs., Inc. v.
Louisiana Wholesale Drug Co., Inc., 133 S. Ct. 2849 (2013). Market entry by the Generic
Defendants in 2006, as Dr. Singer’s Calculation 1 models, would promote consumer choice and
would constitute lawful competition. Therefore, assigning lost profits to Apotex stemming from
the initial 180 days under which the Generic Defendants were first eligible to market generic
Provigil would require assessing damages against Defendants for lawful competition. This the
law does not allow. MCI Commc’n Corp. v. Am. Tel. & Tel. Co., 708 F.2d at 1161 (“If a
plaintiff has suffered financial loss from the lawful activities of a competitor, then no damages
may be recovered under the antitrust laws”); Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429
U.S. 477, 487-89 (1977) (“The antitrust laws . . . were enacted for the protection of competition
not competitors” and damages must flow “from that which makes defendants’ acts unlawful”)
As Dr. Singer explained with respect to Calculation 1, if the reverse-payment settlement
agreements are found to be unlawful, the but-for world would assume the absence of the
unlawful activity (i.e. the settlement agreements), leading to market entry by the Generic
Defendants in December 2006—the first day on which the Generic Defendants would have been
eligible to enter under the Hatch-Waxman Act. Evidence in the record demonstrates that Apotex
would then be eligible to enter the market 180 days later.
For all of these reasons, I find that Dr. Singer’s Calculation 3 is both contrary to the
record and measures damages in excess of lost profits attributable to the alleged anticompetitive
actions of the Defendants, which is contrary to the law. Accordingly, Calculation 3 will be
Dr. Singer’s second damages calculation builds on Calculation 3 and includes the
“assumption that the other generic manufacturers forfeited their exclusivity because of their
misconduct and should not be permitted to use their possible entry in the market to reduce their
liability.” (Singer Exp. Rep. ¶ 89.) It further “assumes that (a) first filers will be held to their
contractual agreement with Cephalon not to enter until April 2012, and (b) Apotex would have
entered the market and captured its anticipated profits as the fifth entrant plus the but-for profits
of the first four generic entrants.” (Id. (emphasis in original).) According to Dr. Singer, “[s]uch a
theory of damages prevents defendants from keeping the overwhelming majority of their
illegally obtained profits.” (Id.)
For all of the reasons described above as to Calculation 3, there is no factual support for
Dr. Singer’s assumption that the Generic Defendants would have entered into the settlement
agreements with Cephalon that required them to stay off of the market until April 2012, while
simultaneously surrendering their first filer exclusivity. Similarly, there is no factual support for
the Generic Defendants signing the settlement agreements absent the contingent launch
Finally, Calculation 2 would model damages far in excess of Apotex’s lost profits.
Assuming away the 180-day period of exclusivity would provide Apotex with lost profits
stemming from lawful competition. Most importantly, there is no rational or legal basis for
assigning profits that the Generic Defendants would have made in the but-for world to Apotex as
Accordingly, because Dr. Singer’s Calculation 2 assumes a but-for world for which there
is no factual support, which requires assuming away rational economic behavior by competitors,
and measures damages in excess of Apotex’s lost profits, Calculation 2 will be excluded.
For all of the reasons recited above, I find that Dr. Singer’s first damages calculation is
sufficiently reliable and fits the facts of the case, such that it may be presented to a jury. While
Defendants may have legitimate factual disputes with some of the inputs Dr. Singer considered,
those disputes can be aired through the presentation of contrary evidence and cross-examination.
Because I find that Dr. Singer’s second and third damages calculations are unreliable and do not
fit the facts of the case, they will be excluded.
An appropriate Order follows.
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