STATE OF WISCONSIN et al v. INDIVIOR INC. et al
MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE MITCHELL S. GOLDBERG ON 9/8/2017. 9/8/2017 ENTERED AND COPIES MAILED AND E-MAILED TO LIAISON COUNSEL. (SEE PAPER # 395 IN 13-MD-2445) (ems)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
IN RE SUBOXONE (BUPRENORPHINE
HYDROCHLORIDE AND NALOXONE)
THIS DOCUMENT RELATES TO:
Wisconsin, et al. v. Indivior Inc. et al.
Case No. 16-cv-5073
STATE OF WISCONSIN
By Attorney General Brad D. Schimel, et al.
INDIVIOR INC. f/k/a RECKITT BENCKISER :
PHARMACEUTICALS, INC., et al.
MDL NO. 2445
CIV. A. NO. 16-5073
September 8, 2017
In this next installment of the ongoing antitrust litigation regarding the prescription drug
Suboxone, a collection of states1 (collectively, “Plaintiffs” or the “States”), have brought suit
against Defendants Indivior Inc., f/k/a Reckitt Benckiser Pharmaceuticals, Inc.; Reckitt
Benckiser Healthcare (UK) Ltd.; and Indivior PLC, f/k/a/ Reckitt Benckiser Group, plc; and
MonoSol Rx, LLC (collectively “Defendants”). The States’ lawsuit follows previously-filed
Plaintiffs include the States of Wisconsin, Alabama, Alaska, Arkansas, California, Colorado,
Connecticut, Delaware, Florida, Hawaii, Illinois, Iowa, Kansas, Louisiana, Maine, Maryland,
Michigan, Minnesota, Mississippi, Missouri, Nebraska, New York, North Carolina, Ohio,
Oklahoma, Rhode Island, South Carolina, Tennessee, Utah, Vermont, and Washington; the
Commonwealths of Kentucky, Massachusetts, Pennsylvania, and Virginia; and the District of
Columbia, by their Attorneys General.
claims brought by several putative classes and a generic drug company. Similar to these prior
claims, the States’ Amended Complaint details antitrust allegations under §§ 1 and 2 of the
Sherman Antitrust Act, allegations of an antitrust conspiracy between Indivior, Inc. (“Indivior”)2
and MonoSol Rx, LLC, and multiple state law claims in connection with Defendants’ alleged use
of a multi-pronged anticompetitive scheme. According to the States, this scheme was designed
to prevent or delay less expensive generic versions of the Suboxone tablet from entering the
market in order to preserve their profits from the sale of Suboxone. Currently pending is
Defendant Indivior’s (“Moving Defendant”) Motion to Dismiss the Amended Complaint. For
the following reasons, I will deny the motion in its entirety.
FACTS ALLEGED IN THE AMENDED COMPLAINT3
The following facts are set forth in the States Amended Complaint:
Generic Drug Approval Process
The federal Food and Drug Administration (“FDA”) regulates the manufacture and
commercial sale of pharmaceutical drugs under the Federal Food, Drug, and Cosmetic Act, 21
U.S.C. § 301, et seq. (Am. Compl. ¶ 26.) The manufacturer of a new drug must submit a new
drug application (“NDA”) that demonstrates, among other things, a drug’s safety, clinically
proven effectiveness, composition, and patent coverage. (Id.)
Indivior, Inc. (“Indivior) was formerly incorporated under the name of Reckitt Benckiser
Pharmaceuticals, Inc. In December 2014, Reckitt Benckiser Pharmaceuticals, Inc. was demerged
from its prior parent, the Reckitt Benckiser Group PLC, into Indivior PLC. (Am. Compl. ¶ 11.)
Although the Amended Complaint used the name “Reckitt” throughout the document, Indivior is
technically the named defendant in this case. To avoid confusion as to the appropriate
defendant, I will refer only to Indivior as Moving Defendant.
When determining whether to grant a motion to dismiss, a federal court must construe the
complaint liberally, accept all well-pleaded factual allegations in the complaint as true and draw
all reasonable inferences in favor of the plaintiff. Fowler v. UPMC Shadyside, 578 F.3d 203,
210–11 (3d Cir. 2009). In accordance with this principle, the recitation of the facts assumes the
truth of the factual statements in the Amended Complaint.
In an effort to speed the entry of generic drugs into the market, Congress passed the Drug
Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Act”), under
which generic drug manufacturers may receive FDA approval for generic drugs without
replicating the clinical trials involved in an NDA. (Id. ¶ 27.) In lieu of an NDA, a generic drug
manufacturer may submit an abbreviated new drug application (“ANDA”) and incorporate data,
such as clinical studies, that the NDA filer submitted to the FDA. (Id. ¶ 28.) To be approved, an
ANDA must demonstrate that the generic drug (a) has the same active ingredients as; (b) is
pharmaceutically equivalent to (same dosage form and strength); and (c) is bioequivalent to
(exhibiting the same drug absorption characteristics) the previously approved drug. (Id. ¶ 29.)
Oral drugs proven to be both pharmaceutically equivalent and bioequivalent to a branded
oral drug receive an “AB” rating from the FDA, indicating they are therapeutically equivalent to
other drugs with the same rating in the same category. (Id. ¶ 30.) In most cases, only oral drugs
with an AB rating may be substituted by pharmacists for a physician’s prescription of a brandname drug without the physician’s approval. (Id.) The FDA publishes a list of all approved
drugs and therapeutic equivalents in the Approved Drug Products with Therapeutic Equivalence
Evaluations (the “Orange Book”). (Id. ¶ 31.)
Once the FDA approves an ANDA and determines that the generic drug is AB-rated to
the branded drug, state laws govern how the generic may be substituted for the brand name drug
prescribed by physicians. (Id. ¶ 32.) In most states and under most health plans, a pharmacist
may, and in many cases must, substitute an AB-rated generic drug for a prescribed brand-name
drug. (Id. ¶ 32.)
Suboxone Tablet’s Orphan Drug Designation
In 2002, Indivior introduced Suboxone, designed for the treatment of opioid addiction, as
a sublingual tablet. (Id. ¶¶ 33, 37.) At that time, the two component ingredients of Suboxone—
naloxone and buprenorphine—were not subject to any patent protection. (Id.) In 1994, and in
lieu of exclusivity through patent protection, the FDA granted Indivior’s Suboxone tablets a
seven-year period of exclusivity as an “orphan drug”4 based on Indivior’s representation that it
would be unlikely to recover the costs of developing and marketing the drug. (Id. ¶¶ 34, 36–37.)
Nonetheless, Suboxone did not obtain actual marketing exclusivity until 2002, thus allowing
Indivior to market the sublingual Suboxone tablet until October 8, 2009, without the threat of
competition from any generic co-formulated buprenorphine/naloxone tablet. (Id. ¶ 37.) Indivior
allegedly earned more than $2 billion on Suboxone tablets by 2010. (Id. ¶ 38.)
Indivior’s Alleged Product-Hopping Scheme
Threat of Generic Entry in the Co-formulated Buprenorphine/
As a general rule, when AB-rated generic drugs become available, lower-priced generic
competitors may be rapidly substituted for their brand-name counterparts because the HatchWaxman Act and state drug product selection laws permit, and in many cases require,
pharmacists to substitute an AB-rated generic drug for the branded version unless the
prescription specifically states otherwise. (Id. ¶ 40.) Soon after a generic competitor enters the
The FDA may designate a drug as an “orphan drug” when it determines that either (a) the
drug is intended for the safe and effective, treatment, diagnosis or prevention of a rare disease or
disorder that affects fewer than 200,000 people in the United States; or (b) the disease or disorder
affects greater than 200,000, but the manufacturer is not reasonably expected to recover the costs
of developing and marketing the treatment drug from sales in the United States. (Id. ¶ 35.) After
designation as an orphan drug, the FDA approves the drug for marketing. (Id. ¶ 36.) It then
becomes eligible for a seven-year exclusivity period during which it may be marketed as a
brand-name drug free from generic competition. (Id.)
market, manufacturers of brand-name drugs typically lose eighty percent or more of their sales to
lower-priced generics. (Id. ¶ 41.)
As the orphan drug exclusivity period for Suboxone tablets neared expiration, Indivior
became concerned that lower-priced generic versions of co-formulated buprenorphine/naloxone
would enter the market and significantly reduce its sales and revenue of Suboxone tablets. (Id.
¶¶ 39, 42.) Faced with this impending loss of exclusivity, Indivior, in connection with a
company named MonoSol Rx, LLC (“MonoSol”), began to formulate a “Buprenorphine Generic
Offensive Strategy.” (Id. ¶¶ 44–45.) This strategy relied on FDA regulations that allow branded
manufacturers to seek FDA approval to modify the dosage form and strength of an existing
product, which would in turn change its pharmaceutical equivalence and alter the AB-rating of
any proposed or available generic substitutes. (Id. ¶ 43.) The first step of the plan was to
develop a new version of Suboxone which could be used to secure patent protection, while the
second step was to convert the market for co-formulated buprenorphine/naloxone from
Suboxone tablets to the newly-developed version of Suboxone. (Id. ¶ 45.)
The Creation and Marketing of Suboxone Film
In a December 2006 meeting, MonoSol and Reckitt Benckiser Healthcare UK Ltd. signed
an agreement to develop and market a sublingual film form of Suboxone for the purpose of
extending Indivior’s exclusivity in the co-formulated buprenorphine/naloxone market. (Id. ¶ 46.)
According to the Amended Complaint, MonoSol originally proposed this idea and convinced
Indivior to develop the film product in partnership with MonoSol. (Id. ¶ 47.) MonoSol also
negotiated with Indivior to receive royalty payments on the sales of Suboxone film. (Id. ¶ 49.)
In April 2008, MonoSol applied for a patent, which was issued as patent number
8,017,150 entitled “Polyethylene Oxide-Based Films and Drug Delivery Systems Made
Therefrom.” (Id. ¶ 51.) Indivior listed the ‘150 patent, as well as patent numbers 8,475,8325 and
8,603,514 in the FDA Orange Book, and alleged that they covered Suboxone film. (Id. ¶ 52.)
The earliest patent expires in 2023. (Id.)
To speed up the approval process for the new film product, MonoSol suggested that
Indivior have a pre-NDA filing guidance meeting with the FDA to request a priority review
status. (Id. ¶ 53.) Both MonoSol and Indivior attended the FDA meeting. (Id.) On October 28,
2008, Reckitt submitted NDA 022410 to the FDA to market the sublingual film version of
Suboxone. (Id. ¶ 55.) On August 21, 2009, the FDA rejected Indivior’s application due to
concerns that the film could be abused by patients and result in accidental exposure to children.
(Id. ¶ 57.) In response, Indivior submitted a revised Risk Evaluation and Mitigation Strategy
(“REMS”)6 to address the safety concerns related to the film form. (Id. ¶ 59.) Based on the
REMS, the FDA approved Indivior’s NDA for Suboxone film on August 30, 2010. (Id. ¶ 60.)
Because Suboxone film is in a different dosage form than Suboxone tablets, the two are
not pharmaceutically equivalent. (Id. ¶ 56) Thus, any tablet form of generic co-formulated
buprenorphine/naloxone would not be an AB-rated generic substitute for Suboxone film. (Id.)
According to the Amended Complaint, however, the film offers no significant benefits for
patients over the tablet and any differences between the two formulations are “clinically
insignificant.” (Id. ¶ 62.) Moreover, the FDA found that the film has no demonstrable safety
advantage over Suboxone tablets and, in fact, expressed concerns that the film actually presents
increased safety issues and potential for abuse. (Id. ¶¶ 65–67.)
The United States District Court for the District of Delaware has invalidated the ‘832 patent.
(Id. ¶ 52.)
The REMS is a document provided by the manufacturer and contains a risk management plan
or risk-minimization strategy that goes beyond the professional labeling to ensure that the
benefits of a drug outweigh the risk. (Id. ¶ 58.)
According to Indivior’s Suboxone Reformulation Development Plan, its “Priority I” goal
was “to keep the target moving to reduce generic competition.” (Id. ¶ 69.) In a March 2007
email, Indivior explained that “the current plan calls for the introduction of the film in June 2009,
transitioning [patients] from the [sublingual] tabs to the film, and then withdrawing the
[sublingual] tabs altogether prior to October 2009.” (Id. ¶ 70.) MonoSol made the original
suggestion that the withdrawal of Suboxone tablets could provide further protection from generic
entry into the market, and this plan was discussed with employees of Reckitt Benckiser
Healthcare, Ltd. (Id. ¶ 71.)
Subsequently, Indivior engaged in a multi-faceted campaign to convert the co-formulated
buprenorphine/naloxone market to Suboxone film. (Id. ¶ 72.) First, Indivior communicated to
the public and the medical community that single-dose or unit-dose packaging was necessary to
prevent potential exposure to multiple doses in the case of accidental pediatric exposure, and it
began marketing Suboxone film in unit-dose packaging. (Id. ¶ 74.) In connection with this
message, it partnered with consulting firm Venebio Group, LLC to develop its “Film is safer”
platform, which it acknowledged was due solely to “packaging type.” (Id. ¶ 75.) Although
Suboxone tablets had been sold in unit-dose packaging outside of the United States since 2005,
Indivior did not make any attempt to convert its tablet packaging in the United States to unitdose packaging, but rather continued to sell tablets in multi-unit bottles. (Id. ¶ 76.)
Second, Indivior began a “multi-front offensive” to get film into the market before the
generics could enter with their version of the tablet, including (1) aggressively promoting the
alleged superiority of the film to doctors, payors and pharmacists; (2) encouraging use of the film
through a targeted and sustainable payor strategy by creating a patient subsidy program available
only for Suboxone film; (3) pricing film to be less expensive than tablets despite the more
expensive production costs for film; (4) hiring and compensating its sales force so that it would
earn bonuses for convincing health care providers to convert to film; and (5) coordinating efforts
among field sales, marketing, and government to drive film’s “stickiness” with targeted payors.
(Id. ¶¶ 77–80, 83–86.)
In September 2012, Indivior issued a press release advising the public and prescribing
physicians that it intended to withdraw the tablets from the market within the next six months
due to a “pediatric exposure safety issue.” (Id. ¶ 81.) Indivior also sought an FDA declaration
that Suboxone tablets were being voluntarily pulled from the market for safety concerns. (Id.
¶ 82.) By mid-2012, the film accounted for over seventy percent of Suboxone prescriptions. (Id.
¶ 87.) By the time the generic tablets received FDA approval in February 2013, eighty-five
percent of Suboxone prescriptions were written for the film. (Id.) Indivior withdrew Suboxone
tablets from the market on March 18, 2013. (Id. ¶ 88.)
Indivior’s Role in Delaying Generic Entry
The orphan drug exclusivity on branded Suboxone tablets expired on October 8, 2009,
and ANDAs for approval to sell generic Suboxone tablets were filed in late 2009. (Id. ¶ 89.)
Nevertheless, generic buprenorphine/naloxone tablets did not gain FDA approval until February
2013. (Id. ¶ 89.)
In late 2011, while certain potential generic competitors were awaiting FDA approval of
their ANDAs, Indivior submitted a REMS for Suboxone tablets, which was approved by the
FDA in December 2011. (Id. ¶ 90.) On January 6, 2012, the FDA ordered Indivior to cooperate
with its potential competitors—including Actavis, Inc., Amneal Pharmaceutical LLC, Ethypharm
USA Corp., Mylan Inc., Roxane Laboratories Inc., Sandoz Inc., Sun Pharmaceuticals Industries,
Ltd., and Teva Pharmaceuticals USA, Inc. (collectively, the “Buprenorphine Products
Manufacturers Group”)—in a shared REMS. (Id. ¶ 91.) Shared REMS, like individual REMS,
are used to address safety concerns of pharmaceutical products, but are designed to cover the
situation where multiple manufacturers are marketing a generic product that is an AB-rated
substitute product for a reference drug. (Id.)
Despite the fact that Indivior’s Suboxone tablet REMS had just been approved by the
FDA in December 2011, Indivior allegedly did not cooperate with the generic manufacturers in
the finalization and submission of a shared REMS. (Id. ¶ 93.) While not explicitly refusing to
participate, it engaged in multiple delay tactics to prolong the approval of the ANDA for the
generics. (Id.) After the Buprenorphine Products Manufacturers Group met with Indivior for
several months to negotiate a shared REMS, the Group ultimately reported to the FDA that
Indivior had no desire to enter into a shared REMS, feigned cooperation with the shared REMS
development process, refused to participate in meetings with the generic ANDA filers, refused to
discuss any issues pertaining to the shared REMS with the generic ANDA filers, placed
conditions on its cooperation with the shared REMS development process that it knew the
ANDA filers could not agree to, refused to share information with the generic ANDA filers
regarding the existing REMS, raised last-minute issues to cause further delay once a shared
REMS was ready to be submitted in August 2012, and stopped participating altogether in
September 2012. (Id. ¶ 94.) Indivior’s refusal to cooperate successfully delayed submission of
the shared REMS until August of 2012, when the generic ANDA filers obtained a waiver
allowing them to submit a shared REMS program of their own without Indivior’s cooperation.
(Id. ¶ 97.)
In another purported delay tactic, Indivior filed a citizen petition7 with the FDA on
September 25, 2011. (Id. ¶ 98.) Indivior’s citizen petition asked the FDA to withhold approval
of the ANDAs for generic Suboxone tablets unless: (1) the ANDA contained a targeted pediatric
exposure education program; (2) the ANDA product had child-resistant unit-dose packaging; and
(3) the FDA had determined whether Indivior had discontinued Suboxone tablets for safety
reasons. (Id. ¶ 102.)
In the same week it filed the citizen petition, Indivior announced its intent to permanently
withdraw Suboxone tablets from the market for safety reasons. (Id. ¶ 103.) Indivior never
disclosed these alleged safety concerns about Suboxone tablets to the generic manufacturers
during the shared REMS negotiation process. (Id. ¶ 104.) Moreover, one month prior, on
August 30, 2012, Indivior specifically represented to the FDA, in a combined REMS assessment,
that its tablet was successful, it needed no further changes, and Indivior had considered and
rejected converting its Suboxone tablets to unit-dose packaging for pediatric safety reasons. (Id.
The FDA denied Indivior’s citizen petition on February 22, 2013, noting the petition was
not supported by evidence and was inconsistent with Indivior’s own behavior. (Id. ¶ 108.) The
FDA further acknowledged that it had no authority to require Suboxone ANDAs to contain
targeted pediatric exposure labeling because, pursuant to 21 U.S.C. § 355(j)(2)(A)(v) and 4(G),
the labeling for an ANDA must be the same as the labeling for the approved listed drug. (Id.
Under § 505 of the Food, Drug and Cosmetic Act, any individual may submit a “citizen
petition” asking the FDA to take, or refrain from taking, certain administrative action. (Id. ¶ 99.)
Such petitions are commonly used to express concerns about the safety or legality of a product.
(Id.) Pursuant to 21 C.F.R. § 10.30, the FDA then has 150 days to respond to the citizen petition.
(Id. ¶ 100.) During that period, FDA approval of any ANDA pending for the subject product is
typically delayed, leading to some abuse by brand-name manufacturers in filing baseless citizen
petitions in order to prolong their monopolies. (Id. ¶ 101.)
¶ 108.) The FDA also stated that the close proximity of Indivior’s withdrawal of Suboxone
tablets to the “period in which generic competition for this product was expected to begin cannot
be ignored.” (Id. ¶ 109.) In turn, the FDA referred Indivior’s conduct to the Federal Trade
Commission for antitrust investigation. (Id. ¶ 110.) Despite the denial, the citizen petition
nonetheless had the effect of delaying FDA approval of the pending ANDAs. (Id. ¶¶ 111, 113.)
On February 22, 2013, the FDA granted the generics-only, waiver-based REMS and
approved Amneal and Actavis’ ANDAs for tablet sales. (Id. ¶ 114.) On March 6, 2013, generic
co-formulated buprenorphine/naloxone tablets entered the market. (Id. ¶ 115.)
In June 2013, several putative classes initiated litigation against Indivior alleging
anticompetitive behavior with respect to its marketing and sale of Suboxone. These cases were
consolidated into a multi-district litigation (“MDL”) in this Court. Among those cases were the
class action complaint (“Class Action Complaint”) brought by Direct Purchaser Plaintiffs and
End-Payor Plaintiffs (“Class Plaintiffs”) alleging that Defendants unlawfully delayed and
impeded competition from generic versions of Suboxone tablets, resulting in ongoing
overpayments by consumers. On December 3, 2014, I issued an opinion (the “Class Action
Opinion”) dismissing one of Direct Purchaser Plaintiffs’ stand-alone antitrust claims, a variety of
state law claims by the End-Payor Plaintiffs, and claims against several of the other Defendant
entities. In re Suboxone, 64 F. Supp. 3d 665 (E.D. Pa. 2014). I left the remaining claims intact.
On December 23, 2015, Amneal Pharmaceuticals LLC (“Amneal”), a generic
manufacturer and competitor of Indivior, filed a complaint regarding Indivior’s alleged
anticompetitive conduct surrounding Suboxone. That case was consolidated with the MDL
currently before me. On January 4, 2017, I issued a decision dismissing part of Amneal’s claims
that Indivior improperly delayed entry of generic tablets, all claims against Reckitt Benckiser
Pharmaceuticals, Inc., and all claims against Indivior PLC. In re Suboxone, 13-MD-2445, 2017
WL 36371 (E.D. Pa. Jan. 4, 2017).
On September 22, 2016, the Plaintiff States initiated the current litigation against all
Defendants. The States then filed a First Amended Complaint on November 23, 2016, setting
forth five causes of action as follows: (1) monopolization under the Sherman Act § 2 against
Indivior, Reckitt Benckiser Healthcare (UK) Ltd., and Indivior PLC (the “Reckitt Defendants”);
(2) attempted monopolization under the Sherman Act § 2 against the Reckitt Defendants; (3)
conspiracy to monopolize under the Sherman Act § 2 against all Defendants; (4) illegal restraint
of trade under the Sherman Act § 1 against all Defendants; and (5) individual state law claims
against all Defendants.
On December 12, 2016, Indivior filed a motion to dismiss the First Amended Complaint.
The States responded on January 30, 2017, and Indivior filed a reply brief on February 21, 2017.
Upon review, I find that the Amended Complaint properly pleads all alleged causes of action.
As set forth in detail below, I will deny the motion to dismiss in its entirety.
STANDARD OF REVIEW
Under Federal Rule of Civil Procedure 12(b)(6), a defendant bears the burden of
demonstrating that the plaintiff has not stated a claim upon which relief can be granted. Fed. R.
Civ. P. 12(b)(6); see also Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). The United
States Supreme Court has recognized that “a plaintiff’s obligation to provide the ‘grounds’ of his
‘entitle[ment] to relief’ requires more than labels and conclusions.” Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007) (quotations omitted). “[T]hreadbare recitals of the elements of a cause
of action, supported by mere conclusory statements, do not suffice” and “only a complaint that
states a plausible claim for relief survives a motion to dismiss.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009). “A claim has facial plausibility when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Id. A complaint does not show an entitlement to relief when the well-pleaded facts do
not permit the court to infer more than the mere possibility of misconduct. Id.
The Court of Appeals has detailed a three-step process to determine whether a complaint
meets the pleadings standard. Bistrian v. Levi, 696 F.3d 352 (3d Cir. 2014). First, the court
outlines the elements a plaintiff must plead to state a claim for relief. Id. at 365. Next, the court
must “peel away those allegations that are no more than conclusions and thus not entitled to the
assumption of truth.” Id. Finally, the court “look[s] for well-pled factual allegations, assume[s]
their veracity, and then ‘determine[s] whether they plausibly give rise to an entitlement to
relief.’” Id. (quoting Iqbal, 556 U.S. at 679). The last step is “ ‘a context-specific task that
requires the reviewing court to draw on its judicial experience and common sense.’ ” Id.
(quoting Iqbal, 556 U.S. at 679).
Moving Defendant’s Motion to Dismiss posits two broad challenges to the Amended
First, Moving Defendant argues that Plaintiffs’ Sherman Act § 2 claims of
monopolization and attempted monopolization cannot survive because Plaintiffs have not pled
sufficient facts to support a finding of anticompetitive behavior. Second, Moving Defendant
contends that Plaintiffs’ conspiracy claims under §§ 1 and 2 of the Sherman Act fail to allege
concerted action taken in restraint of trade. I address each argument separately.
Monopolization Under Section 2 of the Sherman Act
Section 2 of the Sherman Act “makes it unlawful to monopolize attempt to monopolize,
or conspire to monopolize, interstate or international commerce.” Broadcom Corp. v. Qualcomm
Inc., 501 F.3d 297, 306 (3d Cir. 2007) (citing 15 U.S.C. § 2). A monopolization claim requires
proof of “a general intent to do the act, for no monopolist monopolizes unconscious of what he is
Times–Picayune Publ’g Co. v. United States, 345 U.S. 594, 626 (1953) (internal
quotations and citations omitted). Nonetheless, “the possession of monopoly power will not be
found unlawful unless it is accompanied by an element of anticompetitive conduct.” Verizon
Commc’ns v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 407 (2004). This is so
because the Sherman Act “directs itself not against conduct which is competitive, even severely
so, but against conduct which unfairly tends to destroy competition itself.”
Spectrum Sports, 506 U.S. 447, 458 (1993).
Therefore, to succeed on a claim for actual
monopolization under § 2, a party must prove: “(1) the possession of monopoly power in the
relevant market and (2) the willful acquisition or maintenance of that power as distinguished
from growth or development as a consequence of a superior product, business acumen, or
historical accident.” Broadcom, 501 F.3d at 307 (quoting U.S. v. Grinnell Corp., 384 U.S. 563,
Notably, Plaintiffs also bring a claim for attempted monopolization under the Sherman Act
§ 2. “A claim of attempted monopolization under § 2 of the Sherman Act must allege ‘(1) that
the defendant has engaged in predatory or anticompetitive conduct with (2) a specific intent to
monopolize and (3) a dangerous probability of achieving monopoly power.’” Broadcom, 501
F.3d at 317 (quoting Crossroads Cogeneration Corp. v. Orange & Rockland Utils., Inc., 159 F.3d
129, 141 (3d Cir. 1998)). As the sole element at issue for both the monopolization and the
attempted monopolization claims is whether Indivior engaged in anticompetitive conduct, I
address both claims together.
In the present case, Moving Defendant does not deny that it possessed monopoly power
in satisfaction of the first element,9 but instead focuses on the sufficiency of the allegations
regarding anticompetitive conduct.
Given that concession, I will discuss only the second
element of anticompetitive conduct.
Under the “rule of reason” burden-shifting framework set forth by the D.C. Circuit in
United States v. Microsoft Corp., the party seeking to impose antitrust liability must initially
provide evidence of the anticompetitive nature of a defendant’s conduct. 253 F.3d 34, 58 (D.C.
Cir. 2001). Once the plaintiff has met its burden of pleading or establishing the anticompetitive
nature of a defendant’s conduct, the burden shifts to the defendant to proffer a “nonpretextual
claim that its conduct is indeed a form of competition on the merits because it involves, for
Monopoly power is “the ability to control prices and exclude competition in a given market.”
Broadcom Corp., 591 F.3d at 307. Although monopoly power can be demonstrated through
direct evidence, id., the “more common way that a party may prove monopoly power is by
providing indirect evidence, which includes ‘structural evidence of a monopolized market.’”
Mylan Pharms. Inc. v. Warner Chilcott Pub. Ltd. Co., 838 F.3d 421, 435 (3d Cir. 2016) (quoting
Harrison Aire, Inc. v. Aerostar Int’l, Inc., 423 F.3d 374, 381 (3d Cir. 2005)). To support a claim
of monopoly power through indirect evidence, a plaintiff must show that (1) the defendant had
market power in the relevant market and (2) that there were barriers to entry into the market. Id.
The Third Circuit “generally require[s] a plaintiff alleging antitrust injury under Section 2 to
show that [the] [d]efendant maintained a market share “significantly larger than 55%” to
establish antitrust liability.” Id. at 437 (citations omitted).
In the present case, Plaintiffs allege that the relevant product market is any drug with coformulated buprenorphine/naloxone as the active ingredients for the treatment of opioid
addiction, including both Suboxone film and Suboxone tablets together with any AB-rated
generics, (Am. Compl. ¶ 19), and the relevant geographic market is the United States and its
territories. (Id. ¶ 21.) Plaintiffs contend that before October 8, 2009, Suboxone was the only coformulated buprenorphine/naloxone opioid treatment because of its orphan drug status, thus
allowing Indivior to enjoy 100 percent of the market share in the United States and its territories.
(Id. ¶ 22.) Even after the exclusivity period expired, Indivior’s branded Suboxone products,
including the film introduced in September 2010, remained the sole source of
buprenorphine/naloxone until two generic manufacturers introduced generic tablets in March
2013. (Id.) After the generics were approved, Indivior’s market share for co-formulated
buprenorphine/naloxone dropped to sixty-eight percent. (Id.) These allegations suffice to satisfy
the first element of section two Sherman Act claim.
example, greater efficiency or enhanced consumer appeal.” Id. at 59; see also Mylan Pharms. v.
Warner Chilcott Pub. Ltd. Co., 838 F.3d 431, 438 (3d Cir. 2016). The plaintiff may then “
‘either rebut those justifications or demonstrate that the anticompetitive harm outweighs the
procompetitive benefit.’ ” Id. (quoting Microsoft Corp., 253 F.3d at 58–59).
In general terms, “a firm engages in anticompetitive conduct when it attempts ‘to exclude
rivals on some basis other than efficiency’ or when it competes ‘on some basis other than the
merits.’” W. Penn Allegheny Health Sys., Inc. v. UPMC, 627 F.3d 85, 108 (3d Cir. 2010),
(quoting Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 605 (1985) and
LePage’s, Inc. v. 3M, 324 F.3d 141, 147 (3d Cir. 2003)).
“Conduct that impairs the
opportunities of rivals and either does not further competition on the merits or does so in an
unnecessarily restrictive way may be deemed anticompetitive.” Broadcom Corp., 501 F.3d at
308. Mere harm to competitors will not suffice; rather the alleged exclusionary acts must harm
the competitive process and must actually have the requisite anticompetitive effect. Microsoft
Corp., 253 F.3d at 58. Given the number of forms such conduct can take, a comprehensive
enumeration of all the varieties of anti-competitive conduct is impossible. W. Penn Allegheny
Health, 627 F.3d at 109. “The challenge for an antitrust court lies in stating a general rule for
distinguishing between exclusionary acts, which reduce social welfare, and competitive acts,
which increase it.” Microsoft Corp., 253 F.3d at 58.
In the present matter, Plaintiffs’ allegations of anti-competitive conduct fall into two
broad categories: (1) product-hopping claims and (2) delay claims, each addressed separately
Plaintiffs argue that I must examine defendant’s conduct as a whole, rather than as a set of
isolated acts, while Defendant asserts that I must separately consider each individual theory.
Notably, Plaintiffs’ Sherman Act § 2 claim sets forth an overall scheme of anticompetitive
Product Hopping Claim
Plaintiffs’ first theory alleges that Moving Defendant has engaged in anticompetitive
“product hopping.” Specifically, Plaintiffs claim that as the orphan drug exclusivity period for
Suboxone tablets neared expiration, Moving Defendant sought to introduce Suboxone in a
sublingual film form knowing that any generic tablets would not be AB-rated, i.e. not
substitutable by a pharmacist, thereby converting the market to purely film. Plaintiffs contend
that Moving Defendant did so solely to prolong its control over the buprenorphine/naloxone
market without any concern for the fact that the film had substantial disadvantages in comparison
to the tablet form. Moving Defendant now challenges the validity of this theory as a basis for a
Sherman Act § 2 claim. I disagree with Moving Defendant and will allow this theory to proceed.
behavior rather than stating separate causes of action for each individual anticompetitive act.
The Third Circuit has held that “the courts must look to the monopolist’s conduct taken as a
whole rather than considering each aspect in isolation.” LePage’s Inc., 324 F.3d at 162; see also
City of Anaheim v. S. Cal. Edison Co., 955 F.2d 1373, 1376 (9th Cir. 1992) (“[I]t would not be
proper to focus on specific individual acts of an accused monopolist while refusing to consider
their overall combined effect . . . We are dealing with what has been called the ‘synergistic
effect’ of the mixture of the elements.”). Particularly at the motion to dismiss stage, allegations
of multiple forms of anticompetitive conduct may be considered collectively to determine
whether a plaintiff has plausibly pled a section 2 claim under the Sherman Act. See W. Penn
Allegheny Health System, 627 F.3d at 109–10.
Nevertheless, the Third Circuit has clarified that “[t]he relevant inquiry is the
anticompetitive effect of [a defendant’s] exclusionary practices considered together.” LePage’s
Inc., 324 F.3d at 162 (emphasis added). Logically, then, if none of the alleged conduct is
exclusionary or anticompetitive, it cannot collectively violate section 2 of the Sherman Act. See
Eatoni Ergonomics, Inc. v. Research in Motion Corp., 486 F. App’x 186, 191 (2d Cir. 2012)
(“[When] alleged instances of misconduct are not independently anti-competitive . . . they are
not cumulatively anticompetitive either.”). Accordingly, I will separately consider the product
hopping allegation and delay allegations to determine whether at least one of them can
substantiate a claim of anticompetitive conduct.
When an alleged monopolist introduces a new product, the question is whether it is
“engaging in exclusionary conduct ‘as distinguished from growth or development as a
consequence of a superior product, business acumen, or historic accident.’” Microsoft, 253 F.3d
at 58 (quoting Grinnell, 394 U.S. at 571). “As a general rule, ‘any firm, even a monopolist, may
. . . bring its products to market whenever and however it chooses.’” Steamfitters Local Union
No. 420 Welfare Fund v. Philip Morris, Inc., 171 F.3d 912, 925 n.7 (3d Cir. 1999) (quoting
Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263, 286 (2d Cir. 1979)). The practice of
“product hopping,” however, “under certain circumstances may be viewed as anticompetitive
conduct.” Mylan Pharms. v. Warner Chilcott Public Ltd. Co., 838 F.3d 421, 438 (3d Cir. 2016).
Product hopping occurs where “a pharmaceutical company makes modest reformulations to a
brand name drug prior to the expiration of its market exclusivity for the purposes of stymieing
generic competition and preserving monopoly profits.” In re Suboxone Antitrust Litigation, No
13-2445, __ F.R.D. __, 2016 WL 3519618, at *1 (E.D. Pa. June 28, 2016). “Illegal product
hopping—the introduction of a new product by a monopolist in combination with exclusionary
conduct that either severely restricts the market’s ambit or bars a substantial number of rivals—is
anticompetitive.” In re Asacol Antitrust Litig., 233 F. Supp. 3d 247, 256 (D. Mass. 2017).
In the Class Action Complaint by the direct purchasers and end-payors of Suboxone, I
was presented with almost identical allegations of product hopping. Although I found that
simply introducing a new product on the market, whether superior or not, does not by itself
constitute exclusionary conduct, In re Suboxone, 64 F. Supp. 3d 665, 682 (E.D. Pa. 2014), I
concluded that Indivior’s other alleged wrongful conduct, taken in conjunction with the
introduction of the new product, stated a plausible claim of anticompetitive activity. Id. This
decision rested on the combination of Indivior’s near simultaneous introduction of the Suboxone
film, removal of its own Suboxone tablets, and marketing campaign to disparage Suboxone
tablets. Id. at 682–83. Plaintiffs had also plausibly alleged that “various market forces unique to
the pharmaceutical industry ma[d]e generic substitution the cost-efficient means of competing
for companies selling generic pharmaceuticals.” Id. at 683–84. For example, plaintiffs asserted
that a disconnect existed between the person paying for the prescription and the person selecting
the appropriate treatment, meaning that “the ordinary market forces that would allow consumers
to consider price when selecting a product [were] derailed.” Id. at 684.
Since that decision in 2014, the soundness of product hopping as the basis for a Sherman
Act § 2 claim has been the subject of several decisions both within and outside of the Third
Circuit. First, the United States Court of Appeals for the Second Circuit, in New York ex rel
Schneiderman v. Actavis PLC, 787 F.3d 638 (2d Cir. 2015) (“Namenda”), considered whether
product hopping could violate the Sherman Act. The relevant market in that case involved the
memantine drug used to treat Alzheimer’s disease. Id. at 646–47. Defendants manufactured
Namenda IR, a twice-daily immediate-release drug, and Namenda XR, a once-daily extendedrelease drug. Id. The only relevant medical difference between the two was that IR, which is
released immediately into the bloodstream, is taken twice a day while XR, which is released
gradually, is taken once a day. Id. at 647. Patent exclusivity on Namenda IR was set to expire in
July 2015 and, as a result, defendants brought Namenda XR to market in July 2013 to avoid the
end of patent exclusivity, or the “patent cliff.”
In conjunction with the
introduction of the new product, the defendants stopped actively marketing IR; spent substantial
sums of money promoting XR to doctors, caregivers, patients, and pharmacists; sold XR at a
discounted rate; and issued rebates to health plans to ensure that XR co-payments remained
lower than IR co-payments. Id. at 648. This was known as the “soft switch.” Id. In early 2014,
prior to entry of generic IR, defendants publicly announced their plans to discontinue Namenda
IR and began urging their customer base to make the switch to Namenda XR. Id. Eventually,
the defendants withdrew IR entirely, thereby making the ultimate “hard switch” to XR. Id. The
State of New York sued the defendants under antitrust laws and the district court granted the
State a preliminary injunction. Id.
On appeal, the Second Circuit recognized that “neither product withdrawal nor product
improvement alone is anticompetitive,” but “when a monopolist combines product withdrawal
with some other conduct, the overall effect of which is to coerce consumers rather than persuade
them on the merits, and to impede competition, its actions are anticompetitive under the Sherman
Act.” Id. at 653–54 (emphasis in original) (internal citations omitted). On the facts of the case
before it, the court held that “Defendants’ hard switch—the combination of introducing
Namenda XR into the market and effectively withdrawing Namenda IR—forced Alzheimer’s
patients who depended on memantine therapy to switch to XR (to which generic IR is not
therapeutically equivalent) and would likely impede generic competition by precluding generic
substitution through state drug substitution laws.” Id. at 654. In response to the defendants’
claim that alternative means of marketing and selling the generics existed, the court noted that
for there to be an antitrust violation, “generics need not be barred ‘from all means of distribution’
if they are ‘bar[red] . . . from the cost-efficient ones.’” Id. at 656 (citing Microsoft, 253 F.3d at
64 and Dentsply Int’l, 399 F.3d at 191 (“The test is not total foreclosure, but whether the
challenged practices bar a substantial number of rivals or severely restrict the market’s ambit.”)).
Considering the unique market characteristics of the pharmaceutical industry and the state
substitution laws regarding AB-rated drugs, the Second Circuit affirmed the district court’s
finding that antitrust law required the defendants to allow generic competitors a fair opportunity
to compete using state substitution laws. Id. at 658.
Subsequent to that decision, the Third Circuit discussed product hopping in Mylan
Pharmaceuticals Inc. v. Warner Chilcott Public Limited Company (“Doryx”), 838 F.3d 421 (3d
Cir. 2016). In that matter, the plaintiff, a generic drug manufacturer, brought an action against
name-brand drug manufacturers alleging that, in an effort to exclude generic competition, brand
manufacturers made insignificant modifications to an oral tetracycline used to treat severe acne.
Id. at 426. Although the case proceeded past the motion to dismiss stage, the trial court granted
the defendants’ motion for summary judgment. Id. at 431–32. On appeal, the Third Circuit
found the plaintiff had failed to produce evidence that defendants’ anticompetitive conduct
foreclosed it from the relevant market.
Distinguishing Namenda, the court remarked that
defendants’ reformulation was not an attempt to avoid a “patent cliff”—the end of patent
exclusivity corresponding to the brand drug’s loss of market share. Id. at 440. Rather, patent
exclusivity on the brand-name oral tetracycline had long since expired and generic companies
had been engineering and marketing their own versions of the drug during the lengthy ensuing
time period. Id. at 438. The plaintiff delayed in developing its own generic version until
significantly later and, at that time, received 180 days of exclusive marketing and sales rights,
allowing it to sell its tablets at higher prices and reap generous profits. Id. at 438–39. The court
ultimately determined that defendants’ reformulation of their product was done in a further effort
to compete with the multiple generic manufacturers already in the relevant market, and not to
stymie competition. Id.
Despite affirming the district court’s grant of summary judgment in favor of the
defendants on the product-hopping claim, however, the Third Circuit offered guidance for cases
that present a “closer call.” Id. at 440. Primarily, the Third Circuit distinguished the decision on
the Suboxone Class Action Complaint, noting that it was decided at the motion-to-dismiss stage,
whereas Doryx had already survived a motion to dismiss and proceeded through full discovery.
Id. at 440. Moreover, the court emphasized the ongoing feasibility of a product-hopping claim,
remarking that it did not “rule out the possibility that certain insignificant design or formula
changes, combined with other coercive conduct, could present a closer call with respect to
establishing liability in future cases.” Id. It went on to explain that:
[C]ourts may need to consider a number of additional, nonexhaustive factors. For instance, courts might need to balance the
important public interest in encouraging innovation in the
pharmaceutical industry with our obligations to protect consumers
and to ensure fair competition under the antitrust laws. At the
same time, courts should also be wary both of second-guessing
Congress’s legislative judgment and of turning courts into tribunals
over innovation sufficiency. Moreover, courts may need to be
cognizant of the unique separation between consumers and drug
manufacturers in the pharmaceutical market, especially in cases
where there is evidence of extreme coercion of physician
prescribing decisions or blatant misrepresentation about a generic
manufacturer’s version of a drug.
Id. at 440–41 (footnotes omitted). It concluded that “even in more difficult cases, the disposition
of each claim will necessarily turn on the facts and circumstances surrounding a company’s
alleged anticompetitive conduct.” Id. at 441.
Most recently, the United States District Court for the District of Massachusetts had the
opportunity to address the viability of a product hopping claim under section 2 of the Sherman
Act. In re Asacol Antitrust Litig., 233. F. Supp. 3d 247 (D. Mass. 2017). At issue in that case
were the drugs Asacol, used for the treatment of mild to moderately-active ulcerative colitis and
approved by the FDA in 1992, and Asacol HD, a long-acting mesalamine tablet used to treat
only moderately active ulcerative colitis and approved by the FDA in 2008. Id. at 255. The
plaintiffs alleged that, with the patents for Asacol set to expire in July 2013, the defendant made
efforts to switch patients from Asacol to Asacol HD despite the fact that Asacol HD was only
FDA–approved for treatment of moderately severe ulcerative colitis flares whereas the original
Asacol treated three separate indications of ulcerative colitis. Id. at 256. The defendant’s efforts
of marketing Asacol HD from late 2009 into 2013 successfully moved sales from Asacol to
Asacol HD. Id. During this effort, however, both Asacol and Asacol HD remained on the
market, and sales of Asacol HD plateaued and remained at roughly one-fourth of the sales of
Asacol by the end of 2012. Id. at 257. In mid-2012, the defendant began the design and launch
of a new drug called Delzicol to replace its Asacol sales and, by April 1, 2013, the defendant
discontinued selling Asacol altogether. Id. The plaintiffs alleged that this withdrawal of Asacol
forced thousands of patients to switch to Asacol HD or Delzicol and eliminated the possibility
that a generic product could be substituted automatically for an Asacol prescription. Id. The
plaintiffs also alleged that the defendant raised concerns about an inactive ingredient in Asacol,
while continuing to sell Asacol HD, which contained more than twice the amount of that same
The plaintiffs, direct purchasers of the drug, pled a product hop claim based on, among
other things, a hard switch—“removing the original drug from the market entirely right before
patent expiration to deprive potential generic manufacturers a prescription base for their generic
version”—from Asacol to Asacol HD. Id. at 256. The court acknowledged that “conduct by a
monopolist to perpetuate patent exclusivity through successive products” by means of “tweaking
a brand-name drug to prevent pharmacists from substituting a generic equivalent” can constitute
one form of anticompetitive product hopping. Id. (quoting In re Asacol Antitrust Litig., No. 15–
12730, 2016 WL 4083333, at *8 (D. Mass. July 20, 2016)). The court noted, however, that
“ ‘unless [a] plaintiff proves that some conduct of the monopolist associated with its introduction
of a new and improved product design constitutes an anticompetitive abuse or leverage of
monopoly power, or a predatory or exclusionary means of attempting to monopolize the relevant
market’ there is no suspected anticompetitive conduct.” Id. at 268 (quoting Allied Orthopedic
Appliances, Inc. v. Tyco Health Care Grp. LP, 592 F.3d 991, 1000 (9th Cir. 2010)) (additional
internal quotation marks omitted). The plaintiffs in that case did not allege a hard switch from
Asacol to Asacol HD, but rather asserted that the defendant acted over the course of an extended
period to switch patients from Asacol to Asacol HD after its 2009 acquisition of both drugs. Id.
at 268. Both Asacol and Asacol HD remained on the market throughout this period. Id.
Although the plaintiffs claimed that the defendant’s illegal attempts to market Asacol HD for offlabel usage to reduce Asacol sales constituted a soft switch, the court remarked that soft switches
“do not have the same anticompetitive result because ‘the market can determine whether one
product is superior to another . . . so long as the free choice of consumers is preserved.’” Id. at
269 (quoting Namenda, 787 F.3d at 654–55 (further quotations omitted)). In that case, the
freedom of consumer choice existed because both products remained on the market
contemporaneously for four years. Id.
Applying the cumulative lessons from these cases to the Amended Complaint before me,
I find that this matter presents a “closer call” more akin to Namenda than to either Doryx or
First, similar to Namenda and unlike in Doryx, the First Amended Complaint alleges the
introduction of a new product, without any clinically significant benefits, in an attempt to avoid a
“patent cliff”— or, in this case, the end of orphan drug exclusivity—before the entry of generic
competitors into the relevant market.
The Amended Complaint specifically alleges that in
October 2008, as the orphan drug exclusivity period for Suboxone tablets neared its 2009
expiration, Moving Defendant submitted an NDA to the FDA to market a newly-developed
sublingual film version of Suboxone, which is not an AB-rated generic substitute for Suboxone
tablets. (Am. Compl. ¶ 55–56.) According to the Amended Complaint, the film offers no
significant benefits for patients over the tablet and any differences between the two formulations
were “clinically insignificant.” (Id. ¶ 62.) After requiring Indivior to proceed through the REMS
process, the FDA approved Indivior’s NDA for Suboxone film on August 30, 2010, prior to the
entry of any generics. (Id. ¶ 60.)
Second, Plaintiffs have alleged that, in connection with the introduction of the new but
insignificant design changes, Moving Defendant engaged in the “extreme coercion of physician
prescribing decisions or blatant misrepresentation about a generic manufacturer’s version of a
drug”—conduct identified as anticompetitive by the Third Circuit in Doryx. Doryx, 838 F.3d at
441. According to the Amended Complaint, Indivior allegedly engaged in a multi-faceted
campaign to convert the co-formulated buprenorphine/naloxone market to Suboxone film by
(a) communicating to the public and medical community that unit-dose packaging, as with the
film was necessary to prevent accidental pediatric exposure; (b) aggressively promoting the
alleged superiority of the film; (c) creating a patient subsidy program available only for
Suboxone film; (d) pricing film to be less expensive than tablets despite the more expensive
production costs for film; (e) hiring and compensating its sales force so that they would earn
bonuses for convincing health care providers to convert to film; and (f) coordinating efforts
among field sales, marketing, and government to drive film’s “stickiness” with targeted payors.
(Am. Compl. ¶¶ 77–80, 83–86.)
Finally, unlike in Asacol, Plaintiffs allege that Indivior effectuated a “hard switch” from
Suboxone tablets to Suboxone film. Film was approved by the FDA on August 30, 2010 while
Suboxone tablets were still on the market, but prior to generic entry. Simultaneously with its
introduction of film and its anti-tablet marketing campaign described above, Indivior, like the
defendants in Namenda, issued a press release advising the public and prescribing physicians of
its intent to withdraw tablets from the market in the next six months due to safety issues. These
actions had the alleged purpose and effect of decreasing the prescription base for the tablet as
physicians and users were forced to convert to the film, the only other co-formulated
buprenorphine/naloxone on the market. As such, the press release signified the start of Indivior’s
“hard switch.” On March 18, 2013, less than two weeks after generic entry, Indivior actually
withdrew the tablets, thereby completing the hard switch and leaving generic manufacturers
without a prescription base. Such actions “cross the line from persuasion to coercion” and, if
proven, may rise to the level of anticompetitive conduct. Namenda, 787 F.3d at 654
Moving Defendant offers two additional arguments in support of its Motion to Dismiss.
The first challenges Plaintiffs’ failure to include allegations of actual foreclosure in the market,
which Moving Defendant asserts is fatal to the claim. The second argument contends that
Plaintiffs neglected to include crucial allegations of a price disconnect within the pharmaceutical
market. Separately addressing each argument, I find them each meritless.
Allegations of Actual Foreclosure
Moving Defendant first contends that Plaintiffs have failed to include the allegations of
“actual foreclosure” necessary to state a successful product-hop claim. Moving Defendant’s
argument relies heavily on the Doryx trial court’s finding that the defendants did not exclude
competition when they reformulated Doryx because (a) Doryx capsules had been available
without patent protection for twenty years and had generic competition, (b) the plaintiff was able
to introduce its own generic tablet and benefit from 180 days of exclusivity for the tablet, and
(c) the plaintiff was able to raise the price of two of its tablet dosages. Mylan Pharms., Inc. v.
Warner Chilcott Public Ltd. Co., No. 12-3824, 2015 WL 1736957, at *12 (E.D. Pa. Apr. 16,
2015). The Doryx trial court remarked that “[t]hroughout this period, doctors remained free to
prescribe generic Doryx; pharmacists remained free to substitute generics when medically
appropriate; and patients remained free to ask their doctors and pharmacists for generic versions
of the drug.” Id. at *13. The Third Circuit affirmed this conclusion and noted that the product
hopping in this case was not anticompetitive conduct because the plaintiff “was not foreclosed
from the market.” Doryx, 838 F.3d at 438. Seizing on this language, Moving Defendant now
argues that allegations of market foreclosure are a pleading requirement to establish
anticompetitive behavior. Defendants urge that because the Amended Complaint pleads that
generics entered the market and competed for sales notwithstanding the absence of automatic
substitution, foreclosure may not be plausibly inferred.
Moving Defendant misapplies Doryx’s holding and disregards several crucial distinctions
from the present case. Primarily, Doryx was decided at the summary judgment stage, as opposed
to the motion to dismiss stage. After a period of “exhaustive discovery,” there was a “robust
record void of any evidence of anticompetitive conduct.” Id. at 440. Moreover, contrary to
Moving Defendant’s argument, the Third Circuit did not require allegations of total foreclosure
in order for a product hopping claim to survive.11 Rather, the Third Circuit’s decision in Doryx
was premised substantially on the fact that the expansive evidentiary record on summary
judgment review showed that there were plenty of other competitors already in the relevant
In fact, in another recent case, the Third Circuit reaffirmed the long-standing principle that
“[t]he test is not total foreclosure,” but whether the challenged practices “bar a substantial
number of rivals or severely restrict the market’s ambit,” i.e. “substantial foreclosure.” Eisai,
Inc. v. Sanofi Aventis U.S., LLC, 821 F.3d 394, 403 (3d Cir. 2016) (quoting Dentsply Int’l, 399
F.3d at 191).
market and the defendants’ market share was relatively small, never exceeding 18%. Id. at 437–
Finally, here, Plaintiffs plead sufficient facts to allow a plausible inference that the
product hop substantially foreclosed competition. The Amended Complaint alleges that “[b]y
causing a hard product switch, Indivior avoided, and continues to avoid, automatic substitution
of AB-rated generics under state generic substitution laws and, therefore has limited . . .
competition with generic substitutes for Suboxone Tablets.”
(Am. Compl. ¶ 120.)
Amended Complaint goes on to assert that by the time generic tablets received FDA approval in
February 2013, 85% of Suboxone prescriptions were written for film instead of tablets. Id. ¶ 87.
While the summary judgment record might be different, such allegations are sufficient at this
juncture to allow a plausible inference that Moving Defendant’s alleged anticompetitive conduct
resulted in substantial foreclosure of competition. See Eisai, Inc. v. Sonofi Aventis U.S., LLC,
821 F.3d 394, 404 (3d Cir. 2016) (recognizing that even where competitors are not foreclosed
from the market and consumers have a choice between products, if a defendant’s conduct renders
that choice meaningless, the defendant has acted in an anticompetitive fashion).
Allegations of a Price Disconnect
Moving Defendant’s second and related argument for dismissal fares no better. Moving
Defendant asserts that the Amended Complaint completely omits any of the “price-disconnect” 12
allegations that were central to the Class Action Plaintiffs’ product hop claim. Moreover,
Moving Defendant explains that the States’ affirmative contentions are inconsistent with any
A price disconnect is where a disconnect exists between the person paying for the
prescription (the consumer) and the person selecting the appropriate treatment (the physician),
thereby derailing the ordinary market forces that would allow consumers to consider price when
selecting a product. In re Suboxone Antitrust Litig., __ F.R.D. __, 2016 WL 3519618, at *1
(E.D. Pa. June 28, 2016).
price disconnect since Plaintiffs assert that Indivior priced the film to be less expensive than
tablets and raised the price of the tablets to induce the market to convert to film.
As a primary matter, allegations of a price disconnect in the pharmaceutical industry—
while helpful in a complaint to explain why a product hop may be anticompetitive—are not
essential to plausibly pleading an antitrust violation. In the class action portion of this case, the
plaintiffs had emphasized the supposed price disconnect in the pharmaceutical industry and I
specifically relied on these allegations when I found that Class Plaintiffs had plausibly alleged
exclusionary conduct. In re Suboxone Antitrust Litig., __ F.R.D. __, 2016 WL 3519618, at *6
(E.D. Pa. June 28, 2016). I further concluded that “as a general evidentiary matter, it makes
sense that evidence which disproves these allegations is also relevant.” Id. Far from imposing
an absolute requirement of price disconnect allegations in order to adequately plead antitrust
injury, I simply noted that the Defendants were permitted to explore discovery regarding the
Class Plaintiffs’ ability to compete in the market despite the alleged product scheme. Id.
Here, the Amended Complaint relies on more than just the existence of a “price
disconnect” and sufficiently pleads facts allowing a logical inference that Plaintiffs have been
substantially foreclosed from the market. Plaintiffs explain that “only oral drugs that carry the
FDA’s AB generic rating in a particular category may be substituted by pharmacists for a
physician’s prescription for a brand-name drug without physician’s approval.” (Am. Compl.
¶ 30.) They go on to contend that “[b]y causing a hard product switch, [Indivior] avoided, and
continues to avoid, automatic substitution of AB-rated generics under state generic substitution
laws and, therefore, has limited, and continues to limit, competition with generic substitutes for
Suboxone Tablets.” (Id. ¶ 120.) This product hop scheme was combined with Indivior’s plan to
delay the entry of generic tablets, which enabled it “to sell Suboxone at supra-competitive
prices.” (Id. ¶ 122.) Such allegations are sufficient to establish, at the motion to dismiss stage,
substantial foreclosure of the generic tablets from the market.
Nor do I find any merit to Moving Defendant’s argument that the Amended Complaint is
starkly inconsistent with a “price disconnect” theory. Plaintiffs pled that “[Indivior] induced
conversion of the market to the Film by raising the price of its Suboxone Tablets before the
introduction of the AB-rated generic tablet product into the market. As a result, the Film was
initially cheaper than the branded tablets.” (Id. ¶ 84.) Such an allegation does not disprove a
price disconnect, especially since, at the time Indivior dropped the price of the film, the only
potential competitor was branded Suboxone tablets, without any threat of generic competition.
This price adjustment was simply a small part of a larger campaign directed towards medical
decisionmakers. (Id. ¶¶ 77–80, 83–86.) A reasonable inference remains that once generic tablets
entered the market, the price disconnect between the prescribing doctor and the ultimate
consumer would have prevented generic manufacturers from competing by pricing their tablets
lower than Suboxone film.13
Moving Defendant also contends that the requirement of foreclosure is not met by allegations
that Indivior avoided state substitution laws by developing and marketing film. It again cites to
the Doryx decision in which the Third Circuit found the record to be “void of any evidence of
anticompetitive conduct” notwithstanding the plaintiffs’ allegations that the defendants’ product
hops impaired the generics’ ability to benefit from state substitution laws. Doryx, 838 F.3d at
The facts in Doryx are substantially distinguishable. In Doryx, the capsules were available
for more than twenty years, and generic companies were free to engineer their own versions
during that time. Id. at 438. When the plaintiff entered the market, it had 180 days of exclusive
rights to market and sell its tablets, allowing it to set its tablet prices higher than the price of
branded Doryx for at least some period of time and to reap generous profits from its sale of the
generic tablet. Id. The Third Circuit did not find that reliance on state substitution laws to allege
foreclosure was insufficient; rather it found that the plaintiff “failed to satisfy its burden of
demonstrating that Defendants engaged in anticompetitive conduct prohibited by the Sherman
Act.” Id. at 439.
Taken together, Moving Defendant’s “product-hopping” actions, as alleged in the
Amended Complaint, constitute a combination of “product withdrawal with some other conduct,
the overall effect of which is to coerce consumers rather than persuade them on the merits and to
impede competition.” Namenda, 787 F.3d at 654. Such actions are inherently anticompetitive in
nature and, if substantiated by evidence, could rise to the level of monopolistic conduct in
violation of § 2 of the Sherman Act.
The Delay Claims
The second broad category of anti-competitive behavior set forth in the Amended
Complaint describes a two-part scheme by Indivior to delay generic entry into the market near
the expiration of Indivior’s orphan drug exclusivity period. First, despite a January 6, 2012 order
by the FDA for Indivior to cooperate with potential generic competitors to the Suboxone tablet in
the REMS process, Indivior feigned cooperation with the shared REMS development process,
and ultimately refused to participate in any aspect of the shared REMS process. (Am. Compl.
Second, Indivior allegedly filed a sham citizen petition with the FDA raising
concerns about the safety of the tablet form of Suboxone and asking the FDA withhold approval
of the ANDAs for generic Suboxone tablets unless: (a) the ANDA contained a targeted pediatric
exposure education program; (b) the ANDA product had child-resistant unit-dose packaging; and
(c) the FDA had determined whether Indivior had discontinued Suboxone tablets for safety
reasons. (Id. ¶¶ 98–102.)
In the present case, Plaintiffs rely not only on the state substitution laws, but also on
Moving Defendant’s marketing campaign, misrepresentations about the safety of the tablet, and
initiation of a “hard switch.” They further allege resulting injury in the form of “paying more for
co-formulated buprenorphine/naloxone than they would have paid in a competitive market.”
(Am. Compl. ¶ 124.) Thus, even if the state substitution laws are inconsistent among the various
States or are insufficient to establish foreclosure, the totality of plaintiffs’ allegations could allow
a finding of anticompetitive behavior.
Moving Defendant challenges these allegations and argues that Plaintiffs’ delay claim
must be dismissed. Although I consider the entire delay scheme collectively, I address each
Refusal to Cooperate in Shared REMS
Moving Defendant first contends that any allegations relating to the shared REMS
process cannot form the basis of an antitrust claim. In so arguing, Moving Defendant relies
heavily on my Class Action Opinion, in which the plaintiffs claimed a Sherman Act § 2 violation
based on Indivior’s intentional delay of the SSRS process and disregard of the requirement that
parties work together in good faith under 21 U.S.C. § 355-1(f)(8).14 I concluded, in that Opinion,
that even though the FDA ordered Moving Defendant to cooperate in the shared REMS process,
Moving Defendant was under no antitrust duty to deal.
Suboxone, 64 F. Supp. 3d at 687. I
further noted that while the process would have moved more quickly had Indivior provided its
REMS to its competitors, the generic drug manufacturers were free to, and ultimately did, submit
an SSRS without Indivior’s involvement. Id. at 688. As Indivior had no duty to deal under
terms and conditions its rivals found commercially advantageous, I determined that Indivior’s
failure to cooperate could not constitute a valid form of anticompetitive action. Id.
While the claim in the States’ Complaint rests on the identical behavior, that prior
decision does not bind the outcome in this case due to one crucial distinction. In the Class
Action Complaint, the plaintiffs premised an entirely separate count on Indivior’s alleged refusal
This provision states, “[n]o holder of an approved covered application shall use any element
to assure safe use required by the Secretary under this subsection to block or delay approval of
an application under section 355(b)(2) or (j) of this title or to prevent application of such element
under subsection (i)(1)(B) to a drug that is the subject of an abbreviated new drug application.”
21 U.S.C. § 355-1(f)(8).
to participate in the SSRS process.
By contrast, in another Suboxone case by generic
manufacturer Amneal (the “Amneal Complaint”), the plaintiff brought a similar cause of action
alleging deception during the SSRS process, but also included that conduct as part of a cause of
action alleging an overarching scheme of anticompetitive conduct. I determined that “to the
extent that Amneal is attempting to bring a delay claim predicated on Indivior’s conduct during
the SSRS process alone,” that claim failed and would be dismissed. Suboxone, 2017 WL 36371,
at *8. To the extent, however, that Amneal alleged that the defendants’ conduct during the SSRS
process was part of a larger anticompetitive scheme alleged in the complaint, I noted that “a
plaintiff can allege a series of actions that when taken together make out antitrust liability even
though some of the individual actions, when viewed independently, are not all actionable.” Id.15
As there had been no determination at that stage of the case that every aspect of the conduct
alleged by Amneal—including the product hopping and sham citizen petition claims—failed
under the antitrust laws, I concluded that the defendants’ “conduct during the SSRS process may
be considered as one aspect of the overarching scheme claim alleged by Amneal.” Suboxone,
1017 WL 36371, at *9.
See also Cont’l Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 699 (1962)
(concluding that it is improper to treat antitrust claims as “separate and unrelated lawsuits” and
that “plaintiffs should be given the full benefit of their proof without tightly compartmentalizing
the various factual components and wiping the slate clean after scrutiny of each”); LePage’s Inc.
v. 3M, 324 F.3d 141, 162 (3d Cir. 2003) (“courts must look to the monopolist’s conduct taken as
a whole rather than considering each aspect in isolation”); In re Gabapentin Patent Litig., 649 F.
Supp. 2d 340, 359 (D.N.J. 2009) (“If a plaintiff can allege that a series of actions, when viewed
together, were taken in furtherance and as an integral part of a plan to violate the antitrust laws,
that series of actions, as an overall scheme, may trigger antitrust liability”); In re Neurontin
Antitrust Litig., MDL No. 02-1390, 2009 WL 2751029, at *15 (D.N.J. Aug. 28, 2009) (“[i]f an
antitrust plaintiff can allege that a series of actions, when viewed together, were taken in
furtherance and as an integral part of a plan to violate the antitrust laws, that series of actions
may trigger antitrust liability as an overall scheme”); Abbott Labs. v. Teva Pharm. USA, Inc.,
432 F. Supp. 2d 408, 428 (D. Del. 2006) (“[p]laintiffs are entitled to claim that individual acts
are antitrust violations, as well as claiming that those acts as a group have an anticompetitive
effect even if the acts taken separately do not.”).
The Amended Complaint in this case is far more akin to the Amneal complaint than the
Class Action Complaint. Rather than separately challenging the delay in the SSRS process as
anticompetitive, Plaintiffs aver that,
Beginning in 2002, [Indivior] engaged in exclusionary conduct
including, but not limited to: devising and implementing an antigeneric strategy by intentionally causing delays to FDA approval
of ANDAs for generic co-formulated buprenorphine/naloxone,
filing a baseless citizen petition to delay ANDA approval, and
alleging unfounded concerns regarding the safety of the generic
product while engaging in a campaign to convert the co-formulated
buprenorphine/naloxone market from tablet formulations to their
(Am. Compl. ¶ 137.) In other words, the alleged SSRS delays are simply part of a broader,
overarching scheme of anticompetitive conduct by Moving Defendant. Portions of this claim—
specifically the product hopping and the citizen petition allegations16—likewise survive Rule
12(b)(6) review, meaning that the overall Sherman Act § 2 claim survives. To sever out the
particular facts regarding the SSRS process from the claim would unfairly compartmentalize the
underlying conduct into separate causes of action. Therefore, although Plaintiffs could not
premise a Sherman § 2 claim on the SSRS delays alone, such activity may be considered as part
of the broader scheme of anticompetitive conduct.
Moving Defendant also challenges the delay claim to the extent it is premised on
Indivior’s citizen petition. Although Moving Defendant concedes that my 2014 Class Action
Opinion upheld the delay allegations based on the citizen petition, Moving Defendant contends
that the intervening Second Circuit decision in Apotex Inc. v. Acorda Therapeutics, Inc., 823
F.3d 51 (2d Cir. 2016) now requires a different result.
I address the citizen petition claim in more detail below.
I find Apotex distinguishable and
conclude that the allegations of delay based on the sham citizen petition properly state a claim
for anticompetitive conduct.
In Apotex, plaintiff Apotex filed an ANDA for a generic drug to compete with defendant
Acorda’s branded drug. Id. at 57. Subsequently, Acorda filed a citizen petition with the FDA
raising concerns with Apotex’s ANDA and objecting to (1) Apotex’s statement that its product
was equivalent to Reference Listed Drugs and (2) allegedly misleading or untrue statements in
the proposed label for the ANDA. Id. at 57–58. The FDA denied Acorda’s citizen petition and,
on the same day, approved Apotex’s ANDA. Id. at 58. Apotex brought an antitrust claim
alleging that Acorda’s citizen petition was used to delay approval of the ANDA. Id. The district
court granted a motion to dismiss that claim. Id.
On appeal, the Second Circuit expressly recognized that a single sham petition can
violate antitrust law so long as it is both objectively baseless—in that no reasonable litigant
could realistically expect success on the merits—and subjectively baseless—in that it conceals an
attempt to interfere directly with the business relationships of a competitor. Id. at 59. The
Second Circuit found, however, that Apotex failed to plead the objective baselessness of the
citizen petition and, therefore, did not reach the question of whether it was subjectively baseless.
Id. In so holding, the court acknowledged but rejected Apotex’s argument that the timing of the
petition’s denial—which coincided exactly with the FDA’s grant of the ANDA—conclusively
established that the petition was objectively baseless. Id. at 59–60. The court discussed the
FDA’s new Guidance for Industry, which deals with the simultaneous pendency of an ANDA
application and a citizen petition dealing with the same drug. Id. at 60. The Guidance states that
it is preferable for the FDA not to issue a decision on a citizen petition until it issues a decision
on the corresponding ANDA application. Id. The Second Circuit found that “[a]lthough it
remains conceivable, notwithstanding the Guidance, that a citizen petition might cause
anticompetitive delay, the Guidance tends to undermine the inference . . . that when a citizen
petition is denied simultaneously with the grant of an ANDA petition, the citizen petition was a
sham and an anticompetitive weapon.” Id.
Crucially, the Second Circuit directly addressed and distinguished my prior decision
regarding the Class Action Complaint. Id. It noted that in the Suboxone Class Action Opinion,
the Sherman Act § 2 claim based on the filing of a sham citizen petition survived dismissal
“because of the many indicia that the petition was objectively baseless.” Id. The Second Circuit
therefore concurred that, in the Class Action Complaint, it was “plausibly pled” that the petition
was objectively baseless. Id. at 62. In the case before it, however, Apotex had pled no other facts
to suggest the petition was objectively baseless other than the timing of the FDA’s decision. Id.
Unlike in Apotex, and similar to the Class Action Complaint here, the States’ Amended
Complaint does not simply rely on the timing of the FDA’s denial of the citizen petition. Rather,
it sets forth multiple facts which could create an inference that the petition was objectively
baseless, including the following:
105. The same alleged safety concern raised in [Indivior’s]
citizen petition regarding the generic manufacturers’ tablet product
was dismissed by [Indivior] less than a month prior with regard to
its own Suboxone Tablets. Specifically, on August 30, 2012
[Indivior] represented to the FDA in a combined REMS
assessment that its tablet REMS was successful and needed no
further changes. In fact, [Indivior] considered and rejected
converting its Suboxone Tablets to unit-dose packaging for
pediatric safety reasons as early as February 2008.
108. The FDA ultimately denied [Indivior’s] citizen petition on
February 22, 2013, noting that it was not supported by evidence
and was inconsistent with [Indivior’s] own behavior. The FDA
also said that it did not have the authority to issue some of the
relief requested by [Indivior]. The FDA acknowledged in its
ruling that it had no authority to grant [Indivior’s] request to have
Suboxone ANDAs contain targeted pediatric exposure program
because the labeling for an ANDA must be the same as the
labeling for the approved listed drug, pursuant to 21 U.S.C.
§ 355(j)(2)(A)(v) and 4(G).
109. The FDA further stated in its denial that the close proximity
of [Indivior’s] withdrawal of Suboxone Tablets to the “period in
which generic competition for this product was expected to begin
cannot be ignored.”
110. The FDA referred [Indivior’s] conduct to the FTC or
(Am. Compl. ¶¶ 105, 108–110.) Given these many indicia that Indivior’s petition was baseless,
Apotex supports a finding that the citizen petition delay claim should survive Rule 12(b)(6)
In an alternative interpretation of Apotex, Moving Defendant alleges that even assuming
objective baselessness is satisfied, the principles in Apotex negate Plaintiffs’ ability to show
causation. Moving Defendant reasons that prior 2007, it was legal for the FDA to delay approval
of a generic product pending the resolution of a related citizen petition. The state of that law led
the Second Circuit in the case of In re DDAVP Direct Purchaser Antitrust Litig., 585 F.3d 677,
694 (2d Cir. 2009) to conclude that the simultaneous grant of an ANDA and denial of a citizen
petition gave rise to the inference that the petition delayed the ANDA. Subsequently, Congress
enacted 21 U.S.C. § 355(q),17 which rendered such a delay illegal and caused the FDA to
This provision states:
The Secretary shall not delay approval of a pending application
submitted under subsection (b)(2) or (j) of this section or section
262(k) of Title 42 because of any request to take any form of
action relating to the application, either before or during
consideration of the request, unless—
promulgate a new policy that citizen petitions should not be resolved until related ANDAs were
ready for approval. Thereafter, in Apotex, the Second Circuit found, under this new policy, that
its decision in DDAVP was no longer good law and that the simultaneous grant of an ANDA and
denial of a citizen petition no longer creates an inference of delay. Based on that case, Moving
Defendant now contends that the States have failed to allege any fact indicating that the filing of
the citizen petition had any impact whatsoever on the timing of the approvals of the generic
products. Indeed, it asserts that Plaintiffs have not alleged that the generic manufacturers had
submitted fully approvable applications before Indivior filed its citizen petition. Therefore, it
concludes that this claim should be dismissed for failure to plausibly plead causation.
This argument attempts to extend Apotex far too broadly. As set forth above, Apotex
dealt only with what allegations were required to plausibly plead objective baselessness of a
citizen petition. The Second Circuit did not touch on causation or conclusively hold that sham
citizen petitions can never be the basis of a delay claim under the Sherman Act. Nor did the
court require that in order to plead a delay claim, a plaintiff must set forth allegations that the
ANDAs were fully-approvable at the time the citizen petition at issue was filed.18 Given Moving
(i) the request is in writing and is a petition submitted to the
Secretary pursuant to section 10.30 or 10.35 of title 21, Code of
Federal Regulations (or any successor regulations); and
(ii) the Secretary determines, upon reviewing the petition, that a
delay is necessary to protect the public health.
Consideration of the petition shall be separate and apart from
review and approval of any application.
21 U.S.C. § 355(q)(1)(A).
In the 2017 Opinion on Moving Defendant’s Motion to Dismiss the Amneal Complaint, I
considered and rejected the identical argument that Amneal could not allege injury and causation
because it had not properly alleged that its ANDA was fully approvable prior to the date on
which the citizen petition was filed. In so holding, I relied on allegations that “Amneal has
Defendant’s failure to identify any jurisprudence consistent with their argument, I decline to
impose such a requirement here.
Moreover, even considering the causation element, I find that the Amended Complaint
plausibly pleads that the citizen petition resulted in delay of the FDA’s approval of the generic
ANDAs. Specifically, the Amended Complaint states:
During the 150-day period [in which the FDA must respond to
each citizen petition under 21 C.F.R. § 10.30], FDA approval of
any ANDA pending for a product that is the subject of the citizen
petition is typically delayed. Although 21 U.S.C. § 355(q)(1)(A)
provides that the Secretary “shall not delay approval” of a pending
ANDA, subpart (ii) requires that “the Secretary, upon reviewing
the petition,” must determine whether a further delay is necessary
to protect public health. Thus, the filing of a citizen petition in and
of itself creates a delay insofar as the FDA must actually review
the allegations made in the petition, enabling brand-name
manufacturers to file a baseless citizen petition to prolong their
monopoly on a particular branded drug. This abuse of the petition
process has been repeatedly acknowledged by FDA officials.
(Am. Compl. ¶ 101.) Whether such a delay actually occurred in this case is a subject more
properly left for resolution after discovery. For the present purposes, I find that Plaintiffs have
adequately alleged causation.19
plausibly alleged that Indivior’s misconduct in filing the citizen petition delayed approval of its
ANDA and cost lost sales” and that but for the filing of the citizen petition, Amneal would have
begun marketing the generic version of Suboxone well before it actually did. Suboxone, 2017
WL 36371, at *10. That reasoning is equally applicable to the present case.
By way of a Notice of Supplemental Authority, Defendant has referred me to the Third
Circuit’s August 17, 2017 decision in In re Wellbutrin XL Antitrust Litigation, MDL Dkt. No.
305. In that case, the Third Circuit, in part, affirmed a grant of summary judgment in favor of a
defendant pharmaceutical manufacturer on a claim that the defendant had, among other things,
entered into a conspiracy to submit a “sham” citizen petition to the FDA. Defendant now
contends that this ruling bolsters the Motion to Dismiss in three specific respects: (1) it
establishes with certainty the proposition that a plaintiff must prove not only that a petition was a
sham, but that it caused an antitrust injury by delaying generic competition; (2) it rejected a
similar conspiracy theory and declined to find that joint conduct directed toward developing and
Allegations of Delay Relating to the Years 2009–2011 and From
February to March 2013
Finally, Moving Defendant seeks dismissal of any delay claims (a) relating to the years
2009–2011 and (b) post-approval of Amneal and Actavis’ ANDAs.
It contends that the
complaint is devoid of any allegations that Indivior did anything until the REMS negotiation
began in 2012 to hinder the approval and launch of a generic alternative to Suboxone tablets.
Moreover, Moving Defendant asserts that Plaintiffs set forth no facts that could attribute to
Indivior any delay between the approval of the generic ANDAs on February 22, 2013 and the
launch of generic tablet sales on March 6, 2013.
Moving Defendant’s argument again attempts to improperly compartmentalize Plaintiffs’
delay claim into separate causes of action. Plaintiffs assert an overall claim of monopolization,
which requires that they allege anticompetitive conduct on the part of Moving Defendant. To do
so, Plaintiffs set forth a broad scheme, which includes the product hop and the delay claims. The
delay claims, in turn, are premised on Moving Defendant’s allegedly deceptive refusal to
marketing new products is an unlawful conspiracy that violates the Sherman Act; and (3) it
required a showing of actual foreclosure of generics in order to establish antitrust injury.
Moving Defendant’s reading of Wellbutrin, however, ignores the crucial fact that this
case was decided at the summary judgment stage. The Third Circuit specifically acknowledged
that a sham lawsuit citizen petition which causes a delay in generic entry would not be entitled to
immunity under the Noerr-Pennington doctrine and could give rise to an actionable antitrust
violation. Slip. Op. at 27–28. The Court, however, affirmed the grant of summary judgment on
the ground that the appellants had failed to produce evidence creating a genuine issue of material
fact as to the questions of (a) whether the lawsuits/citizen petition caused an actual delay into the
entry of generics into the market and (b) whether the appellees conspired to file the sham petition
as opposed to acting independently. Slip Op. at 34, 37, 38, 42. Contrary to Moving Defendant’s
argument, nothing in Wellbutrin escalates the pleading burden on a plaintiff setting forth antitrust
and conspiracy violations based on the filing of a sham petition. Nor does the Third Circuit ever
suggest that product hop allegations must be dismissed for failure to allege foreclosure. As set
forth in detail in this Memorandum, I have found that Plaintiffs in this case have sufficiently pled
that the citizen petition was a sham, that it resulted in a delay in generic entry, and that
Defendants Indivior and MonoSol conspired to file this petition for the precise purpose of
delaying generic entry and avoiding competition with Suboxone.
cooperate in the shared REMS process and the filing of an allegedly sham citizen petition.
Although Plaintiffs have not specifically alleged facts showing any delay caused by Indivior
prior to 2011 and subsequent to February 22, 2013, the delay claim, as a whole, survives Rule
12(b)(6) scrutiny. The precise contours and impact of the delay cannot be accurately defined
until after discovery on this claim. Accordingly, at this juncture, I decline to parse out specific
timeframes to which the delay claim will not apply.
In sum, Plaintiffs’ Amended Complaint pleads a plausible claim of anticompetitive delay
by Moving Defendant. Given that the allegations of the Amended Complaint describe multiple
actions comprising an overarching scheme, I shall not dismiss any part of this cause of action.
Counts III and IV of the Amended Complaint allege a conspiracy to monopolize under
Sherman Act § 2 and a conspiracy to restrain trade under Sherman Act § 1 respectively. A
Section 2 conspiracy claim has four elements: (1) an agreement to monopolize; (2) an overt act
in furtherance of the conspiracy; (3) a specific intent to monopolize; and (4) a causal connection
between the conspiracy and the injury alleged. Howard Hess Dental Labs. Inc. v. Dentsply Int’l,
Inc., 602 F.3d 237, 253 (3d Cir. 2010) (citing United States v. Yellow Cab Co., 332 U.S. 218,
224–25 (1947); Am. Tobacco Co. v. United States, 328 U.S. 781, 788, 809 (1946)). “A plaintiff
asserting a Section 1 claim also must allege four elements: ‘(1) concerted action by the
defendants; [(2)] that produced anti-competitive effects within the relevant product and
geographic markets; (3) that the concerted actions were illegal; and (4) that it was injured as a
proximate result of the concerted action.’” Id. (quoting Gordon v. Lewistown Hosp., 423 F.3d
184, 207 (3d Cir. 2005)).
Moving Defendant alleges that both claims fail because (a) Plaintiffs fail to allege
concerted action among entities that, for antitrust purposes, do not represent a single enterprise;
and (b) Plaintiffs fail to allege facts showing that any cooperative conduct was anticompetitive.20
Considering each argument individually, I find them meritless.
The Amended Complaint alleges that “[d]efendants Reckitt [consisting of all of the
Defendant Reckitt entities] and MonoSol conspired to monopolize the relevant market for coformulated buprenorphine/naloxone products.”
(Am. Compl. ¶ 149.)
Healthcare UK, Ltd. and MonoSol “entered into a development agreement whereby MonoSol
granted [Indivior] the right to use its patented sublingual film technology to manufacture
Suboxone in a film version.” (Id. ¶ 150.) According to the Amended Complaint, MonoSol
actually convinced [Indivior] to introduce the Suboxone film as a means of preserving
[Indivior’s] market share and market exclusivity. (Id. ¶¶ 47–50.) Thereafter, MonoSol and
Indivior worked jointly to develop the Suboxone film, obtain a patent, and bring the final product
to market prior to the entry of generic co-formulated buprenorphine/naloxone tablets. (Id. ¶¶ 50–
54.) MonoSol then made the initial suggestion that Indivior’s withdrawal of Suboxone tablets
from the market could provide “further protection from generic incursion.” (Id. ¶ 71.) Finally,
MonoSol “engaged in numerous conversations with [Indivior] about Film pricing” and “made
adjustments to its own costs to ensure profitability to [Indivior] and MonoSol on Suboxone Film,
despite the fact that it was launched at a lower price point to encourage the product switch.” (Id.
¶ 85.) Ultimately, the Amended Complaint concludes that “[Indivior] and MonoSol entered into
Moving Defendant also contends that these claims fail because the “product hop” claim
itself is defective. As I have already found that the product hop claim survives Rule 12(b)(6)
scrutiny, I need not consider this argument any further.
the agreement with the specific intent and for the purpose of extending [Indivior’s] monopoly
power, which was due to expire at the end of [Indivior’s] FDA-granted ‘orphan status’ period,
and for the purpose of preventing generic competition with its branded product.” (Id. ¶ 152.)
Moving Defendant now contends that these allegations are insufficient to allege
concerted action because Indivior and MonoSol share a “unity of interest” and the Sherman Act
does not reach agreements between contracting parties who do not have independent competitive
interests in the relevant market. (Defs.’ Mem. Supp. Mot. to Dismiss 16.) Taking the factual
allegations in the Amended Complaint as true, I disagree.
“To prevail on a section 1 claim or a section 2 conspiracy claim, a plaintiff must establish
the existence of an agreement, sometimes also referred to as a ‘conspiracy’ or ‘concerted
action.’” W. Penn Allegheny Health System, Inc. v. UPMC, 627 F.3d 85, 99 (3d Cir. 2010)
(quoting Twombly, 550 U.S. at 553; Gordon, 423 F.3d at 207 & n.16). “An agreement exists
when there is a unity of purpose, a common design and understanding, a meeting of the minds, or
a conscious commitment to a common scheme.” Id. (citing Copperweld Corp. v. Indep. Tube
Corp., 467 U.S. 752, 771 (1984); Howard Hess, 602 F.3d at 254; Gordon, 423 F.3d at 208). To
plead an agreement, a plaintiff may allege direct or circumstantial evidence, or a combination of
the two. Id. “If a complaint includes non-conclusory allegations of direct evidence of an
agreement, a court need go no further on the question whether an agreement has been adequately
The United States Supreme Court has “long held that concerted action under § 1 does not
turn simply on whether the parties involved are legally distinct entities,” but rather has
“eschewed such formalistic distinctions in favor of a functional consideration of how the parties
involved in the alleged anticompetitive conduct actually operate.” Am. Needle, Inc. v. Natl.
Football League, 560 U.S. 183, 191 (2010). Therefore, where members of a legally single entity
are controlled by a group of a competitors and serve as a vehicle for concerted activity, a section
1 violation may exist. Id. at 192. Conversely, the mere fact that more than one legally distinct
entity is involved does not necessarily establish concerted action. Id. “[S]ubstance, not form,
should determine whether a[n] . . . entity is capable of conspiring under § 1.” Copperweld, 467
U.S. at 773 n.21. “The relevant inquiry, therefore, is whether there is a ‘contract, combination . .
. or conspiracy’ amongst ‘separate economic actors pursuing separate economic interests,’ . . .
such that the agreement ‘deprives the marketplace of independent centers of decisionmaking,’ . .
. and therefore of ‘diversity of entrepreneurial interests,’ . . . and thus of actual or potential
competition.” Am. Needle, 560 U.S. at 195 (internal quotations omitted).
Several key cases have helped define the contours of when entities engage in “concerted
action.” In Copperweld Corp. v. Independence Tube Corp., the Supreme Court held that a firm
and its wholly-owned subsidiary are not capable of conspiring in violation of § 1 of the Sherman
Act. 467 U.S. 752, 771 (1984). Subsequently, in Siegel Transfer, Inc. v. Carrier Exp., Inc., 54
F.3d 1125 (3d Cir. 1995), the Third Circuit extended Copperweld to the situation where two
corporations with different ownership were so intertwined and had such unity of interest that
they could not conspire. Id. at 1135. In that case, the plaintiff, a motor carrier, sued defendant
Carrier Express, Inc., a shipper, and its subsidiaries under the Sherman Act. Id. at 1130. Carrier
Express, a licensed common and contract carrier, did not hire employees, acquire equipment or
engage its own drivers; rather it used commissioned, non-exclusive agents to make arrangements
with owner-operators or with other carriers who had access to trucks and drivers to carry the
freight. Id. at 1128. Carrier Express’ operations were managed by Oak Management, who
oversaw all of Carrier Express’ day-to-day functions and received a percentage of Carrier
Express’ revenues as payment for its services. Id. The plaintiff alleged a conspiracy among
Carrier Express, its agents in the field, and Oak Management. Id. at 1134. The court found that
the agents, whose only function was to make arrangements for the transport of Carrier Express
freight with authorized carriers, were a single enterprise with Carrier Express. Id. at 1135. As to
Carrier Express and Oak Management, the Third Circuit held that because Carrier Express did
not have employees of its own, it used Oak Management to handle its day-to-day operations. Id.
“Contractually obligated to manage Carrier Express affairs, Oak Management was, in effect, an
inseparable part of Carrier Express’ structure. Since its fee was a percentage of Carrier Express’
revenue, Oak Management’s economic well-being was directly tied to Carrier Express’ success.”
Id. Therefore, the court held that “Oak Management and the Carrier Express agents could not
conspire with Carrier Express or with each other under section 1.” Id.
Moving Defendant asserts that Siegel Transfer is directly on point for three reasons.
First, like Oak Management’s role in Siegel Transfer, MonoSol was acting in partnership with
Indivior in connection with a film joint venture and MonoSol, as the manufacturer of the film,
was an inseparable part of the film joint venture. Second, just as Oak Management’s economic
well-being was directly tied to Carrier Express’ revenue, MonoSol received royalty payments
from the sale of Suboxone giving it financial incentive to contribute to “a long and vibrant life
cycle for Suboxone film.” (Am. Compl. ¶ 85.) Finally, as in Siegel Transfer, MonoSol and
Indivior were not competitors and nothing in the Amended Complaint indicates that MonoSol
would have been a participant in the relevant market in any capacity but for its “partnership”
with Indivior. Overall, Moving Defendant concludes that Indivior and MonoSol constituted “one
economic unit” and were unable to conspire with each other as a matter of law.
This argument disregards the distinction between two entities working under a
completely intertwined “unity of interest” and two entities operating in a joint venture for a
common purpose. It is well established that the reasoning of cases such as Copperweld and
Siegel Transfer does not “extend to shelter independent actors having diverse economic
interests acting jointly.” Fishman v. Estate of Wirtz, 807 F.2d 520, 541 n.19 (7th Cir. 1986). As
cogently stated by the United States Supreme Court:
Any joint venture involves multiple sources of economic power
cooperating to produce a product. And for many such ventures,
the participation of others is necessary. But that does not mean
that necessity of cooperation transforms concerted action into
independent action; a nut and a bolt can only operate together, but
an agreement between nut and bolt manufacturers is still subject to
§ 1 analysis. Nor does it mean that once a group of firms agree to
produce a joint product, cooperation amongst those firms must be
treated as independent conduct. The mere fact that the teams
operate jointly in some sense does not mean that they are immune.
Am. Needle, 560 U.S. at 199.
Under this standard, the case before me aligns more closely to the joint venture defined in
American Needle than to the intertwined entities in Siegel Transfer. The Third Circuit in Siegel
Transfer relied heavily on the fact that Oak Management constituted “an inseparable part of
Carrier Express’ structure” because it handled all of Carrier Express’ day-to-day operations, its
economic success was tied to Carrier Express’ success because it received a percentage of
Carrier Express’ revenue, and it did not compete with Carrier Express.
In stark contrast,
MonoSol is a separate corporation engaged in the development, manufacture and sale of
pharmaceuticals throughout the United States.
(Am. Compl. ¶ 14.)
Neither Indivior nor
MonoSol were responsible for the other corporation’s day-to-day operations.
although Indivior contracted for MonoSol to receive royalty fees on sales of Suboxone film,
nothing in the complaint suggests that this was MonoSol’s sole form of income or that its
economic success was tied fully to Indivior’s economic success.
Rather, the reasonable
inference is that the particular agreement between the two parties created economic incentives
for the parties to put forth their best faith efforts in carrying out their joint venture related to
Suboxone film. On a broader scale, the two parties were acting for their own financial interests.
See Am Needle, 560 U.S. at 201 (“If the fact that potential competitors shared in profits or losses
from a venture meant that the venture was immune from § 1, then any cartel ‘could evade the
antitrust law simply by creating a “joint venture” to serve as the exclusive seller of their
competing products.’”) (citations omitted).
Finally, the Amended Complaint allows the reasonable inference that MonoSol could
have competed in the relevant market outside of its agreement with Indivior.
purportedly encouraged Indivior “and other pharmaceutical companies” to partner with MonoSol
and use its “PharmFilm formulations” to “introduce products that are highly differentiated from
other dosage forms, both in performance and marketability, creating fresh, dynamic revenuecreating opportunities.” (Id. ¶ 48.) Indivior was but one of the companies to enter into such an
agreement with MonoSol. (Id. ¶ 49.) In short, the relationship between Indivior and MonoSol
“is one of competitive reality” lacking “complete unity of interest,” and does “not possess either
the unitary decisionmaking quality or the single aggregation of economic power characteristic of
independent action.” Am. Needle, 560 U.S. at 195.
For purposes of the motion to dismiss, I find that the Amended Complaint sufficiently
pleads facts to support an inference of concerted action. Therefore, I will deny the motion on
Purpose of the Conspiracy
Moving Defendant’s second and final challenge to the conspiracy claim asserts that a
“conspiracy” to innovate is not anticompetitive. Moving Defendant reasons that marketing a
new product is encouraged by both the antitrust laws and the Hatch-Waxman Act. According to
Moving Defendant, Plaintiffs seek to penalize that precise conduct: MonoSol and Indivior’s
agreement to develop a new product and bring that product to the market—an act that has been
deemed entirely procompetitive. Doryx, 838 F.3d at 440; Namenda, 787 F.3d at 653–54.
As previously explained, “simply introducing a new product on the market, whether it is
a superior product or not, does not, by itself, constitute exclusionary conduct. The key question
is whether the defendant combined the introduction of a new product with some other wrongful
conduct, such that the comprehensive effect is likely to stymie competition, prevent consumer
choice and reduce the market’s ambit.” Suboxone, 64 F. Supp. 3d at 682. “Product innovation
generally benefits consumers and inflicts harm on competitors, so courts look for evidence of
‘exclusionary or anticompetitive effects’ in order to ‘distinguish “between conduct that defeats a
competitor because of efficiency and consumer satisfaction”’ and conduct that impedes
competition through means other than competition on the merits.” Namenda, 787 F.3d at 652.
As noted above, although neither product withdrawal nor product improvement alone is
anticompetitive, when a monopolist combines product improvement with some other conduct,
the overall effect of which is to coerce consumers rather than persuade them on the merits, the
conduct is anticompetitive under the Sherman Act. Id. at 653–54.
Had Plaintiffs limited their allegations regarding the conspiracy between Indivior and
MonoSol to mere product innovation and introduction of the Suboxone film, Plaintiffs would
have been hard-pressed to establish that the conspiracy acted in restraint of trade or for a
noncompetitive purpose. Contrary to Moving Defendant’s arguments, however, the Amended
Complaint goes far beyond allegations that the “conspiracy” was intended only to introduce a
new product into the market; rather it combines allegations of product improvement with product
withdrawal and other anticompetitive conduct as follows:
MonoSol encouraged [Indivior] and other pharmaceutical
companies to engage in illegal and anticompetitive producthopping on its website [through the use of PharmFilm for their
patented drugs]. (Am. Compl. ¶ 48.)
[Indivior] and MonoSol’s development of the new sublingual Film
was intended to thwart generic entry, and to maintain Suboxone’s
market share by extending [Indivior’s] exclusivity on a coformulated buprenorphine/naloxone product. (Id. ¶ 50.)
Throughout the Suboxone Film development process, MonoSol
was aware that the timing of both FDA approval and final product
development was crucial to bring the Suboxone Film to market
prior to the entry of generic co-formulated buprenorphine/naloxone
tablets. MonoSol actively strategized with [Indivior] to minimize
various manufacturing delays to beat the generic tablets to market.
(Id. ¶ 54.)
MonoSol made the initial suggestion that [Indivior’s] withdrawal
of Suboxone Tablets from the market could provide further
protection from generic incursion, and that employees of Reckitt
Benckiser Healthcare (UK), Ltd. participated in discussions
regarding the plans to remove the Tablets from the market. (Id.
To complete their plan to extend Suboxone’s exclusivity by the
patent protection claimed for the Film, [Indivior] then engaged in a
multi-faceted campaign to convert the co-formulated
buprenorphine/naloxone market to Suboxone Film. (Id. ¶ 72.)
MonoSol engaged in numerous conversations with [Indivior] about
Film pricing. MonoSol made adjustments to its own costs to
ensure profitability to [Indivior] and MonoSol on Suboxone Film,
despite the fact that it was launched at a lower price point to
encourage the product switch. Cost and pricing decisions, along
with MonoSol’s royalty payments, were part of ongoing
negotiations between MonoSol and [Indivior] with MonoSol
pledging to do all that it can to contribute to a long and vibrant
product life cycle for Suboxone Film. (Id. ¶ 85.)
As early as 2011, MonoSol actively participated in [Indivior’s]
plan to delay generic entry through its abuse of the citizen petition
process. MonoSol participated in meetings regarding the citizen
petition with Indivior, which were described as “urgent” to
“explore what [citizen petition] opportunities may exist” regarding
Suboxone Tablets. (Id. ¶ 112.)
Indivior’s conspiracy with MonoSol and its acts, practices, and
scheme described herein were for the purposes of, and had the
effect of, restraining competition unreasonably by preventing the
entry of generic co-formulated buprenorphine/naloxone and
destroying the market for tablet formulation by the time the generic
competitors gained FDA approval. (Id. ¶ 118.)
Considered collectively, these allegations plausibly plead that the conspiracy between MonoSol
and Indivior was designed squarely to “stymie competition, prevent consumer choice and reduce
the market’s ambit.” Suboxone, 64 F. Supp. 3d at 682.
To the extent Moving Defendant intends to argue that the true purpose of the joint
venture was for procompetitive innovation, resolution of that inquiry is premature. In addressing
allegations of anticompetitive conduct based on product hops, the “rule of reason” burdenshifting framework set forth by the D.C. Circuit in United States v. Microsoft Corp. applies.
Under that framework, the party seeking to impose liability must initially provide evidence of the
anticompetitive nature of a defendant’s conduct. 253 F.3d at 58. Once established, the defendant
then has the burden of “proffer[ing] ‘nonpretextual’ procompetitive justifications for its
conduct,” and “[t]he plaintiff may then either rebut those justifications or demonstrate that the
anticompetitive harm outweighs the procompetitive benefit.” Id. at 58–59. Such questions may
only be fairly addressed after full discovery on the merits. Accordingly, I decline to dismiss the
conspiracy claims on this ground.
Having thoroughly considered Moving Defendant’s arguments, I find that Plaintiffs’
claims survive Rule 12(b)(6) review.21 For all of the foregoing reasons, Indivior’s Motion to
Dismiss the States’ Amended Complaint will be denied in its entirety.
An appropriate Order follows.
In an effort to dismiss Plaintiffs’ Count V state law claims, Defendant presents a cursory
two-sentence argument, as follows:
The States’ state-law claims fail for the same reasons as their
federal-law claims. As discussed in more detail in Section IV of
Reckitt Benckiser Healthcare (UK) Limited’s brief, since Plaintiffs
fail to state a claim under the Sherman Act and since the state law
claims are based on the same allegations, those claims [should]
also [b]e dismissed.
(Def.’s Mem. Supp. Mot. to Dismiss 4). As I do not find that the Sherman Act claims fail, I
likewise do not find that the state law claims fail. To the extent Reckitt Benckiser Healthcare
(UK) Limited raises additional reasons to dismiss the state law claims, I will address them in the
context of deciding that motion.
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