Case Overview
The IN RE ASACOL ANTITRUST LITIGATION (Case No. 1:15-cv-12730) involves a class action lawsuit against Warner Chilcott and its successor, Allergan, alleging antitrust violations through a practice known as "product hopping." This litigation centers on the defendants' decision to replace the original formulation of Asacol, a drug used to treat ulcerative colitis, with a new formulation called Delzicol.
Allegations and Claims
The plaintiffs, who are end-payor pharmaceutical purchasers, claim that the defendants engaged in product hopping to exclude generic manufacturers from the market. They allege that by pulling Asacol from the market and ceasing to sell or market it, the defendants effectively eliminated competition and maintained a monopoly in the relevant market[1][3].
Defendants' Arguments and Motions
The defendants argued several points in their motion for summary judgment:
- Non-Exclusionary Conduct: The hard switch from Asacol to Delzicol was not intended to exclude generic manufacturers.
- Federal Preemption: Federal food and drug law precluded the state law antitrust claims.
- Lack of Standing: The plaintiffs lacked standing because there was no proof that generic entry was likely or possible.
- No Monopoly Power: The defendants did not exercise monopoly power.
- Procompetitive Benefits: The introduction of Delzicol had procompetitive benefits that outweighed any anticompetitive effects of the hard switch[1].
District Court Holding
The district court denied the defendants' motion for summary judgment, finding:
- No Federal Preemption: Federal food and drug law did not preclude the plaintiffs' state law claims. The FDA had requested but not prohibited the sale of Asacol with dibutyl phthalate (DBP), and the defendants could have reformulated Asacol without DBP instead of switching to Delzicol[1].
- Genuine Dispute of Material Fact: There were genuine disputes regarding whether the defendants exercised market power, engaged in exclusionary conduct, and whether generic entry was possible in the relevant timeline[1].
- Class Certification: The plaintiffs sufficiently alleged the elements required for class certification under FRCP 23(a) and 23(b)(3)[1].
Monopoly Power and Exclusionary Conduct
The court found that there was a genuine issue of material fact regarding whether the defendants had monopoly power. The plaintiffs presented direct and circumstantial evidence, including supracompetitive pricing and consumer behavior indicating that ulcerative colitis drugs were not interchangeable. However, the court noted that high fixed costs could justify prices exceeding marginal costs even in competitive markets[1].
The court also found that the plaintiffs presented a genuine issue of material fact regarding exclusionary conduct. The defendants could have reformulated Asacol using dibutyl sebacate (DBS), a safer alternative, instead of switching to Delzicol. The court rejected the defendants' procompetitive justifications, such as the safety and stability of Delzicol, as there was a genuine dispute about these claims[1].
Antitrust Standing
The court determined that there was a genuine issue of material fact as to whether the defendants caused anticompetitive harm, giving the plaintiffs antitrust standing. The court emphasized that under antitrust law, the issue is whether competitors posed a nascent threat to competition at the time of the allegedly anticompetitive conduct. The FDA's ability to fast-track generic applications further supported the possibility of generic entry during the relevant period[1].
Class Certification Issues
The First Circuit Court of Appeals later reversed the district court's class certification decision. The appellate court held that the class could not be certified because a small minority of class members (about 10%) were uninjured brand loyalists who would not have switched to generic versions even if available. The court required the plaintiffs to propose a manageable mechanism for excluding these uninjured members from the class before trial, which the plaintiffs failed to do[3][5].
Appellate Court Ruling
The First Circuit's decision emphasized the importance of ensuring that no class containing uninjured members can be certified unless the plaintiffs offer a way to contest injury at trial. This ruling aligns with the Seventh Amendment and due process rights, prohibiting the use of class member affidavits post-trial to establish injury. This decision has been followed by several other courts in similar cases, highlighting the stringent requirements for class certification in antitrust litigation[3].
Key Takeaways
- Product Hopping: The case highlights the antitrust implications of product hopping, where a brand-name drug manufacturer switches to a new formulation to prevent generic competition.
- Federal Preemption: Federal food and drug law does not necessarily preclude state law antitrust claims, especially if the FDA's requests do not mandate the removal of the original product.
- Monopoly Power and Exclusionary Conduct: The court's findings emphasize the importance of proving monopoly power and exclusionary conduct in antitrust cases.
- Class Certification: The First Circuit's ruling underscores the need for a manageable mechanism to exclude uninjured class members to ensure due process and Seventh Amendment rights.
FAQs
Q: What is product hopping in the context of antitrust law?
A: Product hopping refers to the practice of a brand-name drug manufacturer switching to a new formulation of a drug to prevent generic competition, often by removing the original formulation from the market.
Q: Why did the district court deny the defendants' motion for summary judgment?
A: The district court denied the motion because there were genuine disputes of material fact regarding monopoly power, exclusionary conduct, and the possibility of generic entry.
Q: What was the First Circuit's ruling on class certification?
A: The First Circuit reversed the class certification decision, requiring the plaintiffs to propose a manageable mechanism to exclude uninjured class members before trial.
Q: How does the FDA's role impact antitrust claims in this case?
A: The FDA's request to remove products containing DBP did not preclude the plaintiffs' state law claims, as the defendants could have reformulated Asacol without DBP instead of switching to Delzicol.
Q: What are the implications of this case for future antitrust litigation?
A: The case sets a precedent for the stringent requirements for class certification in antitrust cases, emphasizing the need to ensure that no class contains uninjured members and that due process and Seventh Amendment rights are protected.
Cited Sources
- Asacol Product-Hopping Claims to Proceed to Trial | Practical Law
- IN RE ASACOL ANTITRUST LITIGATION - Law360
- Most Courts Follow 1st Circ. Generic-Delay Ruling's Standard | White & Case
- In re Asacol Antitrust Litig. - Federal Cases - Case Law - VLEX
- In re Asacol Antitrust Litigation - Public Citizen
