Amy N. Vegari, Partner

The DOJ’s efforts to prosecute alleged wage-fixing and employee non-solicitation agreements have continued to develop over the last few months.  (Check here for our previous coverage of this prosecution trend.)  Most notably, the DOJ nearly secured its first criminal conviction on a no-poach charge, as a defendant in United States v....

The Tenth Circuit recently became the first federal court of appeals to address an antitrust challenge to a relationship central to modern pharmaceutical drug markets:  the price negotiations between drug companies and pharmacy benefit managers (“PBMs”) hired by health plans to manage prescription drug programs. 

Last month, the first two trials arising from the DOJ’s recent push to criminally prosecute wage-fixing and employee non-solicitation agreements both ended in acquittals on the antitrust charges.  (Check here for our previous coverage of this prosecution trend.)  In United States v. Jindal, the defendants were acquitted on charges of price-fixing, while in United States v. DaVita Inc., DaVita and its CEO were acquitted on charges that they engaged in no-poach agreements with competitors.  Though the DOJ has publicly declared its intent to continue pursuing such prosecutions, these setbacks may affect how it approaches other alleged labor-market antitrust violations.

Two weeks ago, the District of Colorado denied defendants’ motion to dismiss in a criminal case targeting agreements between competitors not to solicit (or “poach”) each other’s employees.  United States v. DaVita Inc. et al. is part of a wave of four criminal cases regarding no-poach and wage-fixing deals brought by the Department of Justice for the first time ever over the past year. The DOJ contends that the arrangements at issue are per se unlawful under the Sherman Act, even though no appellate court has ever expressly held as such.  Defendants in each case, including DaVita, moved to dismiss the charges, asserting that these types of agreements are not per se illegal and that they lacked fair notice that their conduct was a crime.    

In addition to the DaVita decision, the motion to dismiss in United States v. Jindal was also recently denied by the Eastern District of Texas.  Motions to dismiss in two other cases remain pending, but these first decisions illuminate how courts may treat similar prosecutions going forward. 

On April 13, 2021, the Court of Appeals for the Fifth Circuit issued its long-anticipated decision in Impax v. FTC, marking the first time an appellate court has weighed in on the merits of a so-called reverse payment case prosecuted by the Federal Trade Commission (“FTC”) since the Supreme Court’s Actavis decision in 2013.  The case resulted in a validation of the FTC’s approach to policing reverse payment agreements.  Specifically, the Court affirmed the Commission’s conclusions that (1) large, unjustified reverse payments are anticompetitive regardless of the strength of the underlying patent litigation, and (2) reverse payment settlements are more anticompetitive than procompetitive if a less-restrictive alternative exists, and that a less-restrictive alternative can be an agreement without a payment that results in an earlier generic entry. 

Stop me if you’ve heard this one before: the FTC is suing pharmaceutical manufacturers Endo and Impax over an alleged “reverse payment” agreement to reduce competition in the market for Opana ER, an oxymorphone extended release product.  In fact, the FTC’s complaint follows quickly on the heels of the Commission’s decision that a 2010 agreement between the same manufacturers to settle Impax’s patent litigation against Endo for a $112 million payment constituted an illicit “reverse payment” that delayed the entry of Impax’s generic version of Opana ER.  (Click here for background on that decision.)  Oral argument on Impax’s appeal of the FTC’s decision happened six months ago; the Fifth Circuit’s decision will mark the first time a Circuit Court weighs in on the FTC’s interpretation of the Supreme Court’s 2013 decision in FTC v. Actavis.  (Click here for analysis of the oral argument)

On November 20, 2020, the U.S. Department of Health & Human Services (HHS) finalized a rule to take effect in 2022, which eliminates the safe harbor under the federal anti-kickback statute for manufacturer rebates to Medicare Part D plan sponsors.  Under the current statutory scheme, drug manufacturers may negotiate rebates with providers of pharmacy benefits—either directly or through a pharmacy benefit manager (PBM)—in exchange for preferential placement or avoiding being disadvantaged on a PBM’s or provider’s drug formulary.  The safe harbor permits such payments by confirming that rebates do not constitute illegal kickbacks under the federal statute.  HHS’s new rule eliminates that safe harbor, but creates a safe harbor for negotiated discounts on the “list price” of the drug..

Yesterday we discussed 2019’s most significant developments in challenges to reverse-payment settlements.  Today we continue our analysis of recent trends in pharmaceutical antitrust actions with a discussion of cases addressing class certification requirements in the reverse-payment context.

Recently, Judge Goldberg in the Eastern District of Pennsylvania certified two classes of plaintiffs asserting antitrust claims based on alleged “product hopping” by the manufacturer of branded tablets treating opioid addiction.  In re: Suboxone (Buprenorphine Hydrochloride and Nalaxone) Antitrust Litig., 13-md-2445, 2019 U.S. Dist. LEXIS 166524 (E.D. Pa. Sept. 26, 2019).  While declining to certify a class of end payors seeking injunctive relief, the court nevertheless certified  (1)  a damages class of direct purchasers of Suboxone tablets under Rule 23(b)(3) and (2) an issues class of end payors certified under Rule 23(c)(4).  The court held that certification of the latter class would materially advance the litigation because the issue of alleged anticompetitive conduct—which focuses only on the conduct of defendants—is “wholly severable” from the issues of antitrust impact and damages, which could raise individualized issues. 

After two hearings over the last week, Judge Richard J. Leon of the District Court for the District of Columbia seems to have put the brakes on the well-publicized merger between health care giants CVS and Aetna.  The merger obtained conditional approval from the DOJ’s Antitrust Division on October 10, 2018, and the parties seemed poised for court approval when they appeared before Judge Leon on November 29, 2018.

The Third Circuit recently affirmed the grant of summary judgment to GlaxoSmithKline (“GSK”) in the nearly 10-year-old Wellbutrin XL Antitrust Litigation, which challenged the lawfulness of settlement agreements resolving patent disputes over Wellbutrin XL.  In determining that GSK had not violated the Sherman Act, the court determined that GSK’s settlement of patent infringement lawsuits did not reflect that GSK had engaged in sham litigation, or that GSK made unlawful “reverse payments” to settle that litigation.  To reach these conclusions, the court carefully picked apart years of evidence

This week, the Second Circuit affirmed the approval of a $50 million agreement settling price-fixing claims brought by a class of farmers against a dairy cooperative and a dairy marketing company.  The settlement in Allen et al. v. Dairy Farmers of America et al. was notable for at least two reasons that were seemingly at odds: First, the unusually high number of claims filed; and second, the vociferous advocacy of two named plaintiffs who objected to the settlement.  The objectors argued that class counsel colluded with defendants’ to reach a settlement agreement, and coerced class members to support the settlement.

Manufacturers of containerboard and corrugated products have asked the Supreme Court to weigh in on a Circuit split concerning the impact of negotiated prices on class certification in antitrust cases brought under Section 1 of the Sherman Act.  Petitioners filed for a writ of certiorari on December 30, 2016, arguing that the Seventh Circuit in Kleen Products LLC, et al. v. International Paper Company, et al., Nos. 15-2385, 15-2386 (7th Cir. Aug. 4 2016), erred in two related ways, both of which flow from the fact that prices of the containerboard products at issue in the case tend to be individually negotiated. 

What facts beyond mere membership in a trade association trigger Sherman Act liability?  Next term, the Supreme Court will hear an antitrust case testing the requirements for pleading the conspiracy element of a claim brought under the Sherman Act—namely, whether the allegation that defendants belong to an association is sufficient for a Section 1 claim.  

It is plausible that Uber’s CEO, Travis Kalanick, may have violated antitrust law by fixing prices charged to Uber passengers, a judge in the United States District Court for the Southern District of New York concluded last week in denying Kalanick’s motion to dismiss.  The lawsuit, Meyer v. Kalanick, is a putative class action initiated by Spencer Meyer, a resident of Connecticut, on behalf of people who, like him, have used Uber car services.  The complaint also names a subclass of people who have been charged according to Uber’s “surge pricing” model.