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In re Wellbutrin XL Antitrust Litigation

July 30, 2009

IN RE: WELLBUTRIN XL ANTITRUST LITIGATION


The opinion of the court was delivered by: McLaughlin, J.

MEMORANDUM

The plaintiffs are a group of indirect purchasers of Wellbutrin XL, a once-a-day antidepressant, who are suing the producers of Wellbutrin XL, Biovail Corp., Biovail Laboratories, Biovail Laboratories International (together, "Biovail"), and its distributors, SmithKline Beecham Corp. and GlaxoSmithKline PLC (together, "GSK"), for illegally conspiring to prevent generic versions of Wellbutrin XL, or buproprion hydrochloride, from entering the American market for that drug.

Plumbers and Pipefitters Local 572 Health and Welfare Fund ("Local 572"), IBEW-NECA Local 505 Health and Welfare Plan ("Local 505"), Painters District Council No. 30 Health and Welfare Fund ("D&C 30"), Mechanical Contractors-United Association Local 119 Health and Welfare Plan ("Local 119"), and Bricklayers and Masons Union Local Union No. 5 Ohio Health and Welfare Fund (Local Union No. 5) are trust funds acting as "employee welfare benefit plans" and "employee benefit plans." These plaintiffs bring suit on the basis of their reimbursement of their members' purchases of Wellbutrin XL.

The plaintiffs themselves are located in Alabama, Illinois, Tennessee and Ohio. The plaintiffs allege to have members whom they reimbursed for purchases of Wellbutrin XL residing in Alabama, California, Florida, Illinois, Indiana, Nevada, New Jersey, New York, Ohio, Pennsylvania, Tennessee, Texas and Wisconsin. The plaintiffs seek to represent an "end payor" class comprised of other purchasers of Wellbutrin XL throughout the country.

The plaintiffs' amended complaint includes three counts, each alleging violations of several separate state laws. The first count alleges a violation of state antitrust laws on the basis of alleged monopolization of the American market for buproprion hydrochloride.*fn1 The second count alleges violations of certain states' consumer protection laws.*fn2 The third count is a claim for unjust enrichment that references the law of no particular jurisdiction.

Biovail and GSK submitted separate motions to dismiss the amended complaint.*fn3 First, the defendants argue that the plaintiffs fail to allege an injury that would provide for standing under the majority of the state laws on which the plaintiffs rely. The defendants contend that the plaintiffs have standing to sue only under the laws of the states where the plaintiffs themselves are located. Second, the defendants argue that the plaintiffs have failed to state claims under the statutes of the various states referenced in counts one and two. Third, the defendants attack the plaintiffs' claim of unjust enrichment in count three. With respect to count three, Biovail argues that the failure to refer to the law of any particular jurisdiction is fatal to the plaintiffs' effort to state a claim. GSK echos the Biovail argument and also argues that count three is an impermissible repackaging of the claims in counts one and two and that the plaintiffs' unjust enrichment claim is barred under the laws of the plaintiffs' home states.

The plaintiffs argue first that they have standing under Article III of the Constitution to assert claims under each statute referenced in the amended complaint. Opp'n at 13. They assert that they have been injured, that the defendants caused the injury and that their injury will be redressed by a judgment in their favor. They argue that this general assertion is sufficient for a threshold showing of Article III standing.

Next, the plaintiffs argue that, if a standing determination must be made with respect to each state referenced in the amended complaint, and if such a determination is ripe for decision, then they have standing to assert claims under the laws of those states where they are located and where their members made purchases of Wellbutrin XL. Opp'n at 15-18. However, the plaintiffs also argue that it would be premature for the Court to make a determination as to their ability to bring suit under the laws of those states where neither they nor their members reside. They argue that such a determination is appropriately handled in the class certification context.

Finally, presuming that they have standing to bring each claim, the plaintiffs argue that should survive a motion under Rule 12(b)(6) for failure to state a claim. The plaintiffs argue that they have adequately stated claims under the laws of the states referenced in counts one and two, as well as in their unjust enrichment claim in count three.

The Court holds that it must make a determination of the plaintiffs' standing to assert each claim of the amended complaint at this stage of the litigation. The plaintiffs' argument that they have general Article III standing is insufficient to establish standing with respect to particular claims. The Court finds that the plaintiffs have standing to assert claims only under the laws of those states where the plaintiffs are located or their members reside. The Court will dismiss those claims arising under all other states.

The remaining claims arise under the laws of California, Florida, Illinois, Ohio, Nevada, New York, Tennessee, and Wisconsin. The Court will grant the defendants' motions to dismiss parts of counts one and two for failure to state a claim. The Court will dismiss claims arising under the antitrust law of Florida, and claims arising under the consumer protection laws of Illinois, Nevada, New York and Ohio. The plaintiffs have conceded their claims under the laws of Pennsylvania and Texas. Opp'n at 47 n.31.

Finally, because the plaintiffs' third count for unjust enrichment refers to no law or jurisdiction, the Court will dismiss the plaintiffs' claims under that count.

I. Legal Background

Certain provisions of federal law relating to the procedures for approving new drugs are at the center of the plaintiffs' allegations. The plaintiffs claim that Biovail and GSK abused provisions of the Food, Drug and Cosmetic Act, 21 U.S.C. §§ 301-392 ("FDCA"), for the purpose of delaying the marketing of generic versions of their drug Wellbutrin XL.

The FDCA provides two different sets of procedures for the approval of new drugs. First, the manufacturer of a new drug must obtain approval from the Food and Drug Administration ("FDA") by filing a New Drug Application ("NDA"). This application contains data as to safety and effectiveness. In filing an NDA, manufacturers also list any patents that the manufacturer believes could reasonably be asserted against a generic manufacturer who makes, uses, or sells a generic version of the drug prior to the expiration of the listed patents. These patents are listed in the FDA's book of Approved Drug Products with Therapeutic Equivalence Evaluations (known as the "Orange Book"). The amended complaint states that the FDA does not exercise tight supervision over the contents of the Orange Book, relying on manufacturers to list patents in good faith. Am. Compl., ¶ 33.

The second approval procedure was established in 1984 by the Hatch-Waxman Amendments. Pub. L. No. 98-417, 98 Stat. 1585 (1984). The purpose of the Amendments was to speed the approval of generic versions of brand-name drugs while respecting brand manufacturers' patent rights. Generic manufacturers need not file NDAs. Instead, they may file Amended New Drug Applications ("ANDA"). ANDAs require a showing of safety and effectiveness and a showing of bioequivalency to an approved brand-name drug. Bioequivalency refers to equivalency of the active ingredient, dosage, route of administration and strength between a brand-name and generic drug. Am. Compl., ¶ 29.

As part of an ANDA, generic manufacturers must certify that they will not infringe any brand manufacturers' patents. One method of certification is referred to as a "Paragraph 4" certification, which requires the generic manufacturer to state that a potentially conflicting Orange Book patent is either invalid or will not be infringed by the proposed generic.

The Hatch-Waxman Amendments seek to protect brand manufacturers' patents. In the case of an ANDA including a Paragraph 4 certification, brand manufacturers have 45 days from the date of notice of the ANDA's filing to initiate litigation on any potentially infringed patents. If the brand manufacturer brings suit within that 45 day window, then the FDA may not give final approval to the generic drug for the shorter of 30 months or a finding by the court that the patent is invalid or not infringed.

The plaintiffs also base their amended complaint on a separate provision of the FDCA. Section 505(j) of the FDCA allows for a person (including a corporation) to file a "Citizen Petition" requesting that the agency take or refrain from taking any administrative action, which may include the approval of a generic drug. The FDA must respond to these petitions within 180 days of their filing. The plaintiffs allege that, until a 2007 amendment to the FDCA, it was common practice for the FDA to withhold ANDA approval until after consideration of a Citizen Petition. Am. Compl., ¶ 47.

II. Allegations of the Plaintiffs' Amended Complaint

The plaintiffs allege that GSK and Biovail have acted in concert to abuse the provisions of the Hatch-Waxman Amendments by filing meritless litigation in an effort to delay the entry of generic competitors into the American market for Wellbutrin XL. They also allege that Biovail filed a baseless citizen petition with the FDA in a further attempt to delay the generics' market entry.

The amended complaint makes the following assertions. Biovail and Pharma Pass, LLC, collaborated to create an extended release formula for buproprion hydrochloride in the 1990s. Id., ¶ 66. Pharma Pass's chemists created an extended release version of the drug using off-the-shelf chemical compounds unworthy of patent protection in themselves. However, they were able to acquire a patent on their formula by claiming that it was "free of stabilizer of any kind." "Stabilizer" is the term used for a chemical or compound that prolongs the release of a drug after initial administration. This formula received patent No. 6,096,341 (the "341 patent"). Id., ¶¶ 70-71. A continuation of the 341 patent was issued on November 7, 2000. This patent number was 6,143,327 (the "327 patent"). Id., ¶ 84. Biovail acquired Pharma Pass in December of 2002 and later obtained the rights conferred by the 341 and 327 patents. Id., ¶ 85.

On October 26, 2001, Biovail and GSK entered into a contract to promote and distribute Wellbutrin XL in the United States and Canada. Id., ¶ 87. In August of 2002, GSK filed a New Drug Application ("NDA") with the FDA. GSK listed the 341 and 327 patents in the FDA's Orange Book as patents that could reasonably be asserted to cover Wellbutrin XL. Id., ¶ 88. The FDA issued approval of Wellbutrin XL to GSK on August 8, 2003. Id., ¶ 89 On December 31, 2004, the 341 and 327 patents were formally assigned to Biovail. Id., ¶ 92.

On September 21, 2004, Anchen (a generic manufacturer of bupropion hydrochloride) filed an ANDA seeking FDA approval to market Wellbutrin XL's generic alternative in a 150mg and 300mg formulation. Anchen's ANDA included a Paragraph 4 certification that stated that it would not infringe the 341 or 327 patents.

The basis for this assertion was the presence of "stabilizer" compounds in the Anchen generic version. Id., ¶ 98. On September 23, 2004, Abrika, another generic manufacturer, filed a similar ANDA, as did the manufacturer Impax on November 30, 2004. Id., ¶¶ 102, 105. On July 21, 2005, the manufacturer Watson filed a similar ANDA for the 300mg formulation of bupropion hydrochloride. Id., ¶ 108.

The amended complaint alleges that on December 21, 2004, GSK and Biovail co-filed an action against Anchen alleging infringement of the 341 and 327 patents in the Central District of California. The same claims were made by GSK and Biovail against Abrika in the Southern District of Florida. In both cases, the claims based on the 327 patent were eventually withdrawn. Id., ¶ 138. On March 7, 2005, Biovail filed an action against Impax alleging a violation of the 341 patent.

Id., ¶ 113. Biovail later filed suit against generic manufacturer Watson. Id., ¶ 139.

The plaintiffs allege that all of the generic competitors provided the defendants with access to their ANDAs and sample products to allow them to compare the products to Wellbutrin XL and its applicable patents. Id., ¶ 116. They allege that these ANDAs and sample products demonstrated conclusively that the generic formulations did not infringe Wellbutrin XL's patents because of the presence of a stabilizer in the generics. Id., ¶ 115.

Anchen received FDA tentative approval for its generic version of Wellbutrin XL on November 14, 2005, but was unable to manufacture and market its product because of the ongoing patent infringement litigation. A generic version of Wellbutrin XL, therefore, was allegedly ready for market entry on November 14, 2005. Id., ¶ 140.

On December 20, 2005, Biovail filed a citizen petition with the FDA allegedly for the sole purpose of blocking the generics' entry to market. Id., ¶ 141. The plaintiffs claim that the FDA had a practice of delaying approval of generic drugs until the resolution of a citizen petition. Id., ¶ 154. On December 14, 2006, the FDA denied Biovail's citizen petition and, on the same day, granted final approval to Anchen's and Abrika's ANDAs. Id., ¶ 151.

On December 15, 2006, the FDA gave Impax tentative approval for its 150 mg formula and final approval of its 300 mg formula. On June 13, 2007, the FDA gave Watson final approval for its 300 mg formula. Id., ¶¶ 152-53. Biovail settled its litigation with Anchen and Impax before either matter had gone to summary judgment. The plaintiffs claim this highlights the sham nature of the suits. Id., ¶ 157-58. These settlements barred generic competitors from releasing their 150 mg formulas until 2008. Id., ¶ 160.

The plaintiffs' amended complaint states that they seek to represent a class of end payors defined as:

All persons or entities in the United States and its territories who, at any time during the period November 14, 2005, to the entry of judgment in this action . . . , paid or reimbursed for or will pay or reimburse for Wellbutrin XL and AB-rated generic equivalents in any form. For purposes of the End Payor Class definition, persons and entities paid or reimbursed for Wellbutrin XL and AB-rated generic equivalents if they paid or reimbursed for some or all of the purchase price.

Am. Compl., ¶ 185.

III. Analysis

The threshold question the Court must answer is whether the Court should consider the named plaintiffs' standing to bring the claims asserted under each individual state's law or should wait until the class certification stage to make such an assessment. The Court concludes that it must decide the plaintiffs' standing to bring each claim now. The Court concludes that the plaintiff benefit funds may bring claims under the laws of the states in which they are located and in which their members, for whom they have reimbursed purchases of Wellbutrin XL, reside. The named plaintiffs' claims under other state laws will be dismissed. The Court will then consider whether the amended complaint states a claim under the various state laws for which the named plaintiffs have standing to sue.

A. Timing of the Standing Analysis

Article III of the Constitution requires that a plaintiff have standing to assert his claims.

Constitutional standing requires: (1) an injury-in-fact, which is an invasion of a legally protected interest that is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical; (2) a causal connection between the injury and the conduct complained of; and (3) that it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.

Winer Family Trust v. Queen, 503 F.3d 319, 325 (3d Cir. 2007).

A plaintiff's standing to sue must be analyzed on the basis of each claim asserted. "The complaining party must . . . show that he is within the class of persons who will be concretely affected. Nor does a plaintiff who has been subject to injurious conduct of one kind possess by virtue of that injury the necessary stake in litigating conduct of another kind, although similar, to which he has not been subject." Blum v. Yaretsky, 457 U.S. 991, 999 (1982).

Standing is analyzed on a claim by claim basis. Each element of standing (injury, causation, redressability) must relate to each other in relation to the claim asserted. "Typically, . . . the standing inquiry requires careful judicial examination of a complaint's allegations to ascertain whether the particular plaintiff is entitled to an adjudication of the particular claims asserted." Allen v. Wright, 468 U.S. 737, 752 (1984). Standing "should be seen as a question of substantive law, answerable by reference to the statutory and constitutional provision whose protection is invoked." Int'l Primate Protection League v. Administrators of Tulane Educ. Fund, 500 U.S. 72, 77 (1991) (quoting William A. Fletcher, The Structure of Standing, 98 Yale L.J. 221, 229 (1988)).

In addition to the "immutable requirements of Article III," the federal judiciary has also adhered to a set of prudential principles that bear on the question of standing. These principles are:

(1) the Plaintiff generally must assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties;

(2) even when the Plaintiff has alleged redressable injury sufficient to meet the requirements of Article III, the federal courts will not adjudicate abstract questions of wide public significance which amount to generalized grievances shared and most appropriately addressed in the representative branches; and

(3) the Plaintiff's complaint must fall within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question.

Miller v. Nissan Motor Acceptance Corp., 362 F.3d 209, 221 (3d Cir. 2004) (quoting Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 484 (3d Cir. 1998) (internal citations omitted)).

Ordinarily, standing is a threshold issue for any case, including class actions. "[A] plaintiff . . . must allege a distinct and palpable injury to himself, even if it is an injury shared by a large class of other possible litigants." Warth v. Seldin, 422 U.S. 490, 501 (1975). The requirement of a named plaintiff's standing is no different in the class action context. Lewis v. Casey, 518 U.S. 343, 357 (1996). "That a suit may be a class action . . . adds nothing to the question of standing, for even named plaintiffs who represent a class must allege and show that they personally have been injured, not that injury has been suffered by other, unidentified members of the class to which they belong and which they purport to represent." Id. (internal quotations omitted). "[I]f none of the named plaintiffs purporting to represent a class establishes the requisite of a case or controversy with the defendants, none may seek relief on behalf of himself or any other member of the class." O'Shea v. Littleton, 414 U.S. 488, 494 (1974). "The initial inquiry . . . is whether the lead plaintiff individually has standing, not whether or not other class members have standing." Winer Family Trust, 503 F.3d at 326.

Standing in the context of class actions remains a claim by claim prerequisite. "[E]ach claim must be analyzed separately, and a claim cannot be asserted on behalf of a class unless at least one plaintiff has suffered the injury that gives rise to that claim." Griffin v. Dugger, 823 F.2d 1476, 1483 (11th Cir. 1987). A named plaintiff whose injuries have no causal relation to, or cannot be redressed by, the legal basis for a claim does not have standing to assert that claim. For example, a plaintiff whose injuries have no causal relation to Pennsylvania, or for whom the laws of Pennsylvania cannot provide redress, has no standing to assert a claim under Pennsylvania law, although it may have standing under the law of another state.

The defendants have asserted that the plaintiffs are unable to bring claims under the laws of states where the named plaintiffs are not located because the named plaintiffs lack standing to do so. The plaintiffs rely on a recent decision of the United States Supreme Court, and several lower court opinions applying that decision, to argue that the Court should defer an examination of the named-plaintiffs' ability to represent unnamed plaintiffs with claims under the laws of states in which the named plaintiffs are not located or have members until the class certification stage of litigation. Opp'n at 18.*fn4

The plaintiffs rely on Ortiz v. Fibreboard Corporation, 527 U.S. 815 (1999), for the proposition that class certification must come before an examination of the named plaintiffs' ability to assert the claims of unnamed parties to a class action. Ortiz involved a global settlement of claims against a manufacturer of asbestos-containing products. The issue before the Court in Ortiz was the propriety of the district court's certification of a class consisting of all persons with personal injury claims against Fibreboard [the manufacturer] for asbestos exposure who had not yet brought suit or settled their claims before the previous August 27; those who had dismissed such a claim but retained the right to bring a future action against Fibreboard; and "past, present and future spouses, parents, children, and other relatives" of class members exposed to Fibreboard asbestos.

Id. at 826-27 (internal quotations omitted).

Before reaching the issue of the certification's propriety under Rule 23, the Supreme Court addressed the petitioners' argument that the class claims were non-justiciable under Article III of the Constitution for lack of standing. The petitioners argued that "this is a feigned action initiated by Fibreboard to control its future asbestos tort liability, with the 'vast majority' of the 'exposure-only' class members being without injury in fact and hence without standing to sue." Id. at 831. Notably, the petitioners attacked the standing of the absent class members and not the standing of the named plaintiffs.

In that context, the Supreme Court followed its decision in Amchem Products, Inc. V. Windsor, 521 U.S. 591 (1997), and deferred consideration of Article III standing of the proposed class members until after the consideration of class certification because the latter was "logically antecedent" to the former. Ortiz, 527 U.S. at 831 (citing Amchem, 521 U.S. at 612). Thus, in a case involving a global settlement in which certain members of a proposed class may not have standing to sue and where the Court was presented with a request for class certification and standing issues simultaneously, the Supreme Court addressed dispositive certification issues prior to issues of Article III standing. Had the Court found that certification of the proposed class was improper, the issue of certain class members' standing would have been moot. To rule on the issue of standing at that point in the case would have required the Court to make a determination as to the standing of persons who were not actually parties to the case, but who were only proposed parties to the case.

Amchem, on which Ortiz relied, also involved a global settlement of an asbestos class-action involving claims on behalf of a proposed class of people exposed to asbestos and certain of their "spouses, parents, children, and other relatives." Amchem, 521 U.S. 591, 603 n.5 (1997). As in Ortiz, the petitioners in Amchem challenged the standing of exposure-only class members prior to the certification of the class. The Supreme Court affirmed the Court of Appeals for the Third Circuit by stating that "because [the resolution of class certification ...


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