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In re Suboxone (Buprenorphine Hydrochloride and Naloxone) Antitrust Litigation

United States District Court, E.D. Pennsylvania

October 30, 2017

Indivior Inc. et al. Case No. 16-cv-5073 STATE OF WISCONSIN By Attorney General Brad D. Schimel, et al. Plaintiffs,


          GOLDBERG, J.

         The Defendants in the present litigation-Indivior Inc., f/k/a Reckitt Benckiser Pharmaceuticals, Inc.; Reckitt Benckiser Healthcare (UK) Ltd.; Indivior PLC; and MonoSol Rx, LLC-each play some role in the manufacture, production, and/or sale of Suboxone, a medication that combines naloxone and buprenorphine to treat opioid addiction. Plaintiffs[1] have brought suit against Defendants alleging violations of federal and state antitrust statutes and state law unfair trade and consumer protection laws. Defendant MonoSol Rx (“Defendant” or “MonoSol”) now moves to dismiss all claims against it. For the following reasons, I will deny the Motion in its entirety.


         A. General Background of Suboxone Tablet

         In 2002, Indivior, Inc. (“Indivior”)[3] introduced Suboxone, a drug designed for the treatment of opioid addiction, as a sublingual tablet. (Am. Compl. ¶¶ 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 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.)

         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 Defendant MonoSol-a company specializing in PharmFilm technology-began to formulate a “Buprenorphine Generic Offensive Strategy.” (Id. ¶¶ 44-45, 48.) 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[5] 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.)

         B. The Creation and Marketing of Suboxone Film

         In a December 2006 meeting, MonoSol and Reckitt Benckiser Healthcare UK Ltd. (“RBH”), Indivior's sister company, 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.) Indeed, MonoSol encouraged Indivior and other pharmaceutical companies to engage in product hopping by advertising on its website, among other things, that “PharmFilm drug technology allows: no generic substitution, ” and “PharmFilm can be an ideal strategy for extending the life of a brand as generic incursion approaches.” (Am. Compl. ¶ 48.) 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, 832 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.) MonoSol actively strategized with Indivior to minimize various manufacturing delays to beat generic tablets to market. (Id. ¶ 54.) On October 28, 2008, Indivior 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) Therefore, 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.)

         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 unit-dose 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.) For its part, MonoSol engaged in numerous conversations with Indivior about film pricing and made adjustments to its own costs to ensure profitability to both Indivor and itself on Suboxone film, despite the fact that it was launched at a lower price point. (Id. ¶ 85.) 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 film. (Id.) Indivior withdrew Suboxone tablets from the market on March 18, 2013. (Id. ¶ 88.)

         C. The Plan to Delay 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 referenced 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.) 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 petition[7] with the FDA on September 25, 2011. (Id. ¶ 98.) MonoSol actively participated in this process, holding “urgent” meetings with Indivior to explore possible citizen petition opportunities regarding Suboxone tablets. (Id. ¶ 112.) 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 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. ¶ 105.)

         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. ¶ 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's and Activis's ANDAs for tablet sales. (Id. ¶ 114.) On March 6, 2013, generic co-formulated buprenorphine/naloxone tablets entered the market. (Id. ¶ 115.)

         D. Procedural History

         In June 2013, several putative classes initiated litigation against the various Defendants alleging anticompetitive behavior with respect to the marketing and sale of Suboxone. These cases were consolidated into a multi-district litigation (“MDL”) in this Court. Among those matters was the class action complaint brought by Direct Purchaser Plaintiffs and End-Payor 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 allowing most of the federal and state law claims to proceed, but 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).

         On December 23, 2015, Amneal Pharmaceuticals LLC (“Amneal”), a generic manufacturer and competitor of Indivior, filed a complaint regarding Indivior's alleged anticompetitive conduct with respect to Suboxone. That case was consolidated with the MDL currently before me. On January 4, 2017, I issued a decision dismissing only part of Amneal's claims against Indivior. 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 Defendants, and the case was consolidated with the MDL. The States 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, I-PLC, and RBH; (2) attempted monopolization under the Sherman Act § 2 against Indivior, I-PLC, and RBH; (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. Several motions, filed pursuant to Federal Rule of Civil Procedure 12(b)(6) followed, including the motion before me filed by MonoSol.

         On September 8, 2017, I denied Indivior's Motion to Dismiss these claims and found that the Amended Complaint adequately alleged an anticompetitive product-hopping scheme and related conspiracy by Indivior. In re Suboxone Antitrust Litig., No. 16-5073, 2017 WL 3967911, at *1-6 (E.D. Pa. Sept. 8, 2017). Subsequently, on October 17, 2017, I granted RBH's Motion to Dismiss. In re Suboxone Antitrust Litig., No. 16-5073, 2017 WL 4642285 (E.D. Pa. Oct. 17, 2017). Subsequently, on October 25, 2017, I granted I-PLC's Motion to Dismiss. In re Suboxone Antitrust Litig., No. 16-5073, 207 WL 4810801 (E.D. Pa. Oct. 25, 2017).

         On December 12, 2016, MonoSol filed a motion to dismiss the Amended Complaint. The States responded on January 30, 2017, and MonoSol filed a reply brief on February 21, 2017.


         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 United States Court of Appeals for the Third Circuit 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).


         The claims against MonoSol involve allegations of a conspiracy to monopolize under the Sherman Act § 2, illegal restraint of trade under Sherman Act § 1, and various state law causes of action. Moving to have all claims against it dismissed, MonoSol sets forth six general arguments: (1) the Amended Complaint does not plausibly allege that MonoSol participated in an unlawful, anticompetitive agreement; (2) the Amended Complaint does not adequately plead proximate causation; (3) the Amended Complaint fails to adequately plead a relevant market; (4) the Amended Complaint does not plausibly plead that MonoSol possessed the requisite specific intent for a Sherman Act § 2 claim; (5) the claims against MonoSol are time barred; and (6) the state law claims must be dismissed for the same reasons as the federal law claims.

         A. Whether the Amended Complaint Plausibly Alleges that MonoSol Participated in an Unlawful Anticompetitive Agreement

         “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.'”[8] W. Penn Allegheny Health System, Inc. v. UPMC, 627 F.3d 85, 99 (3d Cir. 2010) (quoting Twombly, 550 U.S. at 553; Gordon v. Lewistown Hosp., 423 F.3d 184, 207 & n.16 (3d Cir. 2005)). “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 Dental Labs., Inc. v. Dentsply Int'l Inc., 602 F.3d 237, 254 (3d Cir. 2010); 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.

         In support of their claim that MonoSol and Indivior had an agreement, Plaintiffs allege that “[d]efendants Reckitt [consisting of all of the Defendant Reckitt entities] and MonoSol conspired to monopolize the relevant market for co-formulated buprenorphine/naloxone products.” (Am. Compl. ¶ 149.) According to Plaintiffs, Reckitt Benckiser 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.) MonoSol actually convinced Indivior to introduce the Suboxone film as a means of preserving Indivior's market share and market exclusivity. (Id. ¶¶ 47-50.) Plaintiffs go on to contend that MonoSol and Indivior thereafter 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, ” “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. ¶¶ 71, 85.) Finally, it alleged that MonoSol “actively participated in [Indivior's] plan to delay generic entry through its abuse of the citizen petition process.” (Id. ¶ 112.) Ultimately, the Amended Complaint concludes that “[Indivior] and MonoSol entered into 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.)

         MonoSol now contends that these allegations are insufficient to plead an anticompetitive agreement because: (1) MonoSol and Indivior cannot, as a matter of law, conspire with each other; (2) any agreement to develop and introduce a new product is pro-competitive and, thus, not barred by the Sherman Act; and (3) Plaintiffs have not adequately pled facts to support the inference that MonoSol engaged in exclusionary conduct.

         1. Whether MonoSol and Indivior Can Conspire as a Matter of Law

         MonoSol's first argument relies upon the single-entity doctrine set forth in Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752 (1984), which holds that a parent and its wholly-owned subsidiary are a single entity incapable of conspiring. MonoSol reasons that courts have applied the single-entity doctrine of Copperweld to a wide range of corporate relationships, including (a) situations involving a joint venture between two entities and (b) where the relationship between the two entities was one of patent holder and exclusive licensee. MonoSol concludes that both of these scenarios apply here and establish that MonoSol and Indivior are a single economic unit that could not have conspired for purposes of a Sherman Act conspiracy claim.

         With respect to MonoSol's theory that the two companies were in a joint venture in which MonoSol was effectively the agent of Indivior, I considered this identical argument in my Memorandum and Order on Defendant Indivior, Inc.'s Motion to Dismiss. As here, the defendant relied on Siegel Transfer, Inc. v. Carrier Express, Inc., 54 F.3d 1125, 1133 (3d Cir. 1995) to argue that a company and its ...

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