Mylan Pharmaceuticals Inc v. Warner Chilcott Public Limited , 838 F.3d 421 ( 2016 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
__________
No. 15-2236
__________
MYLAN PHARMACEUTICALS INC.,
Appellant
v.
WARNER CHILCOTT PUBLIC LIMITED COMPANY;
WARNER CHILCOTT COMPANY, LLC;
WARNER CHILCOTT US, LLC;
MAYNE PHARMA GROUP LIMITED;
MAYNE PHARMA INTERNATIONAL PTY. LTD.
__________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil No. 2:12-cv-03824)
District Judge: Honorable Paul S. Diamond
Argued on July 14, 2016
Before: FUENTES,* SHWARTZ, and BARRY, Circuit
Judges
(Opinion Filed: September 28, 2016)
Courtney Armour, Esq.
Seth C. Silber, Esq.
Christopher A. Williams, Esq.
Wilson Sonsini Goodrich & Rosati
1700 K Street, NW, 5th Floor
Washington, DC 20006
Jeffrey C. Bank, Esq.
Jonathan M. Jacobson, Esq. [ARGUED]
Michael S. Sommer, Esq.
Daniel P. Weick, Esq.
Wilson Sonsini Goodrich & Rosati
1301 Avenue of the Americas, 40th Floor
New York, NY 10019
Joseph M. Donley, Esq.
Clark Hill
2005 Market Street
One Commerce Square, Suite 1000
Philadelphia, PA 19103
Counsel for Appellant Mylan Pharmaceuticals, Inc.
*
Honorable Julio M. Fuentes assumed senior status on July
18, 2016.
2
Peter J. Carney, Esq.
Eileen M. Cole, Esq.
John M. Gidley, Esq. [ARGUED]
White & Case
701 13th Street, N.W.
Washington, DC 20005
Michael J. Gallagher, Esq.
Jack E. Pace, III, Esq.
White & Case
1155 Avenue of the Americas
New York, NY 10036
Paul J. Koob, Esq.
Ballard Spahr
1735 Market Street, 51st Floor
Philadelphia, PA 19103
Counsel for Appellees Warner Chilcott Public Limited
Company; Warner Chilcott Company, LLC; and Warner
Chilcott US, LLC;
Richard Hernandez, Esq.
Jonathan M.H. Short, Esq.
McCarter & English
100 Mulberry Street
Four Gateway Center, 14th Floor
Newark, NJ 07102
Counsel for Appellees Mayne Pharma Group Limited; Mayne
Pharma International PTY. LTD.
3
Mark A. Ford, Esq.
WilmerHale
60 State Street
Boston, MA 02109
Counsel for Amicus Curiae Pharmaceutical Research and
Manufacturers of America
Mark A. Jacobson, Esq.
Karla M. Vehrs, Esq.
Lindquist & Vennum
80 South 8th Street
4200 IDS Center
Minneapolis, MN 55402
Counsel for Amicus Curiae Antitrust Economists
James B. Reed, Esq.
Baird Williams & Greer
6225 North 24th Street, Suite 125
Phoenix, AZ 85016
Counsel for Amicus Curiae Gregory Dolin, Adam Mossoff,
and Kristin Osenga
4
Daniel A. Cummings, III, Esq.
Rothschild Barry & Myers
150 South Wacker Drive, Suite 3025
Chicago, IL 60606
Counsel for Amicus Curiae Arizona Bioindustry Association,
BIONJ, California Manufacturers & Technology Association,
Healthcare Institute of New Jersey, Industry University
Research Center Inc., Orange County Business Council,
Oregon Bioscience Assocation, Texas Association of
Manufacturers, Texas Healthcare and Bioscience Institute,
and BIOUTAH
William F. Cavanaugh, Jr., Esq.
Patterson Belknap Webb & Tyler
1133 Avenue of the Americas
New York, NY 10036
Counsel for Amicus Curiae Donald E. Hatfield, Riitta Katila,
Jeffrey T. Macher, Tammy L. Madsen, Mitrabarun Sarkar,
Rajshree Agarwal, Jay Barney, Barry L. Bayus, Benjamin A.
Campbell, Laura B. Cardinal, Russell Coff, Raj Echambadi,
Charles Eesley, Alfonso Gambardella, Martin Ganco, and
Nile Hatch
5
Julie Nepveu, Esq.
AARP Foundation Litigation
601 E Street N.W., Room B4-245
Washington, DC 20049
Counsel for Amicus Curiae AARP, National Health Law
Program, Sergeants Benevolent Association, United States
Public Interest Research Group, Center for Medicare
Advocacy, Consumer Action, Consumer Federation of
America, Consumers Union, and District Council 37 Health
& Security Plan, Families USA
Phillip Malone, Esq.
Jeffrey T. Pearlman, Esq.
Stanford Law School
Juelsgaard Intellectual Property and Innovation Clinic, Mills
Legal Clinic
559 Nathan Abbott Way
Stanford, CA 94305
Counsel for Amicus Curiae Scott Hemphill, Herbert
Hovenkamp, Mark A. Lemley, Christopher R. Leslie, Michael
A. Carrier, Stacey L. Dogan, and Harry First
Richard M. Brunell, Esq.
American Antitrust Institute
Suite 1100
1730 Rhode Island Avenue, N.W.
Washington, DC 20036
Counsel for Amicus Curiae American Antitrust Institute
6
Masrk S. Hegedus, Esq.
Joel R. Marcus, Esq.
Federal Trade Commission
600 Pennsylvania Avenue, N.W., MS-582
Washington, DC 20580
Counsel for Amicus Curiae Federal Trade Commission
William S. Consovoy, Esq.
Wiley Rein
1776 K Street NW
Washington, DC 20006
Counsel for Amicus Curiae National Association of
Manufacturers
__________
OPINION OF THE COURT
__________
FUENTES, Circuit Judge.
Mylan Pharmaceuticals, Inc., a generic drug
manufacturer, and several other Plaintiffs (hereinafter
“Mylan”) originally brought this action against Defendants,
Warner Chilcott and Mayne Pharma, both name-brand drug
manufacturers. Defendants manufacture and sell “Doryx,”
the name-brand version of delayed-release doxycycline
hyclate, an oral antibiotic of the tetracycline class used to
treat severe acne. Tetracyclines are a broad category of
antibiotics, the most common being doxycycline
monohydrate and minocycline, which vary in their use and
7
efficacy. Mylan alleges, among other things, that Defendants
conspired to protect their position in the market through
“product hopping,” which involves making various
insignificant modifications to a drug to keep generic
competitors out of the market by forcing them to re-enter a
cumbersome regulatory approval process.
After several Plaintiffs in this action settled their cases,
Mylan was the only remaining Plaintiff. Mylan claims that
Defendants are liable for: (1) creating an unlawful monopoly
under § 2 of the Sherman Act; (2) attempted unlawful
monopolization under § 2 of the Sherman Act; (3) entering
into an agreement in restraint of trade under § 1 of the
Sherman Act; and (4) tortiously interfering with prospective
contractual relationships under Pennsylvania law. The Parties
filed cross-motions for summary judgment, and the District
Court granted Defendants’ and denied Plaintiff’s. In doing
so, the District Court held that Defendants’ conduct was not
anticompetitive, and that, even if it was, Mylan’s claims
failed because it did not establish that Defendants had the
requisite market power in the relevant product market. For
the reasons that follow, we will affirm.
I. BACKGROUND1
We begin by describing the complex regulatory and
industry-specific framework involved in most, if not all,
pharmaceutical “product hopping” cases.2
1
The District Court had jurisdiction under 28 U.S.C. §§ 1331,
1332(a), 1337(a), and 1367(a). We have jurisdiction under 28
U.S.C. § 1291.
8
A. Federal and State Law Governing Drug
Approval
The pharmaceutical industry consists of both name-
brand and generic drug manufacturers. In general, generic
drugs are priced lower than, and compete with, their name-
brand counterparts.3 Both types of drugs are subject to
certain approval requirements before they can be sold to the
public. In particular, a company that wishes to market a new
pharmaceutical product in the United States must first obtain
approval from the Food and Drug Administration (“FDA”).4
This is called the New Drug Application (“NDA”) process.5
Prior to 1984, both name-brand and generic drug
manufacturers were required to go through the same NDA
process. That year, Congress passed the Drug Price
Competition and Patent Term Restoration Act, also known as
the Hatch-Waxman Act.6 The Act loosened the approval
rules for generics by creating an Abbreviated New Drug
Application (“ANDA”) process.7 The ANDA process
2
Unless otherwise noted, the facts are drawn from the record
before the District Court.
3
In re Barr Labs., Inc., 930 F.2d 72, 75 (D.C. Cir. 1991)
(noting the price savings for low-income individuals between
generic drugs and their name-brand equivalents).
4
See 21 U.S.C. § 355.
5
Id.
6
See Drug Price Competition and Patent Term Restoration
Act of 1984, Pub. L. No. 98-417, 98 Stat. 1585.
7
See id. §§ 101-106, 98 Stat. 1585-97.
9
permits generic drug companies to rely on a name-brand drug
company’s original NDA approval for a particular drug in
order to gain quicker, less costly FDA approval of a generic
version of the drug.8 By enabling generic manufacturers to
“piggy-back on a brand drug’s scientific studies” and the
significant costs associated with their NDA, Hatch-Waxman
“speeds the introduction of low-cost generic drugs to market,
thereby furthering drug competition.”9
To rely on a name-brand’s NDA, however, the generic
drug manufacturer must demonstrate that the proposed
generic product is both a “bioequivalent” and a
“pharmaceutical” equivalent of the name-brand drug.10 Put
simply, these two equivalencies require a generic company
filing an ANDA to show a certain level of design and
formulaic similarity between its product and the approved
drug. ANDA filers that successfully show that their drug is
bioequivalent and pharmaceutically equivalent can then have
their product deemed “AB-rated” to the name-brand drug by
the FDA.
To be sure, once obtained, the AB rating carries a
considerable corollary benefit for generics under state law.
Every state in the United States has drug substitution laws.11
8
See 21 U.S.C. § 355(j)(2)(A)(iv).
9
FTC v. Actavis, Inc., 133 S. Ct. 2223, 2228 (2013) (internal
quotation marks, brackets, and citation omitted).
10
See 21 U.S.C. § 355(j)(2)(A)(iv); New York ex rel.
Schneiderman v. Actavis PLC, 787 F.3d 638, 645 (2d Cir.
2015) (hereinafter “Namenda”).
11
Namenda, 787 F.3d at 644.
10
These state substitution laws “either permit or require
pharmacists to dispense a therapeutically equivalent, lower-
cost generic drug in place of a brand drug absent express
direction from the prescribing physician that the prescription
must be dispensed as written.”12 Taken together, these laws
oftentimes make obtaining a prescription cheaper for the
consumer, and they can also prove to be highly profitable for
generic drug companies.13
As the Court of Appeals for the Second Circuit
recently noted in New York ex rel. Schneiderman v. Actavis
PLC (hereafter “Namenda”),14 Hatch-Waxman and state
substitution laws also reflect the fact that the pharmaceutical
market functions in a unique way.15 As the Namenda Court
put it, “[i]n a well-functioning market, a consumer selects and
12
Id. at 645.
13
See, e.g., New York v. Actavis, PLC, No. 14 Civ. 7473
(RWS), 2014 WL 7015198, at *8 (S.D.N.Y. Dec. 11, 2014);
Stacey B. Lee, Pliva v. Mensing: Generic Consumers’
Unfortunate Hand, 12 Yale J. Health Pol’y, L. & Ethics 209,
239 (2012) (noting role played by state substitution laws in
“help[ing] generic manufacturers earn above-average profit
margins”). Generic drugs are reported to have accounted for
over 80% of the prescriptions dispensed in 2014, see Amicus
Br. of FTC 6, and can save patients billions of dollars, see
Amici Br. of AARP et al. 6 (“In 2013 alone, generic
medications saved consumers $239 billion.”).
14
“Namenda” is the brand name for the prescription drug at
issue in that case. As the parties have done, we will therefore
refer to this case as “Namenda.”
15
787 F.3d at 645-46.
11
pays for a product after evaluating the price and quality of the
product.”16 In the prescription drug market, by contrast, the
doctor selects the drug, which creates a certain separation
between the buyer and the manufacturer.17 Moreover, in most
cases, a third-party, such as a health insurance company, pays
for the drug.18 As a result, consumer buying behavior may
have less of an impact on manufacturer pricing than it
otherwise would in a traditional open market.
With this regulatory and market framework in mind,
we turn to the facts in this case.
B. The Parties and Product Development
The parties in this case are manufacturers and sellers
of generic and name-brand pharmaceutical drugs worldwide.
Defendant Mayne is a pharmaceutical company
headquartered in Australia. Defendant Warner Chilcott acted
as a United States distributor of Mayne’s Doryx product, in
both name-brand and generic form, for a number of years.
Plaintiff Mylan, a generic drug manufacturer, began its effort
to produce a generic version of Doryx in 2003.
A form of Doryx had been on the market for many
years. In 1985, the FDA approved Mayne’s Doryx capsules,
an unpatented delayed-release version of doxycycline hyclate,
for sale to the public. In the meantime, using Warner as a
domestic sales channel, Mayne sold both branded and generic
versions of Doryx for many years in the United States, but the
16
Id. at 645.
17
Id. at 645-46.
18
Id. at 646.
12
effort did not prove to be fruitful. Faced with shrinking
profits in the early 1990s, Mayne contacted Warner to
strategically bolster the Doryx brand instead of focusing on
its generic version of the drug.
To sort out their strategy for growing the Doryx brand,
Mayne and Warner entered into a licensing agreement in
1997. Under the contract, they agreed to take certain steps to
bring a new Doryx product to the market. Mayne also agreed
to pull its generic version of Doryx from the market, and
Warner agreed to act as the exclusive distributor of Doryx in
the United States. Warner further agreed to market and
promote Doryx in return for the rights to all income from
domestic sales and to use Mayne as its exclusive
manufacturer and supplier. The parties also agreed to
develop a delayed release Doryx tablet, as opposed to the
capsule previously marketed, for Warner to sell in the United
States.
The FDA approved Defendants’ NDA for Doryx 75mg
and 100mg tablets in May 2005. Defendants then introduced
them to the market in September 2005 in an effort to
transition the market for Doryx capsules over to Doryx
tablets. As the District Court noted, it appears that
Defendants took a number of steps regarding the capsules
that, in conjunction, Mylan claims violated the Sherman Act.
In particular, Defendants:
(1) stopped selling the capsules to wholesalers;
(2) removed Doryx capsules from the Warner
Chilcott website; (3) worked with retailers to
“auto-reference” the Doryx tablet whenever a
doctor filed a Doryx prescription; (4) informed
wholesalers, retailers, and doctors that “Doryx
13
Capsules have been replaced by Doryx
Tablets”; (5) destroyed some of their remaining
capsule inventory; and (6) bought back some
portion of the remaining capsule inventory.19
Mylan refers to these steps as a “hard switch” from capsules
to tablets and claims that this was done in an effort to stifle
generic competition.20
Beginning in 2007, Defendants made a number of
other changes to the existing Doryx product and thereafter
pulled older versions from the market. Each of these changes
would have required generic manufacturers to file, and await
approval of, a new ANDA demonstrating the similarities
between their product and the reformulated Doryx product in
order to continue selling generics that were AB-rated to the
newest Doryx product.
First, Defendants worked to develop a 150mg strength
Doryx tablet, in contrast to the previously available 75mg and
100mg tablets. The 150mg tablet would have a “score,”
which the District Court described as “a groove running
across the tablet’s surface.”21 The score would allow a patient
to divide a 150mg Doryx tablet into two 75mg doses if the
19
Mylan Pharm., Inc. v. Warner Chilcott Pub. Co., No. 12-
3824, 2015 WL 1736957, at *3 (E.D. Pa. Apr. 16, 2015)
(record citations omitted).
20
See Mylan Br. 11, 42 (referring to Defendants’ conduct of
pulling the Doryx capsule from the market, destroying
existing supplies, and introducing the Doryx tablet as a “hard
switch”).
21
Mylan Pharm., 2015 WL 1736957, at *3.
14
patient, for instance, needed to self-adjust dosing based on
sensitivity, doctor recommendation, or for any other reason.
Defendants sought FDA approval for the 150mg single-
scored tablet in December 2007, it was approved by the FDA
in June 2008, and Defendants thereafter began marketing the
tablet.
Soon after, Defendants turned their focus from
marketing the unscored 75mg and 100mg tablets to marketing
the 150mg single-scored tablet. Like the 150mg tablets, they
then added a score to the 75mg and 100mg unscored Doryx
tablets. The FDA approved the 75mg and 100mg scored
tablets in early 2009.
Defendants then made another change to the Doryx
150mg tablet in 2010 by adding a second score line to the
tablet. This dual-scored tablet could be split into two or three
pieces, further enhancing a patient’s ability to control self-
dosing. After Defendants submitted their application for the
dual-scored 150mg tablet to the FDA in February 2011, they
then pulled the 75mg and 100mg single-scored Doryx tablets
from the market. Then, after receiving approval in fall 2011
for the dual-scored 150mg tablet, Defendants stopped
distributing single-scored 150mg tablets, just as they had
done with the 75mg and 100mg single-scored tablets.
All told, it appears that Defendants made four critical
changes to Doryx, all of which required generics to apply for
AB-rating if they wanted to continue to benefit from state
15
substitution laws.22 These modifications spurred this
litigation.
C. Mylan’s Efforts to Compete
with Warner and Mayne Using
Generic Doryx
It is also important to our discussion to note Mylan’s
parallel efforts to effectively compete with Defendants when
they made each of the above-mentioned changes to name-
brand Doryx. In particular, these efforts will be relevant to
our discussion of whether Defendants’ product changes had
exclusionary effects on generic competition.
The capsule version of Doryx was unpatented for the
first nineteen years after Mayne introduced Doryx to the
market. During that period, another generic manufacturer,
Sandoz, created its own generic version of the capsule.
Mylan did not begin developing a generic Doryx capsule until
April 2003. These efforts failed, however, and Mylan finally
gave up on trying to create a capsule for marketing and sale
around late 2005.
Instead of making a capsule, Mylan chose to develop
generic versions of 75mg and 100mg doxycycline hyclate
tablets. By September 2006, Mylan had created the formula
for a generic tablet and, in March 2008, it filed an ANDA for
approval. However, the FDA delayed its approval when
Defendants’ scored version of Doryx was released, because,
22
In April 2013, Defendants introduced a 200mg Doryx
tablet as a treatment for chlamydia, a sexually transmitted
disease. The 200mg tablet was not approved by the FDA for
acne treatment, unlike the previous versions of the drug.
16
among other complications, Mylan was then required, in
accordance with FDA regulations, to alter its original tablet
design to achieve an AB rating. The FDA finally approved
Mylan’s scored 75mg and 100mg generic tablets in December
2010, by which time Defendants were focused on marketing
their single scored-version of the 150mg tablets. At that time,
the FDA had, nonetheless, granted Mylan 180 days of
exclusive selling rights for its generic version of the tablet,
allowing Mylan to profit without any generic competition.
Finally, Mylan created a generic version of
Defendants’ 150mg single-scored tablet in late 2008, and the
FDA granted approval of the drug in February 2012. By that
point, however, Defendants had already received approval for
their dual-scored 150mg tablet and were focused on
marketing that version of the drug. This suit followed.
D. The Underlying Litigation
Mylan filed this lawsuit in July 2012, alleging
violations of §§ 1 and 2 of the Sherman Act.23 It also asserted
a claim for tortious interference with contractual relations
under Pennsylvania law. The crux of Mylan’s complaint is
that Defendants’ product changes had “little or no therapeutic
benefit,”24 and that they served no purpose other than
preventing generics from obtaining the benefit of automatic
23
This case was quickly consolidated with parallel lawsuits
filed by other Plaintiffs. As noted, the other Plaintiffs settled
their cases, leaving only Mylan to litigate its claims against
Defendants.
24
JA 154.
17
substitution under Hatch-Waxman and various state laws.25
Mylan further claims that Defendants’ anticompetitive
“product hopping” strategy was designed to frustrate their
efforts to release a generic version of Doryx to the market.26
In support of its cross-motion for summary judgment before
the District Court, Mylan specifically argued that the
following four “hops” were anticompetitive:
(1) 2005 change from 75mg and 100mg capsules to
75mg and 100mg tablets;
(2) 2008 introduction of a single-scored 150mg tablet;
(3) 2009 addition of a single score to 75mg and 100mg
tablets; and
(4) 2011 change from single to dual score on the
150mg tablet.27
In granting Defendants’ motions for summary
judgment and denying Mylan’s cross-motion, the District
Court found, viewing the facts in the light most favorable to
Mylan, that Defendants had indeed made the Doryx “hops”
primarily to “delay generic market entry.”28 Nonetheless, the
court went on to conclude that Mylan’s antitrust claims failed
as a matter of law. With respect to the § 2 monopolization
claim, the District Court held that Mylan failed to muster
25
JA 178-80.
26
JA 154.
27
Mylan Pharm., 2015 WL 1736957, at *5.
28
Id.
18
sufficient evidence of Defendants’ monopoly power.29 It
rejected Mylan’s narrow view of the market – comprising
only branded and generic Doryx – and determined that the
relevant product market was a broader one, consisting of
name-brand Doryx and all oral tetracyclines prescribed to
treat acne.30 And, within this larger market, the District Court
found that Defendants’ market share was – at most – only
about 18%, an amount insufficient to show that Defendants
exercised monopoly power.31 The District Court stated:
In sum, Mylan has failed to produce
economically plausible evidence to prove that
Defendants hold monopoly power in the
relevant market. Nor has Mylan shown that
other factors might support finding that
Defendants exercise monopoly power in the
absence of predominant market share.32
As an alternative ground, the District Court also
granted summary judgment to the Defendants on both
Sherman Act claims because Mylan failed to put forth
sufficient evidence of anticompetitive conduct.33 The District
Court held that Defendants did not exclude competition when
they made product changes.34 In particular, it found that
29
Id. at *7-11.
30
Id.
31
Id. at *8.
32
Id. at *11.
33
Id. at *12-16.
34
Id.
19
Mylan was free to introduce a generic Doryx capsule any
time after 1985, but it failed to do so, and that Mylan
successfully introduced generic 75mg, 100mg, and 150mg
Doryx tablets.35 As the District Court observed:
Throughout 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.36
The District Court also concluded that Mylan had
failed to even attempt to market generic Doryx, “relying
instead on the ‘promotion’ provided by state automatic
substitution laws,”37 and that “Defendants have no duty to
facilitate Mylan’s business plan by keeping older versions of
branded Doryx on the market.”38 The District Court also
distinguished a number of key cases dealing with alleged
product hops, ultimately concluding that they were
procedurally inapplicable.39
35
Id. at *12.
36
Id. at *13.
37
Id.
38
Id. at *14.
39
Id. at *15 (citing Actavis, 2014 WL 7015198; In re
Suboxone (Buprenorphine Hydrochloride & Naloxone)
Antitrust Litig., 64 F. Supp. 3d 665, 682 (E.D. Pa. 2014);
Walgreen Co. v. AstraZeneca Pharm. L.P., 534 F. Supp. 2d
20
 Finally, the Court addressed a concern about turning
federal courts into innovation sufficiency tribunals, stating:
Adoption of Mylan’s theory of “anticompetitive
product redesign” could well have adverse,
unintended consequences. Any time a
pharmaceutical manufacturer changes the
formulation of a branded drug and so compels a
manufacturer to reformulate (or, as in the
instant case, formulate for the first time) its
generic, this could trigger a . . . burden-shifting
contest. Once the branded drug manufacturer
offered a procompetitive justification for the
product change that the generic manufacturer
could not rebut, courts and juries would have to
determine which product changes were
“sufficiently innovative” to justify their
anticompetitive effects. Mylan has failed to
offer an intelligible test of innovation
“sufficiency,” and I doubt that courts could ever
fashion one. Mylan’s theory also risks slowing
or even stopping pharmaceutical innovation.
The prospect of costly and uncertain litigation
every time a company reformulates a brand-
name drug would likely increase costs and
discourage manufacturers from seeking to
improve existing drugs.40
146, 151 (D.D.C. 2008); Abbott Labs. v. Teva Pharm. USA,
Inc., 432 F. Supp. 2d 408, 422 (D. Del. 2006)).
40
Id. at *15-16 (internal citations omitted).
21
After addressing Mylan’s Sherman Act claims, the
District Court also granted Defendants’ motions for summary
judgment on Mylan’s claim of tortious interference with
prospective contractual relations under Pennsylvania law,
concluding that the only alleged “interference” with
prospective customers was “privileged,” in the sense that
Pennsylvania law permits “competitors, in certain
circumstances . . . to interfere with others’ prospective
contractual relationships.”41 Mylan’s appeal followed.42
41
Id. at *17 (quoting Acumed LLC v. Advanced Surgical
Servs., Inc., 561 F.3d 199, 215 (3d Cir. 2009) (citation
omitted)).
42
We review a grant of summary judgment de novo and
apply the same standard as the District Court. Cosmetic
Gallery, Inc. v. Schoeneman Corp., 495 F.3d 46, 48 n.1 (3d
Cir. 2007). Summary judgment is appropriate when there is
no genuine issue of material fact and the movant is entitled to
judgment as a matter of law. Fed. R. Civ. P. 56(a).
Inferences drawn from the underlying facts must be viewed in
the light most favorable to the nonmoving party. Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587
(1986).
22
II. DISCUSSION
A. Sherman Act Claims
1. Mylan’s Section 2
Claims: Attempted and
Actual Monopolization
Because both the District Court and the parties’
arguments focus heavily on Mylan’s monopolization and
attempted monopolization claims under § 2, we will address
those claims first.43
43
As an initial matter, Defendants assert that Mylan lacks
antitrust standing, because Mylan suffered no antitrust injury.
(Defs.’ Br. 89-92.) Antitrust standing is a prudential
limitation, and we assess several factors to determine its
presence. See Ethypharm S.A. Fr. v. Abbott Labs., 707 F.3d
223, 232-33 (3d Cir. 2013). Specifically, we consider: (1) the
causal connection between an alleged antitrust violation and
harm to the plaintiff as well as the defendant’s intent to cause
that harm; (2) whether the plaintiff has suffered an injury of
the type the antitrust laws intend to redress; (3) the
“directness of the injury,” which seeks to preclude
“speculative” claims; (4) the existence of more direct victims
of the alleged violations; and (5) the potential for duplicative
recovery or “complex apportionment of damages.” Id. (citing
In re Lower Lake Erie Iron Ore Antitrust Litig., 998 F.2d
1144, 1165-66 (3d Cir. 1993)). We reject Defendants’
contention. Although we ultimately conclude that Mylan has
failed to create fact issues for a jury on any of its claims,
Mylan has offered at least some proof to satisfy each of these
elements. We therefore conclude that Mylan has antitrust
23
Section 2 of the Sherman Act “makes it unlawful to
monopolize, attempt to monopolize, or conspire to
monopolize, interstate or international commerce.”44 To
support a claim for actual monopolization, 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
historic accident.”45 By contrast, to succeed on a claim of
attempted monopolization under § 2, a plaintiff must prove
“(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.”46
We begin our analysis with the first element of
Mylan’s actual monopolization claim under § 2: Defendants’
possession of monopoly power in the relevant market.
standing. See also W. Penn Allegheny Health Sys., Inc. v.
UPMC, 627 F.3d 85, 102 (3d Cir. 2010) (noting that
“competitors in the restrained market” are among those
capable of satisfying the antitrust-injury requirement).
44
Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 306 (3d
Cir. 2007) (citing 15 U.S.C. § 2).
45
Id. at 307 (quoting United States v. Grinnell Corp., 384
U.S. 563, 570-71 (1966)).
46
Id. at 317 (quoting Crossroads Cogeneration Corp. v.
Orange & Rockland Utils., Inc., 159 F.3d 129, 141 (3d Cir.
1998)).
24
Monopoly power can be demonstrated through direct or
indirect evidence.47 Mylan has provided neither.
a. Direct Evidence of
Monopoly Power
We have previously stated in Broadcom Corp. v.
Qualcomm, Inc. that monopoly power is “the ability to
control prices and exclude competition in a given market.”48
We also stated there that, “[i]f a firm can profitably raise
prices without causing competing firms to expand output and
drive down prices, that firm has monopoly power,”49 and
therefore “[t]he existence of monopoly power may be proven
through direct evidence of supracompetitive prices and
restricted output.”50 However, we have elsewhere
emphasized that direct evidence of monopoly power to prove
one’s claims is only “rarely available.”51 And, to support a
claim that a defendant set supracompetitive prices through
direct evidence, a plaintiff must often provide an analysis of
the defendant’s costs, showing both that the defendant had an
47
Id. at 307.
48
Id.
49
Id.
50
Id.
51
Harrison Aire, Inc. v. Aerostar Int’l, Inc., 423 F.3d 374,
381 (3d Cir. 2005) (quoting United States v. Microsoft Corp.,
253 F.3d 34, 51 (D.C. Cir. 2001) (en banc)).
25
“abnormally high price-cost margin” and that the defendant
“restricted output.”52
To determine whether Mylan has offered the “rare”
form of direct evidence of monopoly power, we must first
examine whether the record includes any proof of
Defendants’ market power based on supracompetitive pricing
or restricted output.53 To support such a claim, Mylan relies
heavily on its own expert testimony.
Here, in noting that Mylan failed to establish
monopoly power, the District Court concluded:
Mylan has not made a serious effort to present
direct evidence of Defendants’ monopoly
power. To begin, Mylan offers no evidence of
Defendants’ “price-cost margins” for Doryx,
nor does it explain whether those margins were
abnormally high. Mylan’s economic expert, Dr.
Rubenfeld, elected to forego any analysis of
52
Geneva Pharm. Tech. Corp. v. Barr Labs., Inc., 386 F.3d
485, 500 (2d Cir. 2004).
53
Mylan contends that we should look to its proffered expert
testimony to conclude that Defendants exercised monopoly
power even in the absence of clear evidence of
supracompetitive prices or restricted output. We disagree.
See Broadcom Corp., 501 F.3d at 307; see also Eastman
Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 464
(1992) (stating that “[m]arket power is the power ‘to force a
purchaser to do something that he would not do in a
competitive market’” (quoting Jefferson Parish Hosp. Dist.
No. 2 v. Hyde, 466 U.S. 2, 14 (1984))).
26
Defendants’ margins because, as he opined,
other available evidence of monopoly power
was “more compelling,” and margins are
“difficult to measure” and “imperfect indicators
of market power.” Dr. Rubenfeld nonetheless
states that at least some of Defendants’ data
suggested a margin of 83% in the second
quarter of 2006–without explaining whether
that figure is abnormally high. Regardless of
whether or not evidence of Defendants’
marginal and fixed costs was “compelling” or
“difficult to measure,” it is still required to
prove monopoly power directly. Mylan has not
made such a showing. Mylan also fails to show
that Defendants restricted Doryx output to
maintain monopoly profits, and fails to discuss
the quantity of Doryx Defendants manufactured
during the relevant period. In these
circumstances, Mylan has not presented
plausible direct evidence of market power.54
We agree with the District Court’s analysis. We have
held that expert testimony in support of summary judgment
that contains only “general and theoretical observations and
[which] is not tied to evidence in the record” can be
“disregard[ed].”55 As the District Court correctly observed,
Mylan’s expert reports are devoid of any substantiated
quantitative analysis showing that Defendants maintained
54
Mylan Pharm., 2015 WL 1736957, at *7 (internal citations
and record citations omitted).
55
Mass. Sch. of Law at Andover, Inc. v. Am. Bar Ass’n, 107
F.3d 1026, 1040 (3d Cir. 1997).
27
high price-cost margins or that Defendants markedly
restricted output. And, to the extent that Mylan’s experts
offered any such conclusions, they were largely theoretical in
nature. Accordingly, Mylan has failed to provide direct
evidence of monopoly power.
b. Indirect Evidence of
Monopoly Power
The second and more common way that a party may
prove monopoly power is by providing indirect evidence,
which includes “structural evidence of a monopolized
market.”56 To support a claim of monopoly power through
indirect evidence, Mylan must show that (1) Defendants had
market power in the relevant market and (2) that there were
barriers to entry into the market.57
“Proving the existence of monopoly power through
indirect evidence requires a definition of the relevant
56
Harrison Aire, 423 F.3d at 381 (internal citations and
quotations omitted); see also United States v. Dentsply Int’l,
Inc., 399 F.3d 181, 187 (3d Cir. 2005) (stating that direct
proof is “only rarely available, [and] courts more typically
examine market structure in search of circumstantial evidence
of monopoly power” (internal quotation marks omitted)).
57
Broadcom Corp., 501 F.3d at 307 (citing Microsoft Corp.,
253 F.3d at 51). The relevant market determination typically
has both product and geographic components. See Borough
of Lansdale v. Phila. Elec. Co., 692 F.2d 307, 311 (3d Cir.
1982). Defendants do not contest Mylan’s expert’s
conclusion that the relevant geographic market is the United
States. We therefore focus solely on the product component.
28
market,”58 and “[t]he scope of the market is a question of fact
as to which the plaintiff bears the burden of proof.”59 The
question in this case, as in others, is whether the relevant
market consists only of the defendants’ product and the
plaintiff’s product, or whether the market comprises third-
party products as well. To determine if two products are in
the same market, we ask “if they are readily substitutable for
one another,” an inquiry that requires us to assess “the
reasonable interchangeability of use between a product and its
substitute.”60 We also look to their cross-elasticity of
demand, which is defined as “[a] relationship between two
products, usually substitutes for each other, in which a price
change for one product affects the price of the other.”61
Here, Mylan argues that the relevant market consists of
generic Doryx and name-brand Doryx and that, within this
market, Defendants allegedly maintained 100% of sales until
generics entered.62 We reject Mylan’s position and agree
with the District Court’s conclusion that the market was much
broader and consisted of all oral tetracyclines prescribed to
58
Broadcom Corp., 501 F.3d at 307 (internal footnote
omitted) (citing SmithKline Corp. v. Eli Lilly & Co., 575 F.2d
1056, 1062-63 (3d Cir. 1978)).
59
Id. (citing Queen City Pizza Inc. v. Domino’s Pizza, Inc.,
124 F.3d 430, 436 (3d Cir. 1997)).
60
Id. (citing Brown Shoe Co. v. United States, 370 U.S. 294,
325 (1962)).
61
Black’s Law Dictionary 458 (10th ed. 2014).
62
Mylan Pharm., 2015 WL 1736957, at *8.
29
treat acne, a market in which Defendants’ market share never
exceeded approximately 18%.
i. Interchangeability
To define the relevant market, we first consider the
extent to which Defendants’ product is interchangeable with
alternative products in the field.63 The term
“‘[i]nterchangeability’ implies that one product is roughly
equivalent to another for the use to which it is put.”64 It also
means that “while there might be some degree of preference
for . . . one [product] over the other, either would work
effectively.”65
As the District Court accurately observed:
The record abounds with uncontradicted
evidence . . . confirming and reconfirming the
interchangeability of Doryx with other oral
tetracyclines. There is a consensus among
dermatologists that all oral tetracyclines treat
acne with similar effectiveness and so are
interchangeable for that purpose. The FDA has
approved virtually identical labeling for most of
these drugs, stating that in cases of “severe
63
See Eastman Kodak Co., 504 U.S. at 482 (discussing how
the interchangeability of products affects the definition of the
relevant market).
64
Allen-Myland, Inc. v. Int’l Bus. Machs. Corp., 33 F.3d 194,
206 (3d Cir. 1994).
65
Id.
30
acne” the drugs “may be useful adjunctive
therapy.”66
To further undercut Mylan’s position regarding
interchangeability, and consistent with the underlying purpose
of Hatch-Waxman and state substitution laws, health insurers
and other managed care providers encouraged the widespread
substitution of numerous other oral tetracyclines for Doryx.
As the District Court stated:
Managed care organizations have sought to
constrain patients to substitute Doryx with
other, less costly tetracyclines to treat acne.
Some organizations have removed Doryx as a
reimbursable medication; others have limited
any reimbursement. A number of managed care
organizations sent notices to healthcare
providers urging them to substitute other oral
tetracyclines for Doryx.67
Clearly, those in the managed care field acknowledged
that other, more affordable tetracyclines were fully
substitutable for Doryx. Moreover, products need not be
perfectly fungible to be considered reasonably
68
interchangeable for market-definition purposes. With all of
this in view, Mylan simply cannot escape the conclusion that
66
Mylan Pharm., 2015 WL 1736957, at *9 (record citations
omitted).
67
Id. at *9 (record citations omitted).
68
DSM Desotech Inc. v. 3D Sys. Corp., 749 F.3d 1332, 1339-
40 (Fed. Cir. 2014).
31
a high level of product interchangeability existed between
Doryx and other oral tetracyclines prescribed to treat acne.
ii. Cross-elasticity of Demand
Interchangeability is only one aspect of establishing a
relevant antitrust market through indirect evidence. In
addition to evidence establishing Doryx’s interchangeability,
Defendants also point to their own unrebutted expert evidence
showing cross-elasticity of demand between Doryx and other
tetracyclines. This indirect evidence, they claim, further
suggests that Defendants did not maintain monopoly power in
the relevant market.
“Cross-elasticity of demand is a measure of the
substitutability of products from the point of view of buyers.
More technically, it measures the responsiveness of the
demand for one product [X] to changes in the price of a
different product [Y].”69 So, for example, if we were to find
that the Doryx market consisted, as Mylan proposes, only of
name-brand Doryx and its generic counterpart, the cross-
elasticity of demand between Doryx and other oral
tetracyclines prescribed to treat acne would be very small,
showing that Doryx’s price changes had no effect on patient
demand for those drugs. Here, as the District Court correctly
noted, the opposite is true, as the undisputed evidence
demonstrates that “when Defendants increased the price of
69
Queen City Pizza, Inc., 124 F.3d at 438 n.6 (quoting E.
Thomas Sullivan and Jeffrey L. Harrison, Understanding
Antitrust and its Economic Implications 217 (1994)).
32
Doryx, its sales decreased and the sales of other oral
tetracyclines increased.”70
More specifically, Defendants offered unrebutted
expert testimony, including detailed statistical analyses,
showing that demand for other generics rose in response to
certain of Defendants’ strategic marketing and sales
decisions. Most convincingly, we view the customer
response to the various changes in Doryx’s prescription
couponing scheme, which at times made Doryx more
expensive than generics for consumers, as a strong indication
of the existence of cross-elasticity.71 In particular, this
evidence demonstrated that Defendants responded to the
market’s reaction to their prices with sales promotions in an
effort to increase their ability to compete with other
tetracyclines. It also showed that when Defendants increased
the price of Doryx, its sales decreased, and the sales of other
tetracyclines increased. Moreover, Mylan offered no
quantitative analyses to rebut these conclusions, but rather
simply relied on its own expert’s theoretical views on cross-
elasticity. Given that Mylan carried the burden of proof in
defining the market, its evidence was insufficient to create a
jury question in light of Defendants’ showing of cross-
elasticity of demand.
In sum, given the high degree of interchangeability and
cross-elasticity demonstrated in the record, we agree with the
70
Mylan Pharm., 2015 WL 1736957, at *10.
71
For instance, the reports measured the demand between
Doryx and at least “Adoxa, generic immediate release
doxycycline hyclate, and generic immediate-release
doxycycline monohydrate.” Id.
33
District Court that the relevant market consisted of Doryx and
other oral tetracyclines prescribed to treat acne. And, within
that market, we generally require a plaintiff alleging antitrust
injury under Section 2 to show that Defendants maintained a
market share “significantly larger than 55%” to establish
antitrust liability.72 However, Defendants’ market share in
the oral tetracycline market was relatively small. It never
exceeded 18%.
c. Anticompetitive Conduct
Although the District Court acknowledged that its
finding with respect to monopoly power resolved the § 2
monopolization claims, the Court went on to address
anticompetitiveness because it was necessary to resolve the
remaining claims. The District Court concluded that
Defendants’ “product hopping” strategy was not
anticompetitive. Mylan contends that the District Court erred
in its analysis, specifically with respect to whether
Defendants’ product changes barred Mylan from taking
advantage of state substitution laws. Mylan further claims
that this case is indistinguishable from the Second Circuit’s
decision in Namenda and that Defendants’ conduct was
72
Dentsply, 399 F.3d at 187. In the absence of sufficient
market share, we have, nonetheless, held that other factors
may indicate the presence of monopoly power, including
“size and strength of competing firms, freedom of entry,
pricing trends and practices in the industry, ability of
consumers to substitute comparable goods, and consumer
demand.” Id. (citations omitted). Having reviewed the
record, we conclude that none of those factors are present
here.
34
undoubtedly anticompetitive. We discern no error in the
District Court’s conclusion and reject Mylan’s contentions.
We have stated that “[a]nticompetitive conduct may
take a variety of forms, but it is generally defined as conduct
to obtain or maintain monopoly power as a result of
competition on some basis other than the merits.”73
Moreover, it is clear that the Sherman Act “directs itself not
against conduct which is competitive, even severely so, but
against conduct which unfairly tends to destroy competition
itself.”74
In addressing allegations of anticompetitive conduct
based on Defendants’ product hops, the District Court
properly applied the “rule of reason” burden-shifting
framework set forth by the D.C. Circuit in United States v.
Microsoft Corp.75 Under that framework, the party seeking to
impose liability must initially provide evidence of the
anticompetitive nature of a defendant’s conduct.76 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.”77 In conducting this analysis, we
73
Broadcom Corp., 501 F.3d at 308 (citations omitted).
74
Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 458
(1993).
75
253 F.3d 34 (D.C. Cir. 2001) (en banc).
76
Namenda, 787 F.3d at 652 (citing Microsoft Corp., 253
F.3d at 58-60).
77
Id. (quoting Microsoft Corp., 253 F.3d at 58-59).
35
first consider whether Mylan produced evidence of
Defendants’ anticompetitive conduct. The District Court
concluded that Mylan failed on this front, and we agree.78
While product hopping under certain circumstances may be
viewed as anticompetitive conduct, this is not one of those
cases. As we explain, Mylan was not foreclosed from the
market.
Doryx capsules were available for more than twenty
years, and generic companies were free to engineer their own
versions during that time. At least one did, but not Mylan.79
Moreover, the record demonstrates that Mylan received 180
days of exclusive rights to market and sell its 75mg and
100mg tablets once approved, giving Mylan a significant leg
up on generic competitors. And the undisputed evidence
shows that Mylan set its tablet prices higher than the price of
branded Doryx for at least some period of time. Finally, it is
78
See Mylan Pharm., 2015 WL 1736957, at *12.
79
The District Court was persuaded by the fact that Mylan
chose to forego more aggressive research and development,
marketing, and sales efforts. See, e.g., id. at *13. We realize
that it may not necessarily be cost-effective for generic
manufacturers to promote their products with the same level
of investment as their name-brand counterparts and that
Hatch-Waxman seems to provide generics the means to
participate in the market without necessarily promoting their
products in their same way that name-brand manufacturers
do. Nonetheless, as the District Court noted, Mylan is one of
the largest generic pharmaceutical companies in the world,
recording nearly $6.13 billion in revenue in 2011. Id. at *1.
It is therefore difficult to perceive Mylan as a “David” and
Defendants as “Goliath” in these circumstances.
36
clear that Mylan reaped generous profits from its sale of the
generic tablet, in the amount of $146.9 million. Thus, far
from being harmed by Defendants’ product changes, Mylan
was advantaged in the generic market by its 180-day
exclusivity period and ability to profit generously while
raising prices. In sum, we agree with the District Court that
Mylan failed to satisfy its burden of demonstrating that
Defendants engaged in anticompetitive conduct prohibited by
the Sherman Act, thereby failing on the first prong of the
Microsoft Corp. test.80
But even if we were to assume that the first prong of
the test was met, Defendants have offered strong evidence of
non-pretextual purposes for their various product changes.
First, it is clear from the record that doxycycline capsules had
been linked with esophageal problems. The capsule version
of the drug was ultimately banned in France and Sweden, and
Defendants faced a products liability lawsuit in Michigan
regarding the same problems. Second, the record clearly
demonstrates that Doryx experienced shelf-life stability
problems, which in 2002 resulted in a largescale recall of
Doryx capsules. Third, Defendants introduced different
dosages for Doryx largely in response to the actions of their
competitors. For instance, Defendants offered evidence that
their decision to introduce the 150mg tablet was in response
80
To be sure, we recognize that there are a number of
documents that suggest that Defendants were, at least in part,
focused on protecting their name-brand franchise. While
these documents may imply that Defendants were motivated
by an intent to compete with generics, the evidence
nonetheless demonstrates that Defendants’ product
modifications had no anticompetitive effects on the market.
37
to the fact that both Adoxa and Solodyn, tetracyclines
prescribed to treat acne, were offered in a variety of dosages.
Defendants also offered evidence of a non-pretextual
justification when they proposed the scoring modifications:
an ability for consumers to more effectively self-dose at
patient-specific levels.
We are also cognizant of the Second Circuit’s
reasoning in Namenda, which Mylan relies on heavily in its
briefs. However, we find Namenda to be factually and
procedurally distinguishable from this case.
In Namenda, which was decided a few weeks after the
District Court’s decision in this case, the Second Circuit
affirmed a preliminary injunction in favor of the plaintiff, the
State of New York, forcing the defendants, name-brand drug
manufacturers, to keep an old version of Namenda IR, a
prescription drug used to treat dementia, on the market for a
period of time before introducing the new drug (Namenda
XR).81 Namenda involved the defendants’ attempts to avoid
a “patent cliff” – the end of patent exclusivity, corresponding
to the brand drug’s loss of market share – by stringing
together new periods of patent exclusivity in order to
completely bar generics from entering the market. It was
alleged that the defendants did so by introducing changes to
their product to delay the expiration of their patent.82
Here, there were no patent cliffs on the horizon, and
the evidence demonstrates that there were plenty of other
competitors already in the oral tetracycline market.
81
Namenda, 787 F.3d at 649-50, 663.
82
Id. at 647-48.
38
Moreover, as Defendants correctly note in their brief, a
lawyer for the State of New York in Namenda specifically
stated that Mylan’s case against the Defendants here, pending
at the time, was distinguishable from New York’s theory in
Namenda.83 Echoing this sentiment, the Namenda Court
itself also persuasively distinguished this case, citing it as an
example of a situation in which there was no evidence of
consumer coercion, because generics “had already entered the
market at the time of defendants’ product reformulation.”84
Perhaps more importantly, the Second Circuit’s decision in
Namenda merely upheld a preliminary injunction, unlike this
case, which proceeded through full discovery and resulted in
a robust record void of any evidence of anticompetitive
conduct.85
Mylan also cites a number of other procedurally
inapposite cases in which courts have addressed product
hopping claims at the motion-to-dismiss stage and allowed
them to proceed against name-brand drug manufacturers.86
Just as the courts did in those cases, here, the District Court
allowed Mylan’s claims to proceed against Defendants after
83
Defs.’ Br. 4 (citing Dasgupta Letter 1-2, Namenda, 787
F.3d 638 (2d Cir. 2015) (No. 14-4624), ECF No. 324).
84
Namenda, 787 F.3d at 652 n.23 (citing Mylan Pharm., 2015
WL 1736957, at *13).
85
Indeed, the parties have provided the court with 21
appendices of discovery material, consisting of nearly 15,000
pages.
86
See Suboxone, 64 F. Supp. 3d at 681-82; TriCor, 432 F.
Supp. 2d at 422.
39
denying their motions to dismiss.87 However, after a period
of exhaustive discovery, the District Court thoroughly
reviewed the record and concluded that Mylan failed to create
triable issues of material fact to save any of its Sherman Act
claims.
To be clear, we do 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. Thus, after
applying the Microsoft Corp. framework, courts may need to
consider a number of additional, non-exhaustive 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.88 Moreover, courts
87
See generally Mylan Pharm., Inc. v. Warner Chilcott Pub.
Co., No. 12-3824, 2013 WL 5692880 (E.D. Pa. June 12,
2013).
88
Indeed, Congress could have chosen to bar or significantly
restrict name-brand drug manufacturers from making changes
that would delay generic entry, but it did not do so. See Teva
Pharm. Indus. Ltd. v. Crawford, 410 F.3d 51, 54 (D.C. Cir.
2005) (“Because the balance struck between these competing
goals is quintessentially a matter for legislative judgment, the
court must attend closely to the terms in which the Congress
expressed that judgment.”); Tri-Bio Labs. Inc. v. United
States, 836 F.2d 135, 139 (3d Cir. 1987) (Hatch-Waxman
reflects a “statutory compromise of . . . competing concerns”).
40
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.89 With all of this said, 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.
Of course, we need not reach these additional factors
because we are not presented with such a close call. Here,
Mylan’s claims fail under a straightforward application of the
Microsoft Corp. framework because Mylan has failed to
produce evidence that Defendants’ conduct was
anticompetitive. Because Mylan’s § 2 claims each require a
showing of anticompetitive conduct in addition to monopoly
power, we will therefore affirm the District Court’s grant of
summary judgment to Defendants on those claims.90
89
A court may also consider whether a so-called “patent cliff”
is indicative of anticompetitive conduct, especially when a
defendant’s actions are paired with weak or inconsistent
evidence of procompetitive justifications.
90
Mylan also argues, alternatively, that Doryx is an antitrust
“submarket” within the market for tetracyclines. We
disagree. As noted, the evidence shows that Doryx is
interchangeable with a wide variety of other tetracyclines. It
therefore cannot be argued that the public recognizes Doryx
as a distinct submarket within the class of tetracyclines.
Brown Shoe Co., 370 U.S. at 325 (a submarket’s boundaries
are determined by “such practical indicia as industry or public
41
2. Mylan’s Section 1 Claim: Illegal
Restraint of Trade
Mylan also argues that the District Court erred by
granting Defendants’ motions for summary judgment as to
Mylan’s §1 illegal restraint of trade claim based on the
District Court’s finding that Mylan produced insufficient
evidence of Defendants’ anticompetitive conduct. We reject
Mylan’s contention.
Section 1 of the Sherman Act prohibits “[e]very
contract, combination in the form of trust or otherwise, or
conspiracy, in restraint of trade or commerce.”91 “To
establish a [S]ection 1 violation, a plaintiff must prove: (1)
concerted action by the defendants; (2) that produced
anticompetitive effects within the relevant product and
geographic markets; (3) that the objects of the conduct
pursuant to the concerted action were illegal; and (4) that it
was injured as a proximate result of the concerted action.”92
As discussed above, Mylan has failed to prove that
Defendants’ product hops were anticompetitive, as required
under the second element of this test.93 Thus, the District
recognition of the submarket as a separate economic entity,
the product’s peculiar characteristics and uses, unique
production facilities, distinct customers, distinct prices,
sensitivity to price changes, and specialized vendors”).
91
15 U.S.C. § 1.
92
Petruzzi’s IGA Supermarkets, Inc. v. Darling-Del. Co., 998
F.2d 1224, 1229 (3d Cir. 1993).
93
We have thoroughly reviewed the parties’ remaining
arguments, including Mylan’s contentions relating to its
42
Court properly granted Defendants’ motions for summary
judgment on Mylan’s Sherman Act Section 1 claim.
III. CONCLUSION
For substantially the same reasons set forth in the
District Court’s thorough and persuasive opinion, we will
affirm the judgment of the District Court.
tortious interference with prospective contractual relations
claim under Pennsylvania law and its Daubert objections, and
conclude that they are without merit.
43