Iron Workers District Council of New England Health and Welfare Fund v. Teva Pharmaceutical Industries Ltd.

United States District Court

District of Massachusetts

)

Iron Workers District Council of )

New England Health and Welfare Fund )

et al., on behalf of themselves and )

others similarly situated )

) Civil Action No.

Plaintiffs, ) 23-11131-NMG

)

v. )

)

Teva Pharmaceutical Industries Ltd. )

et al., )

)

Defendants. )

)

MEMORANDUM & ORDER

GORTON, J.

The suit arises out of allegations that defendants, Teva

Pharmaceutical Industries, Ltd., Teva Pharmaceuticals USA, Inc.,

Teva Branded Pharmaceutical Products R&D, Inc. (collectively,

“Teva”) and Norton (Waterford) Ltd. (“Norton” and collectively,

“defendants”), have engaged in illegal, anti-competitive

practices to block introduction of a generic drug which competes

with its QVAR and QVAR Redihaler lines of inhaler products.

Plaintiffs are health and welfare funds of labor unions

representing a putative class of entities and individuals that

have allegedly overpaid for prescription asthma medication as a

result of the purported anti-competitive practices.

Currently pending before the Court is defendants’ motion to

dismiss (Docket No. 39). For the reasons that follow, the

motion will be allowed, in part, and denied, in part.

I. Background

A. Regulatory Background

Plaintiffs allege that Teva has created artificial barriers

to prevent generic competition with its QVAR inhaler products.

Generic drugs are biologically equivalent to and yet

considerably cheaper than their brand-name counterparts. See

Impax Laboratories, Inc. v. FTC, 994 F.3d 484, 488 (5th Cir.

2021).

The Drug Price Competition and Patent Term Restoration Act

of 1984, 98 Stat. 1585, more commonly known as the Hatch-Waxman

Act, incentivizes market entry of generics by streamlining the

Food and Drug Administration (“FDA”) approval process. To gain

approval to market a new drug, drug manufacturers must submit a

New Drug Application (“NDA”) to the FDA and undergo a lengthy

testing process. See 21 U.S.C. § 355(b)(1).

Generic drug manufacturers can, however, file an

Abbreviated New Drug Application (“ANDA”), see 21 U.S.C.

§ 355(j), whereby the manufacturer is called upon to establish

that the generic drug has the same active ingredients and is

biologically equivalent to the brand drug. New York ex rel.

Schneiderman v. Actavis PLC (“Namenda”), 787 F.3d 638, 644 (2d

Cir. 2015)). A generic drug is biologically equivalent to a

brand drug when, under similar experimental conditions, the

active ingredient is absorbed at the same rate and to the same

extent. See 21 U.S.C. § 355(j)(8)(B)(i). In effect, the Hatch-

Waxman Act enables generic competitors to “piggy-back on the

pioneer[] [drug’s] approval efforts,” expediting the

introduction of generic drugs. FTC v. Actavis, Inc., 570 U.S.

136, 142 (2013).

The Hatch-Waxman Act also contains provisions for resolving

patent disputes arising from the introduction of generics. FDA-

approved drugs and related patent information are listed in what

is colloquially known as “the Orange Book.” See Approved Drug

Products with Therapeutic Equivalence Evaluations (Orange Book),

U.S. FOOD & DRUG ADMIN., https://www.fda.gov/drugs/drug-approvals-

and-databases/approved-drug-products-therapeutic-equivalence-

evaluations-orange-book (last updated Apr. 12, 2024). Drug

manufacturers are not, however, allowed to list all drug-related

patents in the Orange Book. Rather, the FDA requires that

manufacturers list only patents that claim “the drug substance,

drug product (composition / formulation), or one or more methods

of using the drug for which it is listed.” In re Lantus Direct

Purchaser Antitrust Litig., 950 F.3d 1, 4 (1st Cir. 2020)

(internal quotations omitted); see also 21 C.F.R. §

314.5(c)(2)(i). The FDA has disclaimed monitoring the Orange

Book for accuracy and drug manufacturers must declare that

listed patents meet the definition in the regulation.

When a generic manufacturer submits an ANDA, it must make

certifications with respect to the patents of the branded drug

that are listed in the Orange Book. For the relevant patents, a

generic manufacturer can certify that 1) the patent has expired,

2) the generic manufacturer will wait for the patent to expire

before marketing the generic drug or 3) that the patent will not

be infringed by the introduction of the generic. See 21 U.S.C.

§ 355(b)(2)(A)(i)–(iv). The third option is referred to as a

“Paragraph IV certification.” See In re Lantus Direct Purchaser

Antitrust Litig., 950 F.3d at 4.

A Paragraph IV certification compels the resolution of

patent disputes before a generic drug comes to market. The

filing of a Paragraph IV certification enables the patentholder

(i.e. the brand drug manufacturer) to sue the generic competitor

for infringement without exposing the generic competitor to

potential damages. Id. If such a suit is commenced within 45

days of receipt of a Paragraph IV certification, an automatic

30-month stay of FDA approval of the generic is triggered. 21

U.S.C. § 355(c)(3)(C). The stay can be shortened by resolution

of the action or by court order. Id. The first generic

manufacturer to file an ANDA with a Paragraph IV certification

is granted 180 days of exclusivity to market the drug. 21 U.S.C.

§ 355(j)(5)(B)(iv).

B. Factual Background

This case concerns Teva’s prescription asthma treatment

products, known as QVAR and QVAR Redihaler. Those products

contain beclomethasone dipropionate, a corticosteroid, as well

as a hydrofluoroalkane (“HFA”), an aerosol propellant. Teva

acquired the rights to QVAR in 2006.

The complaint alleges that beginning in 2014, the year

before the last patent claiming beclomethasone dipropionate was

to expire, Teva began a multifaceted scheme to delay generic

competition to QVAR for as long as possible. The scheme

purportedly has four components: 1) product hops, 2) improper

Orange Book listings, 3) a reverse payment and 4) sham

litigation.

In the pharmaceutical context, a “product hop” is an

introduction and transition to a new drug product. A product

hop may take the form of a “soft switch,” which generally is

deemed to be legal for antitrust purposes or a “hard switch,”

which is not. See In Re Asacol Antitrust Litigation, 233 F.

Supp. 3d at 269.

An alleged hard switch may be impermissibly coercive due to

the operation of state substitution laws. Such laws

permit or require pharmacists to dispense a

therapeutically equivalent, lower-cost generic drug in

place of a brand drug

unless a prescribing physician directs the pharmacist to

dispense the prescription as written. Namenda, 787 F.3d 638 at

645. Substitution laws exist in all 50 states, id. at 644, but

in most states, substitution is permitted, only if two drugs are

both biologically and therapeutically equivalent. Id.

Therapeutic equivalence typically requires that the two drugs

have the same active ingredients, dosage form, strength and

routes of administration. Id.

A “hard switch” product hop occurs when a manufacturer

removes a brand drug from the market just prior to patent

expiration, thus forcing consumers to switch onto a new drug

product before the generic entry. The hard switch thus

“deprive[s] potential generic manufacturers a prescription base

for their generic version of the now-removed drug.” In Re Asacol

Antitrust Litigation, 233 F. Supp. 3d at 256 (citing Namenda,

787 F.3d at 648). When a generic drug comes to market after a

hard switch, the brand drug cannot be automatically substituted

for the generic at the pharmacy counter.

By contrast, a “soft switch” involves the introduction of a

new product but the original product is left on the market prior

to the generic entry. See Namenda, 787 F.3d at 654-55. Thus,

consumer choice is left intact as well as a base of patients for

whom a newly approved generic can automatically be switched.

According to the complaint, in 2003, the FDA issued

guidance requiring all new, metered-dose inhaler products to

include a dose counter. The guidance, however, purportedly

exempted inhalers already in the market, such as QVAR.

Nonetheless, in January, 2014, Teva filed a supplemental NDA to

add a dose counter to QVAR, which was approved in May, 2014.

Teva then, purportedly, discontinued its inhaler without the

dose counter in what plaintiffs characterize as an initial “hard

switch product hop.”

The complaint further alleges that Teva made a second “hard

switch” product hop when, in August, 2017, it obtained FDA

approval for QVAR Redihaler and discontinued all QVAR sales.

Unlike QVAR, QVAR Redihaler dispenses the drug when a user

inhales.

Plaintiffs also allege that defendants have improperly

listed patents in the Orange Book. As mentioned above, the

Orange Book is supposed to list only patents of “the drug

substance, drug product...[or] methods of using the drug for

which it is listed.” In re Lantus Direct Purchaser Antitrust

Litig., 950 F.3d at 4 (internal quotations omitted). Plaintiffs

claim that Teva has improperly listed device-only patents in the

Orange Book to deter would-be competitors from launching a

generic version of QVAR.

The third component of the purported monopolization scheme

involves an alleged reverse payment or “pay-for-delay” deal.

Plaintiffs allege that in January, 2020, Amneal Pharmaceuticals

(“Amneal”) filed the first application for a generic version of

QVAR. Teva did not sue Amneal but by the end of 2020,

plaintiffs claim that Amneal “fell silent” on its plans to

secure approval for the generic. From those circumstances,

plaintiffs contend on information and belief that Teva agreed to

pay Amneal to delay launching a generic version of QVAR.

The final component of the alleged scheme is “sham

litigation.” In 2020, two other generic manufacturers, Cipla

Ltd. (“Cipla”) and Aurobindo Pharma Ltd. (“Aurobindo”), filed

ANDAs seeking approval for generic versions of QVAR which

contained paragraph IV certifications. Teva promptly filed suit

against both manufacturers thereby triggering a 30-month stay of

FDA approval pursuant to the Hatch-Waxman Act. After stipulated

dismissals of several claims, Teva ultimately settled with

Aurobindo in December, 2022, and prevailed on its remaining

claims against Cipla in June, 2023.

Plaintiffs filed a massive amended complaint in September,

2023, containing ten claims for relief, a claim for injunctive

relief under Section 2 of the Sherman Act, 15 U.S.C. § 2, a

plethora of claims under state antitrust and consumer protection

statutes and a claim for unjust enrichment. Defendants have

moved to dismiss the complaint in its entirety.

II. Motion to Dismiss

A. Legal Standard

To survive a motion to dismiss under Fed. R. Civ. P.

12(b)(6), the subject pleading must contain sufficient factual

matter to state a claim for relief that is actionable as a

matter of law and “plausible on its face.” Ashcroft v. Iqbal,

556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly,

550 U.S. 544, 570 (2007)). A claim is facially plausible if,

after accepting as true all non-conclusory factual allegations,

the court can draw the reasonable inference that the defendant

is liable for the misconduct alleged. Ocasio-Hernandez v.

Fortuno-Burset, 640 F.3d 1, 12 (1st Cir. 2011).

When rendering such a determination, a court may consider

certain categories of documents extrinsic to the complaint

“without converting a motion to dismiss into a motion for

summary judgment.” Freeman v. Town of Hudson, 714 F.3d 29, 36

(1st Cir. 2013) (citing Watterson v. Page, 987 F.2d 1, 3 (1st

Cir. 1993)). For instance, a court may consider documents of

undisputed authenticity, official public records, documents

central to a plaintiff’s claim and documents that were

sufficiently referred to in the complaint. Watterson, 987 F.2d

at 3.

A court may not disregard properly pled factual allegations

in the complaint even if actual proof of those facts is

improbable. Ocasio-Hernandez, 640 F.3d at 12. Rather, the

court’s inquiry must focus on the reasonableness of the

inference of liability that plaintiff is asking the court to

draw. Id. at 13.

B. Analysis

The complaint alleges that Teva engaged in a monopolistic

scheme with four components of illegal activity under federal

and state antitrust laws: 1) two product hops, 2) the listing of

inhaler devices in the Orange Book, 3) a pay-for-delay deal with

Amneal and 4) sham litigation against Cipla and Aurobindo. The

parties dispute the extent to which the merits of those

individual allegations should be independently assessed for

plausibility or be considered as component parts of an overall

monopolistic scheme.

The Court will take the middle ground. On one hand, the

plaintiffs

should be given the full benefit of their proof

without tightly compartmentalizing the various factual

components and wiping the slate clean after scrutiny

of each.

In Re Asacol Antitrust Litigation, 233 F. Supp. 3d 247, 261 (D.

Mass. 2017) (quoting Cont'l Ore Co. v. Union Carbide & Carbon

Corp., 370 U.S. 690, 698–99 (1962)). Still, the Court can

evaluate “the specific claims while ruminat[ing] upon the effect

of combining those claims.” Id. (quoting City of Anaheim v. S.

Cal. Edison Co., 955 F.2d 1373, 1376 (9th Cir. 1992) (internal

quotations omitted). Accordingly, the Court will assess each of

the alleged component parts of the scheme while bearing in mind

their synergistic effect.

1. Causation

The Court will first address antitrust law standing. Under

sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15, 26,

private parties may bring a cause of action for violation of

federal antitrust law. To bring suit, however, plaintiffs must

demonstrate that they have “antitrust standing.” See Vazquez-

Ramos v. Triple-S Salud, Inc., 55 F.4th 286, 293 (1st Cir.

2022). To establish antitrust standing, courts balance six

factors:

(1) the causal connection between the alleged

antitrust violation and harm to the plaintiff; (2) an

improper motive; (3) the nature of the plaintiff's

alleged injury and whether the injury was of a type

that Congress sought to redress with the antitrust

laws (“antitrust injury”); (4) the directness with

which the alleged market restraint caused the asserted

injury; (5) the speculative nature of the damages; and

(6) the risk of duplicative recovery or complex

apportionment of damages.

RSA Media, Inc. v. AK Media Grp., Inc., 260 F.3d 10, 14 (1st

Cir. 2001) (quoting Serpa Corp. v. McWane, Inc., 199 F.3d 6, 10

(1st Cir. 1999)). The causation requirement is emphasized and

is the basis of defendant’s challenge to the antitrust standing

of plaintiffs.

Teva contends that even if the allegations of a scheme to

block generic competition are proven, its

‘289, ‘587, and ‘808 patent [have been found] not

invalid...and lawfully extend Teva’s monopoly on QVAR

products through 2032.

See Teva Branded Pharma. Prod. R&D, Inc. v. Cipla Ltd., 678

F.Supp.3d 559 (D.N.J. 2023). Accordingly, it asserts that the

allegations could not have caused an antitrust injury because

generic QVAR competition is legally precluded until 2032.

Plaintiffs rejoin that Teva’s judgment in the Cipla

litigation does not imply that all would-be competitors are

necessarily barred from launching a generic competitor to QVAR.

The Court agrees. According to the complaint, none of the

claims of the ‘808, ‘587 or ‘289 patents that were the subject

of the Cipla litigation relate to beclomethasone dipropionate,

the active ingredient in QVAR. Rather, the complaint avers that

those patent claims relate to dose counters.

At this juncture, the Court has no basis for determining

whether it would have been feasible to design an inhaler product

that conforms to the ANDA process without infringing on Teva’s

dose-counter patents. Without more, Teva’s judgment in the

Cipla litigation does not preclude the possibility that no

generic manufacturer would be able to design a generic QVAR

product around Teva’s patents.

Furthermore, the complaint alleges that Teva did not sue

Amneal when that company sought to introduce a generic QVAR into

the market and filed a paragraph IV certification concerning

four of Teva’s device-related patents in 2021. Teva has a

strong incentive to defend its QVAR patents, so its decision to

demur from suing Amneal adds credence to plaintiff’s contention

that a generic manufacturer could successfully design around

Teva’s QVAR patents. Accordingly, dismissal for want of

antitrust standing is unwarranted.

2. Product Hops

Plaintiffs allege, as part of their federal and state

claims of monopolization (Counts I, V and X) that defendants

orchestrated two hard switch product hops to deter generic

competition to QVAR.

The First Circuit has yet to rule on the antitrust

ramifications of “soft switch” and “hard switch” product hops.

This Court agrees, however, with another session of this Court

that a so-called “soft switch” is not anti-competitive because

it preserves consumer choice whereas a “hard switch” is anti-

competitive because it forces adoption of the new iteration of

the drug before generics have the chance to compete. See In re

Asacol Antitrust Litig., 233 F. Supp. 3d at 269; see also

Namenda, 787 F.3d at 654-55. Transaction costs and default

positions can powerfully dissuade generic competitors that enter

the market after a hard switch product hop.

Defendants contend that the complaint fails to allege an

initial hard switch product hop from QVAR to QVAR with a dose

counter. While the complaint lacks specificity, it clearly

refers to that product hop in the First Claim for Relief. See

Complaint ¶ 619.

Defendants also move to dismiss claims premised on a

product hop from QVAR (with a dose counter) to QVAR Redihaler.

They assert that the complaint admits that the transition to

QVAR Redihaler was a permissible “soft switch.” They emphasize

that the complaint states that 1) the FDA allowed QVAR to remain

listed on the “Discontinued Drug Product List” in the Orange

Book and that the FDA would review QVAR ANDAs and 2) generic

competitors to QVAR “could be automatically substituted for

prescriptions written for just QVAR, instead of QVAR Redihaler.”

Defendants’ contention is unavailing. Because no generic

QVAR existed at the time Teva purportedly discontinued QVAR in

favor of QVAR Redihaler, asthma patients necessarily had to be

transitioned onto QVAR Redihaler. The complaint states that

future generic QVAR prescriptions could be automatically

substituted for QVAR prescriptions but not that generic QVAR

could be switched for QVAR Redihaler prescriptions or that both

QVAR and QVAR Redihaler remained on the market contemporaneously

for any significant period of time. Compare In re Asacol

Antitrust Litig., 233 F. Supp. 3d at 269 (dismissing product hop

claim where “both products remained on the market

contemporaneously for four years.”).

Ultimately, the debate is academic. There are no

standalone product hop claims. To the extent defendants seek to

dismiss on the grounds of defective claims of products hops,

their motion will be denied.

3. Reverse Payment

Defendants move to dismiss plaintiffs’ claims arising from

a purported reverse payment deal between Teva and Amneal

(including Counts III and VII and the reverse payment components

of the state and federal monopolization scheme).

In a reverse payment, a brand drug manufacturer agrees to

pay a potential generic competitor to delay bringing a generic

drug to market. The payment is subject to antitrust scrutiny

under the rule of reason. See In re Loestrin 24 Fe Antitrust

Litig., 814 F.3d 538, 551 (1st Cir. 2016). Under that analysis,

courts look to

its size, its scale in relation to the payor's

anticipated future litigation costs, its independence

from other services for which it might represent

payment, and the lack of any other convincing

justification.

Id. (quoting FTC v. Actavis, Inc., 570 U.S. 136, 159 (2013).

The First Circuit has rejected the requirement of exact figures

and calculations at the pleading stage and instead, requires

plaintiffs

[to] allege facts sufficient to support the legal

conclusion that the settlement at issue involves a

large and unjustified reverse payment.

In re Loestrin 24 Fe Antitrust Litig., 814 F.3d at 552.

Here, Teva asserts that the very existence of a reverse

payment is pure conjecture and, in any event, plaintiffs have

failed to allege facts supporting a “large and unjustified”

reverse payment.

Plaintiffs acknowledge that as of yet, they have no proof

of the purported reverse payment because 1) any agreement

between Teva and Amneal would have been resolved prior to the

commencement of litigation and 2) any settlement would not

therefore be part of the public record. Still, they contend

that the facts surrounding Amneal’s announcement of a generic

QVAR and subsequent, unexplained failure to launch the drug

conjures a sufficient inference of a reverse payment. They

point out that Amneal’s failure to launch a generic was

“possibly” worth hundreds of millions of dollars, given the 180

days of exclusivity it would have had as the first generic QVAR

ANDA filer.

The Court agrees that plaintiffs have pled sufficient facts

to avoid dismissal of their claim of a reverse payment. They

allege that in 2020, Amneal became the first drug manufacturer

to file an ANDA for a generic QVAR. Accordingly, Amneal’s ANDA

presented a considerable financial opportunity for it and,

conversely, a loss for Teva, which, in its briefing, insists it

maintains exclusivity over QVAR until 2032. Given those

dynamics, plaintiffs plausibly allege that Teva’s surprising

decision not to sue Amneal within 45 days of receiving the ANDA

can be explained only by an out-of-court settlement. Adding

credence to that inference are facts from the complaint

describing how Amneal hedged representations of a generic QVAR

launch in late 2020 and eventually fell silent about future

plans to bring generic QVAR to market. Such allegations

sufficiently describe “the general contours of when an agreement

was made...with a context that tends to make said agreement

plausible.” Evergreen Partnering Grp., Inc. v. Pactiv Corp., 720

F.3d 33, 46 (1st Cir. 2013).

As to the substance of the agreement, plaintiffs

sufficiently plead facts that the hypothesized reverse payment

was “large and unjustified.” In re Loestrin 24 Fe Antitrust

Litig., 814 F.3d at 552. As plaintiffs point out, it is well-

established that ANDA first filers have considerable financial

incentive to bring generics to market. Indeed, the exclusivity

period “potentially worth millions of dollars, is meant to

incentivize generic pharmaceutical companies to bear the costs

of the patent infringement lawsuit.” Mylan Pharm., Inc. v. FDA,

594 Fed. App’x 791, 794 (4th Cir. 2014) (citing Teva Pharm.,

USA, Inc. v. Leavitt, 548 F.3d 103, 104 (D.C. Cir. 2008)).

Plaintiffs plausibly infer that any reverse payment here would

have had to be substantial. The antitrust harm in a reverse-

payment is that it “seeks to prevent the risk of competition.”

Actavis, Inc., 570 U.S. at 157. Given the continued lack of

generic QVAR competition since Amneal filed its ANDA more than

four years ago and the allegations of selective dismissals in

the Cipla ANDA litigation concerning a patent claim relevant to

Amneal, plaintiffs have sufficiently alleged an unjustified

reverse payment. While the complaint lacks details, it is

understood that proof of such allegations

require evidence in the exclusive possession of the

defendants, as well as expert analysis.

In re Aggrenox Antitrust Litig., 94 F. Supp. 3d 224, 244 (D.

Conn. 2015). Here, with the benefit of discovery, the

particulars can be best evaluated at summary judgment.

4. Sham Litigation

Plaintiffs allege that Teva violated state antitrust law

and consumer protection laws (Counts IV and VIII, respectively)

by commencing sham litigation against Cipla and Aurobindo. Teva

filed suit against those entities in 2020 after they filed

Paragraph IV certifications to introduce generic competitors to

QVAR. The suits were consolidated in 2021. After the

stipulated dismissal of certain claims, Teva prevailed against

Cipla and settled with Aurobindo.

A party petitioning the government for redress is

“generally immune from antitrust liability.” Prof’l Real Estate

Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49,

56 (1993). That immunity extends to citizens or groups who

petition the legislature, the executive, administrative agencies

or the courts. Cali. Motor Transp. Co. v. Trucking Unlimited,

404 U.S. 508, 510–11 (1972). It does not, however, cover “sham”

activities or lawsuits because

application of the Sherman Act would be justified when

petitioning activity, ostensibly directed toward

influencing governmental action, is a mere sham to cover an

attempt to interfere directly with the business

relationships of a competitor.

Prof’l Real Estate Investors, 508 U.S. at 56 (quoting Eastern

R.R. Presidents Conf. v. Noerr Motor Freight, Inc., 365 U.S.

127, 144 (1961)) (internal quotations omitted).

To determine whether litigation is a sham, courts look to

whether the suit was “objectively baseless in the sense that no

reasonable litigant could realistically expect success on the

merits.” Id. at 60. If, however, an “objective litigant could

conclude that the suit is reasonably calculated to elicit a

favorable outcome” the sham litigation claim will fail. Id.

If the Court concludes that the suit was objectively

baseless, it considers the subjective motivations of the alleged

monopolist. United Food & Com. Workers Unions & Emps. Midwest

Health Benefits Fund v. Novartis Pharms. Corp., 902 F.3d 1, 13

(1st Cir. 2018) (internal quotations omitted). In particular,

the Court determines if a litigant is motivated by an attempt to

interfere directly with “the business relationships of a

competitor...as an anticompetitive weapon.” Prof’l Real Estate

Investors, 508 U.S. at 60-61 (internal quotations omitted).

Critically, “[a] winning lawsuit is by definition a

reasonable effort at petitioning for redress and therefore not a

sham.” See Nuance Commc’ns, Inc. v. Omilia Nat. Language Sols.,

Ltd., No. CV 19-11438-PBS, 2020 WL 2198362, at *8 (D. Mass. May

6, 2020) (quoting Prof’l Real Estate Investors, 508 U.S. at 60

n.5).

Here, Teva contends that because it won the ANDA suit

against Cipla, the litigation was not a sham as a matter of law.

Plaintiffs rejoin that Teva’s patents asserted against Cipla and

Aurobindo were improperly included in the Orange Book, and that,

therefore, Teva lacked standing to assert those patents until

after a generic product was introduced. Plaintiffs add that

during the litigation, Teva selectively dismissed claims with

respect to certain patents but refused to stipulate to their

non-infringement. Plaintiffs contend that Teva sought to

prevent adjudication of patent claims that otherwise blocked

Amneal from introducing its generic version of QVAR.

Teva’s success in the Cipla ANDA litigation forecloses the

claims of sham litigation. In June, 2023, following a three-day

bench trial, District Judge Julien X. Neals of the District of

New Jersey found that Cipla's ANDA product infringed the

asserted ’289, ’587, and ’808 patents and the asserted patents

were not invalid for obviousness. Teva Branded Pharm. Prod. R&D,

Inc. v. Cipla Ltd., 678 F. Supp. 3d at 563. This Court is

unaware of any cases in which a winning lawsuit has been deemed

sham litigation. See Prof’l Real Estate Investors, 508 U.S. at

60 n.5; see also U.S. Philips Corp. v. Sears Roebuck & Co., 55

F.3d 592, 597 (Fed. Cir. 1995).

Dismissing plaintiffs’ sham litigation claims does not

“impermissibly excise” them from the overall monopolization

scheme. See In re Asacol Antitrust Litig., 233 F. Supp. 3d 247,

261 (D. Mass. 2017). The Court must assess “specific claims

while ruminating upon the effect of combining those claims.” Id.

The mere accusation of a sham is insufficient but the selective

stipulation and dismissal of claims in the Cipla litigation is

pertinent to the pay-for-delay and overall monopolization scheme

and is not negated by Teva’s ultimate victory.

Teva’s success forecloses the sham litigation claim, but

not this Court’s scrutiny of its conduct during the Cipla

litigation. Accordingly, the scope of discovery in this case

may include Teva’s selective dismissal of claims as to the ‘509,

‘510 and ‘512 patents in the Cipla litigation which is relevant

to the monopolization scheme and the purported existence of a

reverse payment agreement. Counts IV and VIII will be

dismissed.

5. Unjust Enrichment

Defendants contends that the claim for unjust enrichment

(Count IX) should be dismissed because 1) the complaint fails to

allege sufficiently unlawful conduct and 2) plaintiffs fail to

identify the relevant state laws at issue.

As to Teva’s first contention, as discussed supra,

plaintiffs have sufficiently alleged unlawful conduct with

respect to some of their claims. Furthermore, the Court will

not require at this stage more specificity in the claim for

unjust enrichment than plaintiffs’ allegations of violations of

“the common law of all fifty states and commonwealths.” As

another session of this Court has noted, “there are only a few

differences in the description of unjust enrichment claims as

between states.” Overka v. Am. Airlines, Inc., 265 F.R.D. 14,

21 (D. Mass. 2010). Accordingly, plaintiffs have sufficiently

alleged a claim for unjust enrichment by citing to the common

law of the 50 states.

6. Sherman Act

Defendants contend that the Sherman Act claim (Count X)

should be dismissed because it is dependent upon the deficient

factual claims in the complaint. Because the Court has found

that the complaint has alleged the plausible components of a

monopolization scheme, the motion to dismiss Count X will be

denied.

7. Remaining State Law Defenses

Teva concludes its brief with a litany of defenses to the

state law claims, i.e. that 1) they fail by virtue of

deficiencies in the federal claims, 2) plaintiffs lack standing

in the 20 states where they or their members do not reside, 3)

the District of Columbia, Massachusetts and Mississippi claims

fail due to insufficient contacts with those jurisdictions,

4) the state unilateral monopolization claims fail under

California, Kansas, New York and Tennessee law, 5) the consumer

protection claims fail to meet the pleading standard, 6) the

consumer protection claims for six states do not cover antitrust

matters and 7) plaintiffs fail to plead deception under the

consumer protection acts of nine states. The Court will address

each defense in turn.

i. Deficiencies in the federal claims

First, there is no merit to the assertion that the state

law claims fail by virtue of supposed deficiencies in the

federal claims. As discussed, plaintiffs have sufficiently pled

a Sherman Act claim and generally allege a plausible

monopolization scheme.

ii. Standing

Defendants assert that the representative plaintiffs lack

standing to pursue the state law claims for the 20 states in

which they do not reside or have financial dealings with respect

to QVAR. To assess standing for a putative class action

asserting aggregate harms, the court focuses on whether the

differences that exist between class representatives and members

are such that leave the representatives without a sufficient

personal stake in the litigation. See In re Asacol Antitrust

Litig., 907 F.3d 42, 49 (1st Cir. 2018). This circuit has

required only that “a plaintiff make a single purchase in order

to satisfy standing for a claim brought under multiple state

laws.” Id. at 50 (citing Nexium, 777 F.3d at 31-32).

Defendants contend that differences in state law leave

plaintiffs with an insufficient stake in the litigation but the

Court disagrees. As discussed infra, certain states have minor

variations in the requirements for certain antitrust and

consumer protection claims. Those differences are insufficient

to render the several, geographically diverse plaintiffs without

a stake in this case. Generally, “success on the claim under

one state's law will more or less dictate success under another

state's law” in the matter. Id. at 49.

iii. State Antitrust Claims: Intrastate

conduct

Defendants assert that the Massachusetts, District of

Columbia and Mississippi claims fail because none of the alleged

anticompetitive activity occurred in those jurisdictions.

It is unconstitutional under the Commerce Clause of the

United States Constitution to apply District of Columbia Code

antitrust provisions to interstate conduct. The D.C. Code

requires a “sufficient nexus” to the jurisdiction for an

antitrust claim to proceed. See Sun Dun, Inc. of Wash v. Coca-

Cola Co., 740 F. Supp. 381, 396 (D. Md. 1990). At this stage of

the litigation it is unclear whether any claim sufficiently

satisfies that nexus.

Mississippi’s Antitrust Act requires “at least some

conduct” that is wholly intrastate. In re Keurig Green Mountain

Single-Serve Coffee Antitrust Litig., 383 F. Supp. 3d 187, 267

(S.D.N.Y. 2019). The dispositive factor is the physical

location of the conduct. Id. at 266. The complaint does not

plausibly allege any anticompetitive conduct of defendants in

Mississippi. Counts I-IV will be dismissed as to the Mississippi

cause of action.

Finally, with respect to Massachusetts, the parties dispute

under which section of M.G.L. ch. 93A the claims are made.

Section 9 of that statute provides a cause of action for

individual consumers who have suffered a loss due to an unfair

trade practice whereas section 11 pertains to persons acting in

a business context. See In re Pharmaceutical Industry Average

Wholesale Price Litig., 582 F.3d 156, 191 (1st Cir. 2009).

Unlike actions pursuant to section 9, section 11 claims must

concern conduct that occurred “primarily and substantially”

within the Commonwealth. Fishman Transducers, Inc. v. Paul, 684

F.3d 187, 197 (1st Cir. 2012). Where, as here, the impact of

the alleged conduct is on consumers nationwide, the “primarily”

component is not satisfied. Id. Therefore, to the extent

plaintiffs’ claims are brought under section 11, they will be

dismissed.

iv. State Antitrust Claims: Conspiracy

requirements

Defendants assert that Counts I-IV fail under the

California, New York, Kansas and Tennessee antitrust laws

because those laws require a conspiracy involving two or more

entities. Plaintiffs respond that its reverse payment

allegations involve joint monopolization conduct between Teva

and Amneal. As discussed supra, Count IV will be dismissed with

respect to all causes of action.

Defendants are correct that the antitrust statutes in the

four subject jurisdictions require joint conduct. Plaintiffs

sufficiently allege joint conduct by virtue of the reverse

payment with respect to Count I (total monopolization scheme)

and Count III (specifically concerning the alleged reverse

payment). There is no joint conduct alleged in Count II,

however, which concerns allegations of improper Orange Book

listings. Accordingly, that claim will be dismissed with

respect to the California, New York, Kansas and Tennessee causes

of action.

v. Consumer protection claims:

Pleading Standard

Defendants contend that the consumer protection act claims

(Counts V-VIII) are threadbare and are insufficient under Fed.

R. Civ. P. 8. In those claims, plaintiffs incorporate and

reallege the facts of the preceding 600+ paragraphs. The

allegations describing a complex, multi-step monopolization

scheme state plausible consumer protection violations. It is

unnecessary and indeed would be impractical to require

additional allegations tailored to each of the many state

consumer protection acts cited.

vi. Consumer protection claims:

extension to the antitrust context

Defendants also pursue a more targeted response to the

consumer protection claims and seek to dismiss the causes of

action in six states where the consumer protection laws

purportedly do not extend to antitrust conduct (Arkansas,

Illinois, New Mexico, Utah, South Dakota and Virginia).

Arkansas. With respect to Arkansas’s consumer protection

statute, the Arkansas Supreme Court has held that its

proscription of “unconscionable” trade practices is broad and

that the statute is to be liberally construed. See, e.g., In re

Packaged Seafood Prods. Antitrust Litig., 242 F. Supp. 3d 1033,

1072 (S.D. Cal. 2017). The statute also provides, however, that

a

private class action under this subsection is

prohibited unless the claim is being asserted for a

violation of Arkansas Constitution, Amendment 89.

Ark. Code Ann. § 4-88-113(f)(1)(A)-(B). Here, there is no

contention that the alleged conduct violates Amendment 89 of the

Arkansas Constitution. Plaintiff has not cited nor has this

Court found precedent from the Arkansas courts extending the act

to antitrust actions. Accordingly, the Arkansas consumer

protection claim is not viable. See In re HIV Antitrust Litig.,

2022 WL 22609107, at *17 (N.D. Ca. Sep. 27, 2022).

Illinois. Under the Illinois Consumer Fraud and Deceptive

Business Practices Act (“ICFA”), 815 Ill. Comp. Stat. § 505/1 et

seq., the Illinois Supreme Court does not permit an antitrust

claim where the “the legislature had declined to include such a

cause of action under the Illinois Antitrust Act.” In re Flonase

Antitrust Litig., 692 F.Supp.2d 524, 538 (E.D. Pa. 2010).

Neither party has addressed whether the antitrust claims at

issue are actionable under the Illinois Antitrust Act.

Accordingly, the motion to dismiss with respect to the ICFA will

be denied but may be revisited at the summary judgment stage.

New Mexico. The Court disagrees with defendants that the

New Mexico Unfair Practices Act (“NMUPA”) does not cover

antitrust conduct. That statute proscribes “unconscionable

trade practice[s]” including acts that result in a “gross

disparity between the value received by a person and the price

paid.” N.M. Stat. Ann. § 57-12-2(D). It is plausible that such

disparities may arise in an antitrust context where the pricing

power of an alleged monopolist deprives consumers of the

opportunity to purchase a product for its fair market value.

See also Sergeants Benevolent Ass’n Health & Welfare Fund v.

Actavis, plc, 2018 WL 7197233, at * 47-48 (S.D.N.Y. Dec. 26,

2018).

Utah. Utah’s consumer protection statute, the Utah

Consumer Sales Practices Act (“UCSPA”), Utah Code Ann. § 13-11-

4, is modelled after the FTC Act. See Utah Code Ann. § 13–11–

2(4). It does not, however, include a provision that is

analogous to the FTC Act’s proscription of “unfair competition.”

See 15 U.S.C. § 45. In the absence of any rulings from the Utah

state courts on the application of UCSPA in the antitrust

context, this Court will decline to extend its scope and will

dismiss the Utah consumer protection claims.

South Dakota and Virginia. With respect to the consumer

protection statutes of Virginia and South Dakota, defendants

contend that they apply only to specific, listed conduct that

does not include antitrust violations.

Under the South Dakota deceptive trade practices law, proof

of a purposeful “misrepresentation or concealment of a fact on

which plaintiff relied and that caused an injury to plaintiff”

is required to state a claim. Nw. Pub. Serv., a Div. of Nw.

Corp. v. Union Carbide Corp., 236 F.Supp.2d 966, 973-74 (D.S.D.

2002). That requirement does not, however, preclude pleading an

antitrust claim under the statute. See, e.g., In re DDAVP

Indirect Purchaser Antitrust Litig. v. Ferring Pharms. Inc., 903

F. Supp. 2d 198 (S.D.N.Y. 2012).

Virginia’s consumer protection statute also requires fraud

or misrepresentation to state a claim thereunder, see In re

Niaspan Antitrust Litig., 42 F. Supp. 3d 735, 760 (E.D. Pa.

2014), but does not preclude antitrust claims. See In re

Suboxone (Buprenorphine Hydrochloride and Naloxone) Antitrust

Litig., 64 F. Supp. 3d 665, 703 (E.D. Pa. 2014). The claims

under the South Dakota and Virginia consumer protection statutes

will not be dismissed.

vii. Consumer protection claims:

failure to allege deception

Finally, defendants assert that the complaint does not

allege deception so as to be actionable under the consumer

protection statutes of Arkansas, California, Illinois, Maine,

Nevada, New York, South Dakota, Utah and Virginia.

The Court declines to consider these defenses state-by-

state because the surviving allegations sufficiently allege

“deception directed at the consumer, or deceptive acts in

connection with the sale of goods.” The alleged improper Orange

Book listings can be construed as misrepresentations because

Teva had to certify that each patent claimed only “the drug

substance, drug product (composition / formulation), or one or

more methods of using the drug for which it is listed.” In re

Lantus Direct Purchaser Antitrust Litig., 950 F.3d at 4

(internal quotations omitted); see also 21 C.F.R. §

314.5(c)(2)(i). Here, plaintiffs allege that Teva listed

several device-only patents that do not claim the drug in the

Orange Book which, if proven, would contradict Teva’s

certification. Furthermore, the alleged hard-switch product

hops are plausibly deceptive because they required consumers to

switch to new iterations of drug products at the expense of

potential generic substitution.

ORDER

For the foregoing reasons, the motion of defendants, Teva

Pharmaceutical Industries, Ltd., Teva Pharmaceuticals USA, Inc.,

Teva Branded Pharmaceutical Products R&D, Inc. and Norton

(Waterford) Ltd. is, with respect to Counts IV and VIII in their

entirety, Counts I-IV as to the Mississippi cause of action and

M.G.L. ch. 93A, § 11, Count II as to the California, New York,

Kansas and Tennessee causes of action and Counts V-VIII as to

the Arkansas and Utah causes of action, ALLOWED, but is

otherwise DENIED.

So ordered.

_/s/ Nathaniel M. Gorton_

Nathaniel M. Gorton

United States District Judge

Dated: May 7, 2024