The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
KING DRUG CO. OF FLORENCE, : CIVIL ACTION
INC., et al. :
:
v. :
:
ABBOTT LABORATORIES, et al. : NO. 19-3565
MEMORANDUM
Bartle, J. August 22, 2024
This civil antitrust action concerns allegations of
anticompetitive conduct by brand and generic pharmaceutical drug
manufacturers. Plaintiffs1 are direct-purchase wholesalers of
pharmaceutical drugs. They aver that the brand defendants2
brought meritless patent infringement lawsuits to enforce the
’894 patent against the generic defendants3 to maintain the brand
defendants’ patent monopoly of a topical testosterone gel drug
1. Plaintiffs are: King Drug Company of Florence, Inc.;
AmerisourceBergen Corp.; AmerisourceBergen Drug Corp.; Bellco
Drug Co.; H.D. Smith, LLC; Cardinal Health, Inc.; The Harvard
Drug Group, LLC; McKesson Corp.; J.M. Smith Corp. (d/b/a Smith
Drug Co.); Burlington Drug Co., Inc.; The North Carolina Mutual
Wholesale Drug Co.; Dakota Drug Inc.; Value Drug Co.; and FWK
Holdings, LLC.
2. Brand defendants are the following pharmaceutical drug
manufacturers: Abbott Laboratories; AbbVie Inc.; AbbVie Products
LLC (f/k/a Abbott Products LLC f/k/a Abbott Products, Inc. f/k/a
Solvay Pharmaceuticals, Inc.); Unimed Pharmaceuticals, LLC
(f/k/a Unimed Pharmaceuticals, Inc.); and Besins Healthcare,
Inc. (f/k/a Laboratoires Besins-Iscovesco and Besins-Iscovesco
U.S., Inc.).
3. Generic defendants are the following pharmaceutical drug
manufacturers: Actavis Holdco, U.S. Inc.; Actavis, Inc. (f/k/a
Watson Pharmaceuticals, Inc.); Paddock Laboratories, Inc.; and
product. Plaintiffs further allege that the generic defendants
were complicit in this anticompetitive scheme by then accepting
reverse settlement payments from the brand defendants in
exchange for delaying the entry of competing generic drug
products.
Plaintiffs move to have this court enter an order
requiring all of the defendants “to make an election stating
certain subjective beliefs on which they intend to rely in this
case and whether in doing so they intend to waive [attorney-
client] privilege as to those beliefs.” Pls.’ Mot., at 1
(Doc. #362). Specifically, plaintiffs seek elections as to the
subjective beliefs of defendants’ decisionmakers in the
underlying patent actions and settlements “relating to patent
strength, settlement negotiations and strategy, and how
Defendants would have conducted themselves absent the challenged
payments.” Pls.’ Supp. Br., at 2 (Doc. #362-1).
It is undisputed that defendants’ subjective beliefs
on these matters are highly relevant to plaintiffs’ antitrust
claims. The Supreme Court has made clear that in cases
involving reverse settlement payments, “the relevant antitrust
question” is “[w]hat are th[e] reasons” for the payment. F.T.C.
v. Actavis, Inc., 570 U.S. 136, 158 (2013). “If the basic
reason is a desire to maintain and to share patent-generated
monopoly profits, then, in the absence of some other
justification, the antitrust laws are likely to forbid the
arrangement.” Id.
Plaintiffs have filed the pending motion to ferret out
whether defendants will waive the attorney-client privilege and
rely on the advice of counsel or will assert the privilege and
simply rely on non-privileged bases for the subjective beliefs
of their decisionmakers.4
Defendants declare several times in their brief in
opposition to the pending motion that they have not and will not
waive the attorney-client privilege:
To the extent Plaintiffs seek an election as
to an advice of counsel affirmative defense,
none of the undersigned Defendants have
[sic] asserted or intend to assert an
“advice of counsel” defense on any issue
addressed by Plaintiffs’ motion.
. . . .
Defendants here have answered and made clear
they do not intend to pursue an advice of
counsel defense on any issue covered by
Plaintiffs’ motion.
Defs.’ Opp’n Br., at 4, 9 (Doc. #370). Even so, plaintiffs are
concerned that defendants may engage in a bait-and-switch. They
fear that at the eleventh hour defendants will waive the
privilege and try to introduce evidence of their attorneys’
4. The attorney-client privilege of course cannot be deemed
waived simply because defendants’ communications with counsel
may be relevant to the issue at hand. Rhone-Poulenc Rorer Inc.
advice and communications to support their defenses, for example
as to the strength of the ‘894 testosterone gel patent in issue.
Plaintiffs argue that if waiver occurs at the last minute, it
will be trial by ambush. The court, in their view, will then
have to interrupt and delay trial not only to rule on the issue
of waiver but also to decide whether defendants must provide
relevant discovery. Even if there is no formal waiver by
defendants, plaintiffs submit that the answers of decisionmakers
at trial to questions on direct and cross-examination are likely
to disclose reliance or to imply reliance on the advice of
counsel and thus raise issues related to waiver of the
privilege.
It is not possible to anticipate pretrial all
questions which will be asked of a witness at trial on either
direct or cross-examination or the answers that will be
forthcoming. Nor can the court determine in advance if and in
what form the waiver of attorney-client privilege may be
implicated at trial. While the court sympathizes with
plaintiffs’ desire to have all such issues decided before trial
and to have the trial proceed smoothly and without surprise,
this worthy goal simply cannot always be realized even in this
post 1938 era when fulsome pretrial discovery is available. The
election by defendants which plaintiffs seek via the pending
motion will surely not achieve that goal.
Plaintiffs have the means through interrogatories,
depositions, motions to compel, and motions in limine to learn
the subjective beliefs of defendants’ decisionmakers on all
subjects relevant to this action. These traditional tools
concededly will not put to rest all of plaintiffs’ concerns.
Nonetheless, what plaintiffs seek here is neither a more
efficient nor a more efficacious procedure than the use of the
tools presently available.
The motion of plaintiffs to compel defendants to make
an election stating their subjective beliefs will be denied.
Defendants have represented to the court that they
will not invoke reliance on the advice of counsel with respect
to any of the issues raised in plaintiffs’ motion. Defendants
are now locked in. The court in the interest of fairness will
not permit them to reverse course.