In re: Seroquel XR (Extended Release Quetiapine Fumarate) Antitrust Litigation

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

In re Seroquel XR (Extended Release

Quetiapine Fumarate) Antitrust

Litigation

Master Docket No. 20-1076-CFC

This Document Relates to:

All Actions

MEMORANDUM ORDER

Pending before me is Plaintiffs’ Daubert Motion No. | to Exclude the

Opinions of Handa’s Expert Mr. Walter Lunsmann. D.I. 641.

I.

These class actions arise out of a 2011 agreement to settle a patent lawsuit

relating to extended-release quetiapine fumarate, an anti-psychotic drug sold by

Defendants AstraZeneca Pharmaceuticals LP and AstraZeneca LP (collectively,

AstraZeneca) under the brand-name Seroquel XR® (Seroquel). AstraZeneca had

alleged in the underlying lawsuit that generic versions of Seroquel made by

Defendant Handa Pharmaceuticals LLC and other generic manufacturers were

covered by one of AstraZeneca’s patents and that abbreviated new drug

applications (ANDAs) filed by Handa and the other manufacturers with the Food

and Drug Administration (FDA) to market their respective generic versions of

Seroquel constituted patent infringement under the Hatch-Waxman Act. See

35 U.S.C. § 271(e)(2)(A) (making the submission of an ANDA “an act of

infringement . . . for a [generic] drug claimed in a patent or the use of which is

claimed in a patent” for the brand drug).

Although the patent’s expiration date was May 28, 2017, AstraZeneca was

entitled to an additional six-month period of the patent’s exclusivity under

21 U.S.C. § 355 because of AstraZeneca’s participation in pediatric studies of

Seroquel. D.I. 627 J 4; D.I. 718 9 4. Thus, as long as the patent remained valid, it

effectively precluded a manufacturer from marketing before November 28, 2017 a

generic version of Seroquel that infringed the patent unless that manufacturer had a

license from AstraZeneca.

As part of an agreement to settle its case against Handa, AstraZeneca paid

Handa $4 million in cash, licensed the asserted patent exclusively to Handa as of

November 2016 (i.e., a year before the patent’s pediatric exclusivity period ended),

and agreed not to launch its own generic version of Seroquel during the 1 80-day

period in which only Handa and AstraZeneca had FDA approval to lawfully

market a generic version of Seroquel—thus ensuring that the only generic versions

of Seroquel on the market during that period would be sold by Handa, which

enjoyed a 180-day period of exclusivity as the generic first filer. D.I. 718 459;

D.I. 627 FJ 16—17; see also FTC v. Actavis, Inc., 570 U.S. 136, 143-44 (2013)

(explaining that the first generic manufacturer to file with the FDA an ANDA to

market a generic drug “will enjoy a period of 180 days of exclusivity” and that

“[d]uring that period of exclusivity[,] no other generic can compete with the brand-

name drug”); King Drug Co. of Florence, Inc. v. Smithkline Beecham Corp., 791

F.3d 388, 393 (3d Cir. 2015) (holding that “[t]he relevant statute permits the brand

to produce an ‘authorized generic’ during the [first generic filer’s] exclusivity

period”) (citations omitted).

Plaintiffs allege that these settlement terms constituted an unlawful “reverse

payment”—i.e., a payment made by the plaintiff (AstraZeneca) to the defendant

(Handa) to settle claims brought by the plaintiffj—that delayed and suppressed

competition among sellers of generic versions of Seroquel in violation of the

Sherman Act, as interpreted in Actavis. Plaintiffs allege that as a result of this

delay and suppressed competition, they paid more than they should have for

branded and/or generic versions of Seroquel. D.I. 135 § 25. And they say that the

settlement agreement’s reverse payment caused them this antitrust injury because,

but for that payment, AstraZeneca and Handa would have entered into an

alternative settlement agreement that would have allowed Handa to launch generic

versions of Seroquel in July 2015. See D.I. 635-1 at 22.

One of the limitations in the claims of the patent asserted by AstraZeneca in

the underlying lawsuit was “a gelling agent.” Handa told AstraZeneca before the

lawsuit that its generic versions of Seroquel did not literally infringe the patent

because they did not contain a gelling agent. D.I. 653-1 at 14. Handa asserted this

same noninfringement defense in the underlying suit. D.I. 653-1 at 71-74.

Handa intends to call at trial Walter Lunsmann to testify as an expert and

specifically to testify that in his opinion colloidal silicon dioxide (CSD), which was

an ingredient of Handa’s generic versions of Seroquel, “can be considered a

‘gelling agent’ as that phrase was construed in the underlying infringement case”

between Handa and AstraZeneca. D.I. 711 at 10. Handa says that this expert

testimony “will help the trier of fact understand why [Handa] would settle with

AstraZeneca instead of proceeding to a trial that it could lose[.]” D.I. 711 at 3.

Plaintiffs have moved pursuant to Federal Rule of Evidence 702 and

Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993) to preclude Mr.

Lunsmann from offering this opinion at trial. D.I. 641.

II.

Federal Rule of Evidence 702 provides:

A witness who is qualified as an expert by knowledge,

skill, experience, training, or education may testify in the

form of an opinion or otherwise if the proponent

demonstrates to the court that it is more likely than not

that:

(a) the expert’s scientific, technical, or other specialized

knowledge will help the trier of fact to understand the

evidence or to determine a fact in issue;

(b) the testimony is based on sufficient facts or data;

(c) the testimony is the product of reliable principles and

methods; and

(d)the expert’s opinion reflects a reliable application

of the principles and methods to the facts of the case.

Fed. R. Evid. 702. In Daubert, the Supreme Court held that district courts must act

as gatekeepers to ensure that proffered expert scientific testimony meets the

requirements of Rule 702. See 509 U.S. at 589. And in Kumho Tire Co. v.

Carmichael, 526 U.S. 137 (1999), the Court held that “this basic gatekeeping

obligation” “applies to all expert testimony,” and not just “scientific” testimony.

Id. at 147.

At issue here is Rule 702’s requirement that the expert’s knowledge “help

the trier of fact to understand the evidence or to determine a fact in issue.” The

Third Circuit has called this the “fit” requirement. Schneider ex rel. Estate of

Schneider v. Fried, 320 F.3d 396, 404 (3d Cir. 2003); see also Daubert, 509 U.S

at 591 (noting that Rule 702’s helpfulness requirement was “aptly described by

Judge Becker as one of ‘fit’”). As the Court explained in Schneider, “Rule 702

requires that the expert testimony must fit the issues in the case. In other words,

the expert’s testimony must be relevant for the purposes of the case and must assist

the trier of fact.” 320 F.3d at 404.

III.

Plaintiffs argue that neither AstraZeneca nor its experts in the underlying

patent suit were asserting that CSD was a “gelling agent” at the time AstraZeneca

and Handa settled the case and that therefore Mr. Lunsmann’s opinion does not fit

the facts of this case and should be excluded under Rule 702 and Daubert.

According to Plaintiffs, “[b]y the time of the challenged reverse payment

agreement, the only remaining infringement question in the litigation between

Handa and AstraZeneca was whether the hydrogenated vegetable oil (“HVO’)

[(i.e., not the CSD)] in Handa’s ANDA Product constituted a gelling agent,” D.I.

652 at 3 (emphasis in the original), and that therefore Mr. Lunsmann’s opinion has

no relevance to the likely outcome of the underlying patent case.

Handa counters that “Mr. Lunsmann’s testimony ‘fits’ this case for the same

reason Plaintiffs intend to offer testimony about how a reasonable patent litigator

would advise Handa prior to trial — a belief about the likelihood of success at trial

is directly relevant to the decision to enter into a settlement.” D.I. 711 at 4.

According to Handa, “AstraZeneca’s litigation position kept alive the prospect that

other excipients in the Handa ANDA Product, like CSD, were a gelling agent when

used in combination with the hydrogenated vegetable oil.” D.I. 711 at 7. At oral

argument, Handa’s counsel repeated this claim, insisting that AstraZeneca “never

fully abandoned that [CSD] could be either alone or in conjunction with HVO, part

of the gelling agent” and thus the presence of CSD in Handa’s product was “still an

issue in the underlying case.” 2.6.25 Tr. 230:6—9 (docketed as D.I. 825).

The record in the underlying case flatly contradicts Handa’s position. The

record makes abundantly clear that as the parties readied themselves for trial, the

sole question with respect to the gelling agent limitation was whether the HVO in

Handa’s accused product met the limitation. In its “Outline of Trial Proofs,”

AstraZeneca stated that the “only infringement issue[] to be tried” was whether the

HVO in Handa’s product amounted to a “gelling agent[].” D.I. 653-1 at 240

(emphasis added). And in its “Intended Proofs,” Handa similarly stated that its

“evidence of non-infringement will be directed to the single issue of establishing

that the Hydrogenated Vegetable Oil (HVO) in Handa’s product is not a ‘gelling

agent’ as required by the asserted claims.” D.I. 653-1 at 254 (emphasis added).

The reports of AstraZeneca’s experts in the underlying litigation, Drs.

Prud’homme and Davies, also confirm that AstraZeneca was focused solely on the

theory that HVO infringed the asserted patent’s “gelling agent” limitation. See D.I.

653-1 at 112 (“[I]t is my opinion that the HVO in Handa’s Proposed ANDA

Products forms a gel to provide sustained release.”); D.J. 653-1 at 101 (“These

images show a network structure formed by the HVO where water can enter into

the tablet, and where quetiapine is dissolved and diffuses in an aqueous phase out

of the tablet.”). Handa’s own experts’ reports were similarly focused on HVO.

See, e.g., D.I. 653-1 at 119 “Accordingly, these results suggest that HV O does not

form a gel when in contact with water.”); D.I. 653-1 at 134 (“The HVO in Handa’s

product is not a ‘gelling agent’ as that term is used in claim 1.”).

Because the undisputed record evidence establishes that the question of

whether CSD was a gelling agent was not an issue in the underlying patent case at

the time AstraZeneca and Handa reached a settlement agreement, Mr. Lunsmann’s

opinion that CSD could constitute a gelling agent has no relevance to the likely

outcome of the underlying patent case or the reasonableness of the challenged

settlement agreement. Accordingly, Mr. Lunsmann’s opinion fails to satisfy Rule

702’s fit requirement with respect to those issues, and I will grant Plaintiffs’

motion to the extent it seeks to bar Handa from adducing Mr. Lunsmann’s opinion

at trial with respect to those issues.

Handa, however, also argues in its opposition brief that “whether CSD can

be considered a ‘gelling agent’ is relevant to Handa’s subjective belief about the

strength of its position in the underlying litigation and the legitimate justifications

for its decision to settle.” D.J. 711 at 10. Plaintiffs say that “Handa blocked

discovery o[f] both its subjective beliefs and those of [its CEO,] Dr. Liu at the time

of settlement, and therefore [it] should not be permitted to offer Mr. Lunsmann’s

testimony to bolster those alleged—but withheld—beliefs.” D.I. 777 at 3

(emphasis removed). From my preliminary review of the discovery materials and

my recollection of a discovery conference during which I warned Handa that it

could not “take advantage of” inconsistent privilege claims and use “privilege to

[its] advantage in a way that prejudices [Plaintiffs] unfairly,” 7.13.23 Tr. 149:13-

14, 146:9-10 (docketed as D.I. 455), I am sympathetic to Plaintiffs’ position. But

Plaintiffs have not cited, let alone discussed, any case law or other legal authority

to support their position, and it is undisputed that Handa allowed some (albeit very

limited) discovery of the subjective beliefs of Handa’s CEO about the underlying

patent case. Accordingly, | think the prudent course of action is to defer ruling on

whether Mr. Lunsmann’s opinion would be admissible at trial with respect to the

reasonableness of Handa and Dr. Liu’s subjective beliefs until I first determine

whether Handa will be permitted to adduce evidence at trial about those beliefs.

KOK OK

NOW THEREFORE, at Wilmington on this Twentieth day of March in

2025, itis HEREBY ORDERED that Plaintiffs’ Daubert Motion No. | to Exclude

the Opinions of Handa’s Expert Mr. Walter Lunsmann (D.1. 641) is GRANTED IN

PART AND DEFERRED IN PART.

2 tah ag