AAI Urges Third Circuit to Preserve Product Hopping Case on Behalf of Victims of the Opioid Epidemic (In re Suboxone Antitrust Litigation)

On March 12, AAI filed an amicus brief in the Third Circuit urging the court to reject a prescription drug manufacturer’s challenge to consolidated antitrust claims brought by purchasers of Suboxone, a brand drug used to treat opioid addiction.

In cases first consolidated in a Pennsylvania district court in 2013, a class of direct purchasers of Suboxone allege that Reckitt-Benckiser, now known as Indivior Inc., engaged in a product hopping scheme to coerce patients into using a patented film formulation of Suboxone instead of a tablet form, just as the latter was on the brink of becoming open to generic competition.

According to a study by the Federal Trade Commission, generic entry typically reduces the price of prescription drugs by 85%, resulting in enormous savings for patients.  But because most generic drug substitution laws do not permit pharmacists to substitute a different formulation of the same drug, even if the formulation administers the same amount of the active ingredient, brand drug manufacturers have a perverse incentive to attempt “product hops” from one formulation to another, which can effectively extend their exclusive control of a drug market and preserve monopoly prices.

A class of direct purchasers allege that Reckitt violated Section 2 of the Sherman Act by engaging in a six-part scheme to force patients onto film and off of tablets, thereby thwarting generic competition.  Specifically, they allege that Reckitt (1) falsely disparaged Suboxone tablets as dangerous to children, (2) falsely announced the withdrawal of tablets due to fabricated safety concerns (to hasten switching), (3) eliminated tablet rebate contracts in favor of film rebate contracts, (4) significantly raised tablet prices above film prices to manipulate the market, (5) eventually removed tablets from the market altogether, and (6) manipulated the FDA’s Risk Evaluation and Mitigation Strategy process.

The district court denied an early motion to dismiss and eventually certified the class, and Reckitt sought and obtained an interlocutory appeal of the class certification order.  Reckitt argues that the plaintiffs wrongly attributed injury and damages to lawful, pro-competitive pricing practices, namely Reckitt’s decision to price film lower than tablets.  It argues that pricing practices are per se lawful if they are above cost, and therefore the plaintiffs could not rely on common evidence to prove antitrust injury in satisfaction of Rule 23’s predominance requirement.

The AAI brief counters that product hopping is not analogous to predatory pricing, and above-cost prices can be part of a cognizable antitrust violation when they are part of a broader scheme in which price is not the predominant mechanism of exclusion.  But AAI emphasizes that the court does not need to decide this question to affirm the district court’s class certification order, because the law of “antitrust injury” requires courts to assume plaintiffs can prove a violation.  The inquiry asks only whether plaintiffs were injured by reason of the alleged harm to competition.

The brief was written by AAI Vice President of Legal Advocacy Randy Stutz, with assistance from AAI Vice President of Policy Laura Alexander.