City of Rockford v. Mallinckrodt ARD, Inc.

360 F. Supp. 3d 730 (2019) United States District Court for the Northern District of Illinois 2019-01-25

civil putative class action by two self-insured payors against a drug manufacturer and its exclusive distributor under §§ 1 and 2 (Counts VII, VI) plus state-law and RICO claims; Rule 12(b)(6) motions; denied as to Rockford's federal antitrust claims, granted without prejudice (leave to replead) as to Acument's for want of antitrust standing (result: mixed)

Facts

  1. 1 Concerted action ("contract, combination ... or conspiracy") between separate economic decisionmakers satisfied pleaded
    On August 27, 2007, Mallinckrodt embarked on a "new strategy" that sought to limit Acthar's distribution by designating Express Scripts as Mallinckrodt's sole distributor of Acthar.
  2. 1 Concerted action ("contract, combination ... or conspiracy") between separate economic decisionmakers satisfied pleaded
    Mallinckrodt set the average wholesale prices of Acthar used by Express Scripts for reimbursement.
  3. 1 Concerted action ("contract, combination ... or conspiracy") between separate economic decisionmakers satisfied pleaded
    A plaintiff alleging conspiracy to fix prices in violation of the Sherman Act must allege "enough factual matter (taken as true) to suggest that an agreement was made"-that is, "enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of illegal agreement."
  4. 1 Concerted action ("contract, combination ... or conspiracy") between separate economic decisionmakers satisfied pleaded
    Specifically, Express Scripts agreed not to push back on Mallinckrodt's decisions to inflate Acthar's price beyond the competitive level, in contrast to when Express Scripts took the opposite approach in 2015 with respect to Turing's drug, Daraprim.
  5. 1 Concerted action ("contract, combination ... or conspiracy") between separate economic decisionmakers satisfied pleaded
    But at this stage of litigation, the court draws all reasonable inferences from the complaint in favor of plaintiffs and taking the SAC as a whole finds that plaintiffs have sufficiently alleged a conspiracy.
  6. 2 Unreasonable restraint of trade (Standard Oil Co. v. United States) satisfied pleaded
    As soon as defendants implemented the ASAP, Mallinckrodt increased the price of Acthar from approximately $ 1,980 to $ 27,922.80-a 1,310% increase in the span of a month, and a 69,707% increase from 2001.
  7. 2 Unreasonable restraint of trade (Standard Oil Co. v. United States) satisfied pleaded
    Upon purchasing the rights to Synacthen, Mallinckrodt chose not to bring it to market.
  8. 2 Unreasonable restraint of trade (Standard Oil Co. v. United States) satisfied pleaded
    At this stage, it is sufficient for plaintiffs to plausibly allege that defendants engaged in conduct that resulted in an unreasonable restraint of trade.
  9. 2 Unreasonable restraint of trade (Standard Oil Co. v. United States) satisfied pleaded
    The "new strategy" reduced the number of wholesale distributors of Acthar from three to one, thereby restricting patient's access to Acthar, and employed Express Scripts' market power not to push for lower-cost alternatives.
  10. 2 Unreasonable restraint of trade (Standard Oil Co. v. United States) satisfied pleaded
    Consequently, the court finds that Rockford's assertions of anticompetitive conduct are sufficient to adequately plead the "unreasonable restraint of trade" prong of Rockford's § 1 claim.
  11. 7 Private antitrust injury and fact of damage (Clayton Act §§ 4, 16; Brunswick Corp. v. Pueblo Bowl-O-Mat) satisfied pleaded
    The third prong requires that an antitrust plaintiff must allege that the "claimed injuries are of the type the antitrust laws were intended to prevent and reflect the anticompetitive effect of either the violation of or anticompetitive acts made possible by the violation."
  12. 7 Private antitrust injury and fact of damage (Clayton Act §§ 4, 16; Brunswick Corp. v. Pueblo Bowl-O-Mat) satisfied pleaded
    Rockford alleges that defendants were able to charge higher prices for Acthar by restricting distribution of Acthar through the ASAP.
  13. 7 Private antitrust injury and fact of damage (Clayton Act §§ 4, 16; Brunswick Corp. v. Pueblo Bowl-O-Mat) satisfied pleaded
    Had Novartis sold the rights to Synacthen to one of the other bidders that planned to bring Acthar to market, Rockford alleges that purchasers would have had a low-cost alternative to Acthar.
  14. 7 Private antitrust injury and fact of damage (Clayton Act §§ 4, 16; Brunswick Corp. v. Pueblo Bowl-O-Mat) satisfied pleaded
    Thus, Rockford has satisfied the "antitrust injury" prong and, accordingly, the court finds that Rockford has stated a § 1 claim.
  15. 8 Antitrust standing / efficient enforcer test (Associated General Contractors; Illinois Brick) satisfied pleaded
    Accordingly, on April 1, 2015, Mallinckrodt had Acthar shipped directly to the children of two Rockford employees.
  16. 8 Antitrust standing / efficient enforcer test (Associated General Contractors; Illinois Brick) satisfied pleaded
    ESI then charged Rockford $ 100,457.64 for the 30-day supply of Acthar, pursuant to the terms of the PBM Agreement.
  17. 8 Antitrust standing / efficient enforcer test (Associated General Contractors; Illinois Brick) not pleaded
    Plaintiffs allege that CVS stepped into the place of ESI in the Acthar distribution chain, but was still coordinated by UBC.
  18. 8 Antitrust standing / efficient enforcer test (Associated General Contractors; Illinois Brick) not pleaded
    CVS charged Acument $ 894,617.75 for thirteen administrations of Acthar in a thirteen-month period between December 2015 and December 2016.
  19. 8 Antitrust standing / efficient enforcer test (Associated General Contractors; Illinois Brick) not pleaded
    First, in Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977), the Supreme Court held that only direct purchasers from alleged antitrust violators may bring federal antitrust actions.
  20. 8 Antitrust standing / efficient enforcer test (Associated General Contractors; Illinois Brick) satisfied pleaded
    One such exception is the "co-conspirator" exception, which allows indirect purchasers to sue middlemen-conspirators if the plaintiffs can establish a conspiracy and overcharges:
  21. 8 Antitrust standing / efficient enforcer test (Associated General Contractors; Illinois Brick) satisfied pleaded
    But here, plaintiffs do not allege that defendants' agreement in fact included a "pass-on" payment.
  22. 8 Antitrust standing / efficient enforcer test (Associated General Contractors; Illinois Brick) satisfied pleaded
    But at the Rule 12 stage, the court draws all reasonable inferences in favor of plaintiffs, and finds that Illinois Brick is not a bar to plaintiffs' claims.
  23. 8 Antitrust standing / efficient enforcer test (Associated General Contractors; Illinois Brick) not pleaded
    Otherwise, the SAC contains scant mentions of CVS and its role as part of the dealing arrangement alleged in all other respects to be exclusive.
  24. 8 Antitrust standing / efficient enforcer test (Associated General Contractors; Illinois Brick) not pleaded
    As currently formulated, plaintiffs do not plausibly allege that Acument was a direct purchaser from a member of the alleged conspiracy, nor does Acument plausibly allege any other theory which would furnish antitrust standing to it.