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Flonase Indirect Purchasers' Claims Survive GSK's Motion for Summary Judgment

Monday, October 10, 2011

Alexandra Kay | Bloomberg Law In re Flonase Antitrust Litig., 08-CV-3301, 2011 BL 245049 (E.D. Pa. Sept. 26, 2011) The U.S. District Court for the Eastern District of Pennsylvania recently granted in part and denied in part a motion for summary judgment brought by defendant SmithKline Beechman Corporation, doing business as GlaxoSmithKline PLC (GSK), in a consolidated class action brought by indirect purchasers of Flonase. The court dismissed some of plaintiffs' claims that GSK improperly delayed sales of a generic version of Flonase, and allowed others to proceed.

Plaintiffs Claim that GSK Improperly Delayed Generic's Market Entry

Plaintiffs include the following four health care funds: A.F. of L.-A.G.C. Building Trades Welfare Plan (AFL), IBEW-NECA Local 505 Health & Welfare Plan (IBEW), International Association of Bridge, Structural, Ornamental and Reinforcing Ironworkers Local No. 79 Health Fund (IABORI), and Painters District Council No. 30 Health & Welfare Fund (Painters) (collectively, the Plans). They alleged that GSK filed sham citizen petitions with the U.S. Food and Drug Administration to delay the entry of a cheaper generic version of Flonase into the market, causing them to overpay for Flonase in Arizona, Florida, Iowa, North Carolina, and Wisconsin (the Purchase States). Plaintiffs brought claims against GSK for monopolization, unfair and deceptive trade practices (UDTP), and unjust enrichment under the laws of the Purchase States. GSK previously moved to dismiss the claims. In a split ruling, the court held, inter alia, that plaintiffs had standing under the laws of the states where they were located, where they purchased Flonase, or where they reimbursed for purchases of Flonase. For Bloomberg's coverage of the motion to dismiss, see District court Holds Indirect Purchasers Have Standing to Sue GlaxoSmithKline for Alleged Sham FDA Filings, Bloomberg Law Reports Vol. 3, No. 2 (Feb. 1, 2010). Following several amendments to the complaint, GSK moved for summary judgment, arguing that plaintiffs lacked standing to bring claims under the laws of the Purchase States, that choice of law rules required the claims be governed by the laws of the home states, and that plaintiffs failed to provide sufficient evidence to support their UDTP claims.

Plans Have Standing to Sue for Their Alleged Injuries

Contrary to GSK's perception of the court's earlier ruling on standing, the court explained that standing was not conferred based upon the laws of the states in which reimbursement checks were sent. Rather, the Plans could have standing to assert their claims under the laws of the states in which Plan members made Flonase purchases, where those purchases were reimbursed by the Plans. The court focused its analysis on whether plaintiffs provided sufficient and properly authenticated evidence that they purchased or provided reimbursements for Flonase in the Purchase States. Plaintiffs' evidence largely consisted of spreadsheet printouts listing each of the purchases made or reimbursed by the Plans. To authenticate the data in the spreadsheets, plaintiffs provided declarations and certifications from record custodians and plan administrators. Analyzing each of the Plan's claims and evidence in turn, the court first ruled that AFL and IBEW provided sufficiently authenticated evidence showing that they reimbursed plan members for the numerous purchases made in Florida. The evidence pertaining to IABORI's claims under North Carolina law consisted of two receipts that were not self-authenticating, however; therefore the court granted GSK's motion to dismiss IABORI's claims of monopolization and UDTP under North Carolina law. The court also agreed with GSK that plaintiffs' data did not include sufficient geographic information showing that Painters purchased Flonase or reimbursed its members for Flonase purchases in Florida and Iowa. Although the spreadsheets showed purchases in those states, they did not indicate which purchases, if any, were for Flonase. The spreadsheets did show Flonase purchases in Wisconsin and Arizona, however, which matched reimbursements made by Painters during the same time period. Thus, drawing all reasonable inferences in favor of plaintiffs, the court found that plaintiffs' evidence sufficiently raised a genuine issue of material fact as to whether Painters reimbursed plan members for purchases made in Wisconsin and Arizona.

Laws of the Purchase States Apply

GSK's second argument was that choice of law rules required that the Plans' claims proceed under the laws of the states in which they are located, and not the laws of the states where the Flonase purchases and reimbursements occurred. Because the court previously held that the Plans could not state claims in their home states, GSK moved for summary judgment. But the court disagreed and held that the laws of the Purchase States should be applied to plaintiffs' claims. Likening antitrust violations to tortious acts, the court reasoned that the applicable law will typically be the law of the state where the injury occurred. Plaintiffs' main injury was the overcharge paid for Flonase purchases in the Purchase States. Moreover, the court observed the significant contacts in the Purchase States: the Flonase product, Plan member purchasers, and pharmacies were all located in the Purchase States. Thus, although the Plans themselves may have had significant contacts with their home states, the court found that the home states' had minimal contacts with the purchases at issue. The court also noted that governmental and policy interests weighed in favor of applying the Purchase States' law, as the laws were intended to protect consumers from being overcharged. Finally, the court found guidance from two recent antitrust cases brought by indirect purchasers against GSK: In re Wellbutrin XL Antitrust Litig., No. 08-2433,2011 BL 210039 (E.D. Pa. Aug. 15, 2011) and Sheet Metal Workers Local 441 Health & Welfare Plan v. GlaxoSmithKline, PLC, 737 F. Supp. 2d 380, 390-93(E.D. Pa. Sept. 7, 2010). In both cases, the court used Pennsylvania choice of law principles to determine whether to apply a health benefit plan's home state's law or the purchase states' laws to the alleged overcharge injury. In both instances, the purchase states' laws were applied. Here, the court concluded that plaintiffs' claims were "best considered under the laws of the states where they either purchased Flonase, or where Plan Members purchased Flonase and were reimbursed for those purchases." In re Flonase at 24.

Sufficiency of the Arizona and Florida State Law Claims

GSK's third argument was that plaintiffs failed to provide evidence to support their UDTP claims against Painters under Arizona law and against AFL and IBEW under Florida law. The court granted GSK's motion and dismissed Painters' Arizona UDTP claim, finding that plaintiffs failed to adequately allege the requisite deception. But the court denied GSK's motion as to AFL's and IBEW's Florida UDTP claim, finding that GSK's "reliance on bald assertions is not sufficient to satisfy its initial burden in moving for summary judgment on this issue." Id. at 29. Disclaimer This document and any discussions set forth herein are for informational purposes only, and should not be construed as legal advice, which has to be addressed to particular facts and circumstances involved in any given situation. Review or use of the document and any discussions does not create an attorney-client relationship with the author or publisher. To the extent that this document may contain suggested provisions, they will require modification to suit a particular transaction, jurisdiction or situation. Please consult with an attorney with the appropriate level of experience if you have any questions. Any tax information contained in the document or discussions is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code. Any opinions expressed are those of the author. The Bureau of National Affairs, Inc. and its affiliated entities do not take responsibility for the content in this document or discussions and do not make any representation or warranty as to their completeness or accuracy. ©2014 The Bureau of National Affairs, Inc. All rights reserved. Bloomberg Law Reports ® is a registered trademark and service mark of The Bureau of National Affairs, Inc.

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