Lidoderm Price-Fixing Classes Likely to Be Certified

SAN FRANCISCO (CN) — Despite opposition from drugmakers, a federal judge said Tuesday he will likely certify two classes in a multidistrict price-fixing suit over the pain patch Lidoderm.

The lead plaintiff, a health fund for United Food and Commercial Workers Local 1776, sued drugmakers Endo, Watson, Teikoku Pharma and others in April 2014.

The UFCW claims the drugmakers struck an anticompetitive deal to settle a patent dispute in 2012 that blocked generic versions of the pain patch from entering the market for nearly two years.

During a hearing Tuesday, U.S. District Judge William H. Orrick III said he was inclined to certify two classes: direct buyers and end-payor plaintiffs.

Orrick found the plaintiffs’ two economics experts identified common pieces of evidence, such as estimated overcharges, that could be presented to a jury at trial. He said the defendants offered little to rebut the relevance of those expert findings on a classwide scale.

“The primary attack revolves not around class-wide evidence but rather the difference in damages for each plaintiff,” Orrick said. “Apportionment may be complex, but it’s no reason to deny class certification.”

Defense attorney Karen Lent implored Orrick to reconsider his tentative ruling, saying recent Supreme Court decisions, including Wal-Mart v. Dukes in 2011, set a more rigorous standard for class certification.

The Dukes ruling held that 1.6 million female Wal-Mart employees lacked commonality to sue for gender discrimination.

“Before Wal-Mart, many courts were hesitant to get into the merits of the case [at the class certification stage],” Lent told Orrick. “We ask that you do that here.”

Lent said the direct buyers’ economics expert, Jeffery Leitzinger, used “generic proof” to establish common impact and calculate aggregate damages. The expert based his findings on economic literature and internal forecasts, rather than real-life, individual experiences, she argued.

“These are general predications. They don’t show what happened, and there’s no individual experiences,” Lent said.

Class attorney Peter Kohn countered that the plaintiffs’ expert did not limit his analysis to mere generalities and forecasts but examined the real-world effect generics hitting the market had on the price of brand-name Lidoderm.

“Dr. Leitzinger conceded that all of the brand prices were higher when there were no generics,” Kohn said. “The starkness of the effect when there was generic competition was so stark, and the before-and-after evidence is strong.”

Turning to the end-payor plaintiffs’ motion for class certification, defense attorney Daniel Asimow argued that because patients have different insurance plans and copayments, it would be impossible to calculate how much each class member allegedly overpaid.

“We’ll have to roll up our sleeves and look at contracts and look at copayments,” Asimow said.

He accused the plaintiffs of concocting a “really complicated” class definition that includes three groups of indirect buyers: those who bought brand-name Lidoderm in the early period, those who bought generics during a later period of limited competition, and insurers that also paid for the patches.

Asinow said the plaintiffs lack the records needed to identify which consumers purchased which brand of the patch under which insurance plan.

But class attorney Josh Davis said his clients can easily obtain those records, and that that, combined with a plan to identify class members, meets and exceeds the administrative feasibility requirement for class certification.

“Courts have consistently found ascertainability when there are records or a feasible plan,” Davis said. “Here we have both.”

Several entities, including pharmacies and insurers, maintain duplicate records on prescription drug purchases, Davis said, and those records can be used to identify all class members.

“If not here, where are you going to find an ascertainable class?” Davis asked. “Defendants argue we don’t have the records yet, but we have a plan, and the records are there.”

After nearly three hours of debate, Orrick thanked both sides for presenting “excellent” arguments and said he would issue a ruling soon.

Orrick indicated early in the hearing that he would likely deny the drug-makers’ motions to disqualify plaintiffs’ expert reports. The motions for class certification, motions to exclude expert opinions, and expert reports were all filed under seal.

Orrick denied motions to dismiss antitrust claims against the drug-makers in November 2014 and again in July 2015.

In November 2015, Orrick refused Teikoku Pharma’s request to disqualify opposing counsel for allegedly misusing an inadvertently disclosed privileged email.

The Lidoderm patch is a topical antiseptic used to treat painful skin conditions, such as shingles. It was developed by Hind Health Care, which granted Endo exclusive rights to sell the patch in the United States. The FDA approved Lidoderm for sale in the U.S. on March 19, 1999.

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