10th Circuit asked to revive EpiPen monopoly claims for jury to decide

(CN) — Global pharmaceutical giant Sanofi-Aventis asked the 10th Circuit on Wednesday to revive antitrust claims against EpiPen maker Mylan, arguing the company created and held a monopoly in the epinephrine autoinjector market.

The EpiPen is a branded epinephrine autoinjector that delivers a quick shot to treat anaphylaxis, a life-threatening allergic reaction affecting millions of people.

During the early 2000s, Mylan’s EpiPen had few competitors and dominated the market. According to Sanofi, the lack of competition allowed Mylan to raise prices more than 500% between 2008 and 2016 while offering little innovation to the “swing and jab” device.

In 2013, Sanofi launched Auvi-Q, a more portable autoinjector with a retractable needle and audio instructions, posing the first real challenge to the EpiPen in years. Sanofi claims that rather than offer a better product, Mylan offered extensive discounts to insurers for exclusively covering the EpiPen and excluding competing products.

Sanofi initially sued Mylan in the District of New Jersey in 2017, but the case was transferred to the District of Kansas alongside a consolidated consumer class action. U.S. District Judge Daniel Crabtree, a Barack Obama appointee, granted summary judgment to Mylan in December 2020.

Sanofi appealed to the 10th Circuit, which took up oral arguments Wednesday.

“EpiPen is what the babysitter uses, it’s what grandparents know how to use. No matter what, when a better mouse trap comes along, like Auvi-Q, you’re not going to get everybody to move off of it right away,” Sanofi attorney Gregory Silbert of the firm Weil Gotshal & Manges in New York told the three-judge panel.

Senior U.S. Circuit Judge Bobby Baldock, a Ronald Reagan appointee, questioned Silbert on how heavily his argument relied on behavioral economics.

“From what I’ve read that is an explanation of behavioral economics,” Baldock said.

Silbert initially denied Sanofi’s argument needs to pull from behavioral economics, but acknowledged Baldock’s viewpoint.

“Whatever terminology we use here, I don’t want to lose sight of the fact question,” Silbert said.

U.S. Circuit Judge Nancy Moritz, an Obama appointee, homed in on Sanofi’s claims that Mylan controlled the market.

“If there is a fact question, it has to be material,” Moritz said. “And I’d like for you to explain why there is an entrenched market share, why that’s material to our evaluation of whether there was substantial market foreclosure.”

Silbert described his perception of Mylan’s market strategy.

“Mylan can inflict a penalty on a payer that refuses to lock us out and that means that Mylan is exercising monopoly power,” Silbert said. “[Mylan] could not do this in a competitive market, because in a competitive market, no one has to buy EpiPens.”

Baldock asked why Sanofi didn’t just spend its way into the market.

“That’s what we did do,” Silbert said with a chuckle. “But normally you don’t have to do that if you have a better mousetrap.”

After struggling to gain a foothold in the market, Sanofi discovered a defect that might prevent Auvi-Q devices from delivering the drug as needed and recalled the product in October 2015. Rather than relaunch, Sanofi returned its rights to its inventor Kaleo, previously known as Intelliject.

“They weren’t driven from the market by anything my client did, they were driven from the market by the recall,” said Mylan’s attorney Roy Englert with Robbins Russell Englert Orseck & Untereiner.

During the same period, Mylan’s price increases drew national scrutiny, with executives called to testify before Congress in 2016. Mylan settled with the Department of Justice for $465 million in 2017 over a False Claims Act violation, then settled for $30 million with the Securities Exchange Commission in 2019.

“I’m interested in what we do with the fact that it seems prior to Auvi-Q entering the market there was a pretty unprecedented price escalation of the EpiPen on Mylan’s part,” Moritz said. “What I understand Sanofi to be arguing is that your monopoly combined with that unprecedented price escalation puts you in a position of being able to offer these substantial discounts because you put yourself in that position.”

Englert tried to draw a distinct line between the price hikes and Sanofi’s discount complaint.

“This is not a case of the low-cost pricing, this is a case in which Sanofi says Mylan raised its price and it was unable to compete at an equal or higher price,” Englert said. “This doesn’t add up. If our prices are especially high, it increases Sanofi’s ability to compete, not decreases it.”

But Sanofi got the final word.

“My friend on the other side says we were excluded from the market because we chose not to compete on price,” Silbert concluded. “That’s a fact question the jury should decide.”

The Open Markets Institute and the Allergy & Asthma Network submitted amicus briefs on behalf of Sanofi, while the U.S. Chamber of Commerce sided with Mylan.

U.S. Circuit Judge Allison Eid, appointed by Donald Trump, rounded out the panel, which held Wednesday's hearing remotely with a public broadcast on YouTube. The court did not indicate when or how it would decide the case.

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