(CN) — The 10th Circuit Court of Appeals on Friday ruled in favor of Mylan, distributor of EpiPen, the famously expensive auto-injectable device used to treat anaphylaxis, an extreme allergic reaction.
Mylan had been sued by Sanofi, one of the world's largest pharmaceutical companies, on antitrust grounds, claiming that Mylan had offered extensive coupons and rebates to consumers and insurers in order to block competition. Those discounts didn't exactly make the EpiPen cheap; but Sanofi argued that they lured insurers into exclusive arrangements with Mylan, requiring them to cover EpiPen and not the newer, Sanofi-made competitor Auvi-Q.
Although EpiPen's share of the market ranged from 80% to 98% between 2011 and 2017, according to court filings, Mylan argued that its "rebate contracts were short-term and easily terminable" and thus "never prevented payors from making formulary changes." A U.S. District Court agreed, and tossed out the lawsuit.
The 10th Circuit, in an 89-page decision (an "extraordinary length," by the court's own admission), sided with the federal court and said the lawsuit had not offered any evidence "of actual or threatened consumer harm."
In his opinion, U.S. Circuit Judge Bobby Baldock, a Ronald Reagan appointee, wrote that the use of coupons and rebates are appropriate within the U.S. health care system.
"When a patient purchases health insurance, the patient necessarily relinquishes some treatment-choice autonomy in exchange for lower premiums," Baldock wrote. "Adopting a consumer choice framework would frustrate, for example, the patient who sought out a health plan with a tighter formulary and lower premiums, because the health plan would be obligated to cover both EpiPen and Auvi-Q when covering EpiPen alone would be cheaper. The proper balance between health plan premiums and formulary coverage is better struck through the workings of the private market than the judiciary."
Baldock added that at its very worst, only 31% of the U.S. population was blocked by insurance companies from using Auvi-Q.
In a written statement, a Sanofi spokesperson said: "We are disappointed by the Tenth Circuit Court of Appeals’ decision and continue to firmly believe Mylan’s actions were anticompetitive. We are evaluating next steps."
Mylan acquired the generics division of Merck in 2007, giving it the rights to market and distribute EpiPen, of which a box of two sold for $100. By 2016, the price had risen to $608. The story became a national scandal, a symbol of pharmaceutical greed, leading to congressional hearings.
Both Mylan and Pfizer, the manufacturer of EpiPen, have been sued for price gouging; earlier this month, a federal court in Kansas approved a $264 million settlement between Mylan and a class of plaintiffs.
Sanofi had launched Auvi-Q in 2013, marketing its product as the premium auto-injectable — a "better mousetrap," as Sanofi lawyers would later argue. It initially eschewed discounts and exclusivity arrangements, and was punished in the marketplace. It later reversed course and was gaining market share when, in 2015, it was forced to recall its product after a defect was discovered. Instead of relaunching, Sanofi returned the rights to sell Auvi-Q to its inventor.
"They weren’t driven from the market by anything my client did," said Mylan’s attorney Roy Englert during oral arguments. "They were driven from the market by the recall.”
The three-judge panel was rounded out by Nancy Moritz, a Barack Obama appointee, and Allison Eid, a Donald Trump appointee.
Follow @hillelaron
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.
