United States District Court, D. New Jersey
MARY L. COOPER, District Judge.
This antitrust dispute concerns parties marketing certain brand-name pharmaceuticals used to treat blood clots in patients with deep vein thrombosis ("DVT"). Specifically, Eisai Inc. ("Eisai"), the plaintiff, marketed Fragmin®, an anticoagulant drug product known as a low molecular weight heparin ("LMWH"). The defendants, Sanofi-Aventis U.S., LLC, and Sanofi-Aventis, U.S., Inc. (collectively "Sanofi"), marketed Lovenox®, another LMWH. Eisai sued Sanofi based on Sanofi's alleged anticompetitive and monopolistic conduct in its marketing of Lovenox®. Eisai's claims primarily relate to Sanofi's use of loyalty-discount contracts. Eisai asserts that this conduct violates § 1 and § 2 of the Sherman Act, § 3 of the Clayton Act, and New Jersey state law. Before the Court is Sanofi's motion for summary judgment as to its liability under the antitrust laws. (Docket entry no. ("dkt.") 245, Sanofi's Notice of Mot. for Summ. J. on Liability Issues.) For the reasons that follow, this motion is granted in its entirety.
I. UNDISPUTED FACTS
A. Overview of the Drugs
The undisputed facts are based on the summary judgment record following the close of discovery. DVT, a condition in which a blood clot develops in the body's veins, can result in a pulmonary embolism ("PE") if the clot travels to the lungs. (Dkt. 287, Pl.'s Response to Defs.' Rule 56.1 Statement at ¶ 1.) LMWHs are used in the treatment and prevention of DVT. (Id. at ¶ 2.) Lovenox®, marketed in the United States by Sanofi, and Fragmin®, marketed in the United States by Eisai, are two such LMWHs. (Id. at ¶¶ 3, 4.) The relevant period for the Court's analysis in this case is the time during which Eisai was selling Fragmin® in the United States and Sanofi was using loyalty-discount contracts to sell Lovenox®, September 27, 2005 to July 25, 2010. (Dkt. 250, Walsh Decl., Ex. 42, Expert Report of Professor Nicholas Economides dated 9-10-12 ("Economides Report") at ¶ 10; see also id. at Ex. 35, Expert Report of Professor Einer Elhauge dated 9-10-12 ("Elhauge Report") at ¶ 8 n.1.)
Innohep® is another LMWH that was manufactured by a company known as LEO Pharma Inc. and sold in the United States from 2000 to 2011. (Dkt. 287 at ¶¶ 6, 140.) It was approved by the United States Food & Drug Administration ("FDA") for "the treatment of acute symptomatic [DVT] with or without [PE] when administered in conjunction with warfarin sodium." (Dkt. 287-1, Duffy Certif., Ex. 7, Innohep Approval Letter, NDA 20-484 at 1.)
Arixtra®, while not an LMWH, is "a synthetic pentasaccharide, injectable anticoagulant" that was approved by the FDA in 2001. (Dkt. 287 at ¶ 5.) From 2005 to 2010, Arixtra® was sold in the United States by a company known as GlaxoSmithKline. (Id.) Arixtra® has six indications:
prophylaxis of [DVT], which may lead to [PE]:
in patients undergoing hip fracture surgery, including extended prophylaxis;
in patients undergoing hip replacement surgery;
in patients undergoing knee replacement surgery;
in patients undergoing abdominal surgery who are at risk for thromboembolic complications.
... the treatment of acute [DVT] when administered in conjunction with warfarin sodium.
... the treatment of acute [PE] when administered in conjunction with warfarin sodium when initial therapy is administered in the hospital.
(Dkt. 250, Ex. 20, FDA Prescribing Information for Arixtra® at 3; see also dkt. 287 at ¶ 129.)
Lovenox®, which was approved by the FDA in 1993, is indicated:
for the prophylaxis of [DVT], which may lead to [PE]:
in patients undergoing abdominal surgery who are at risk for thromboembolic complications.
in patients undergoing hip replacement surgery, during and following hospitalization.
in patients undergoing knee replacement surgery.
in medical patients who are at risk for thromboembolic complications due to severely restricted mobility during acute illness.
the inpatient treatment of acute [DVT] with or without [PE], when administered in conjunction with warfarin sodium.
the outpatient treatment of acute [DVT] without [PE] when administered in conjunction with warfarin sodium.
... for the prophylaxis of ischemic complications of unstable angina and non-Q-wave myocardial infarction, when concurrently administered with aspirin.
Lovenox, when administered concurrently with aspirin, has been shown to reduce the rate of the combined endpoint of recurrent myocardial infarction or death in patients with acute STsegment elevation myocardial infarction (STEMI) receiving thrombolysis and being managed medically or with percutaneous coronary intervention (PCI) [("the Unique Cardiology Indication")].
(Dkt. 250, Ex. 1, FDA Prescribing Information for Lovenox® at 2 (internal cross references omitted); see also dkt. 287 at ¶¶ 3, 16-24.) Sanofi asserts that Lovenox® has a total of eight indications, but, by Eisai's count, Lovenox® has seven. (Dkt. 287 at ¶ 16.)
Fragmin® has five FDA-approved indications:
... prophylaxis of ischemic complications in unstable angina and non-Q-wave myocardial infarction, when concurrently administered with aspirin therapy.
... prophylaxis of [DVT], which may lead to [PE]:
In patients undergoing hip replacement surgery;
In patients undergoing abdominal surgery who are at risk for thromboembolic complications;
In medical patients who are at risk for thromboembolic complications due to severely restricted mobility during acute illness.
... extended treatment of symptomatic venous thromboembolism (VTE) (proximal DVT and/or PE), to reduce the recurrence of VTE in patients with cancer [("the Cancer Indication")]....
FRAGMIN is not indicated for the acute treatment of VTE. (Dkt. 250, Ex. 10, FDA Prescribing Information for Fragmin® at 2 (internal cross references omitted); see also dkt. 287 at ¶¶ 51-55, 59.) While Fragmin® was initially approved by the FDA for some uses in 1994, Fragmin® received FDA approval for the Cancer Indication in 2007. (Dkt. 287 at ¶¶ 4, 59.)
Lovenox® has more FDA-approved indications than Arixtra®, Innohep®, or Fragmin®. (Id. at ¶ 25.) Arixtra® also has more indications than Fragmin®. (Id. at ¶ 66.)
As the foregoing illustrates, Arixtra® and the LMWHs - Lovenox®, Fragmin®, and Innohep® - all had indications that related to the treatment and/or prevention of DVT. According to Sanofi, some individuals in the medical field view unfractionated heparin ("UFH") and warfarin as serving a similar purpose to Arixtra® and the LMWHs, i.e., treatment and prevention of blood clots and DVT. (Id. at ¶ 7.)
Generic versions of Lovenox® and Arixtra® were approved by the FDA in July 2010 and July 2011 respectively. (Id. at ¶¶ 8-9.) In the United States, no generic version of Fragmin® is available. (Id. at ¶ 10.) Innohep® was voluntarily removed from the market in 2011 by LEO Pharma Inc. following a contamination recall. (Id. at ¶¶ 6, 142.)
It is undisputed that during the relevant period, as between Lovenox®, Arixtra®, Fragmin®, and Innohep® - the Lovenox® Therapeutic Class ("LTC") - Lovenox® has enjoyed the greatest market share. Specifically, during the relevant period, Lovenox® had an LTC market share of 81.5% to 92.3%. (Economides Report at ¶¶ 10, 12; see also Elhauge Report at ¶ 1; dkt. 247, Sanofi Br. in Support of Mot. for Summ. J. ("Sanofi Br.") at 18.)
B. Sale of Drugs to Hospitals
1. Sanofi's Marketing of Lovenox®
The focus of Eisai's claims against Sanofi is Sanofi's marketing of Lovenox® to hospitals.
a. Group Purchasing Organizations and Wholesalers
The United States had about 6, 000 hospitals in 2006, and most were members of a group purchasing organization ("GPO"). (Dkt. 287 at ¶ 12.) A GPO is an organization comprised of hospital members "that uses the aggregated purchase power of its individual members to negotiate contracts and discounts on drug products from pharmaceutical manufacturers." (Id. at ¶ 11.) Many GPOs had contracts for the purchase of Lovenox®, Arixtra®, and Fragmin® available to their member hospitals. (Id. at ¶ 13.) Sanofi does not sell Lovenox® directly to hospital customers. Rather, it sells Lovenox® to pharmaceutical wholesalers, who ultimately distribute the product to the hospitals. (Id. at ¶¶ 14-15.) These wholesalers sell Lovenox® to the hospital at the price negotiated by the GPO. (Dkt. 250, Ex. 21, Brunken Decl. at ¶ 6.)
b. Sanofi's Market-Share Discounts
Beginning in September 2005, Sanofi began offering its "Lovenox® (enoxaparin sodium) Acute Contract Value Program" ("Lovenox® Program" or "Lovenox® contract") to GPOs in the form of contracts. (Dkt. 287 at ¶ 26.) The Lovenox® Program provided for "discounts" off the wholesale acquisition cost ("WAC"), also known as the list price, of Lovenox® based on the amount of Lovenox® purchased by a customer. (Id.) These discounts were calculated based on both the customer's volume of Lovenox® purchases and a market-share calculation. (Id. at ¶ 28; see also dkt. 250, Ex. 23, First Addendum to Premier Purchasing Partners, L.P./sanofi-aventis U.S. LLC Group Purchase Agreement.) The contracts defined the market share as "the rolling four (4) months of Units of Lovenox® purchased" by the customer "divided by the rolling four (4) months of Units of all products within the" LTC market, defined as Lovenox®, Fragmin®, Arixtra®, and Innohep®, that were purchased by the customer. (See dkt. 250, Ex. 23 at 9.) Greater discounts were offered where customers purchased higher volumes and higher market shares of Lovenox®. (See dkt. 287 at ¶ 30.)
The Lovenox® Program generally treated a GPO's hospital members as the individual customers for the purposes of determining the volume and market share. However, if certain criteria were satisfied, multiple hospitals could be classified as a system, which would result in their volumes being aggregated and their market shares being measured collectively for the purposes of determining system discounts. (Id. at ¶ 31.)
The discount structure for individual hospital customers, as of June 16, 2008, is demonstrated in the following table:
(Id. at ¶ 30.) As this table shows, the discounts off the wholesale price for individual hospital customers ranged from 1% to 30%. For hospitals treated as a system, the discount structure is depicted in the following table:
(Id. at ¶ 32.)
It is undisputed that between September 2005 and August 2010, Sanofi did not sell Lovenox® to hospitals at a price that was below Sanofi's cost even after the discounts were applied. (Id. at ¶ 45.) Moreover, whether described as a discount or a penalty program, it is undisputed that the Lovenox® Program did not contractually obligate customers to purchase any amount of Lovenox® from Sanofi. (See id. at ¶ 34.) The consequence of not achieving a certain volume or market-share level was that the customer would not earn the corresponding discount. (See id. at ¶ 35.) The Lovenox® Program contracts were also terminable at any time by any party for any reason upon thirty days' written notice. (Id. at ¶ 41.) Terminating the contract meant that a member hospital would not receive the tiered discounts on purchases of Lovenox®, but instead, the hospital could purchase "off contract" from wholesalers at the wholesale price. (Id. at ¶¶ 42-43.) Sanofi ended the Lovenox® Program when the first generic came on the market in July 2010. (Id. at ¶ 44.)
c. Formulary Access Clauses
In addition to these structured discounts, the Lovenox® Program contracts contained Formulary Access Clauses that Eisai asserts are part of the overall picture of anticompetitive conduct by Sanofi. A "formulary" is a health-care organization's (such as a hospital) "continually updated list of medications and related information, representing the clinical judgment of physicians, pharmacists, and other experts in the diagnosis, prophylaxis, or treatment of disease and promotion of health." (ASHP Guidelines on the Pharmacy and Therapeutics Committee and the Formulary System, American Society of Health-System Pharmacists, 172, http://www.ashp.org/DocLibrary/BestPractices/FormGdlPTCommFormSyst. aspx.) The hospital "establishes policies regarding the use of drugs, therapies, and drug-related products and identifies those that are most medically appropriate and cost-effective to best serve the health interests of a given patient population." (Id.) Generally, a hospital's pharmacy and therapeutics committee ("P&T Committee"), which is comprised of doctors and health-care providers from various disciplines, manages a formulary and makes decisions - based on factors such as safety, efficacy, and cost - regarding what treatments and medications (such as LMWHs) are "on formulary" and whether certain medications should be added or deleted from the formulary. (See id. at 172-74; dkt. 287 at ¶¶ 145, 146.) In essence, a formulary "determines what treatments are available for use at a particular hospital." (Dkt. 287 at ¶ 144.)
It is possible, at least in some hospitals disclosed in the record, for a physician to prescribe anticoagulants that are not on formulary. (See id. at ¶ 157.) Additionally, many hospitals have multiple drugs with similar indications on formulary. Hospitals may have more than one anticoagulant on formulary, and there are several examples in the record where a hospital's formulary contained multiple LTC drugs, such as Lovenox® and Fragmin®. (See id. at ¶¶ 152-56.)
Hospitals may also do a "therapeutic interchange, " meaning that one drug or treatment is substituted for another drug or treatment, either primarily or exclusively, for a condition or conditions where either drug or treatment is effective for the same condition(s). (See id. at ¶ 170.) Thus, following a therapeutic interchange, if a physician wrote a prescription for a drug that was no longer the preferred or exclusive drug, a hospital would do one of two things. Either (a) the pharmacy would automatically substitute that drug "with the equivalent dose with the correct indication" of the drug that was preferred or exclusive following the therapeutic interchange (dkt. 250, Ex. 47, Dep. of Michael Edwards at 38), or (b) "the pharmacy department would notify the physician" and ask whether "he would like to use the medication that was on our therapeutic interchange." (Id. at Ex. 41, Dep. of Monty Person at 71-72.)
Against this backdrop, the Court can evaluate the Formulary Access Clauses. The Formulary Access Clauses in the Lovenox® Program contracts required members to provide "unrestricted formulary access for Lovenox for all Lovenox FDA-approved indications, as noted in the Lovenox prescribing information, in such manner that Lovenox is not more restricted or limited in its availability than any other product in the [LTC]." (Dkt. 287 at ¶ 36.) Moreover, the clause dictated that members of the program
shall not impose any restrictions or limitations on any marketing or promotional programs for Lovenox, including (but not limited to) documentation or communication that disfavors Lovenox, identifies Lovenox in a less than equal status with other products in the [LTC], or places greater restrictions on access by [Sanofi] sales representatives to healthcare professionals than is permitted for other pharmaceutical manufacturer ...