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In re Lipitor Antitrust Litigation

United States Court of Appeals, Third Circuit

August 21, 2017

In re: LIPITOR ANTITRUST LITIGATION RITE AID CORPORATION; RITE AID HDQTRS CORPORATION; JCG (PJC) USA, LLC; MAXI DRUG, INC. d/b/a Brooks Pharmacy; ECKERD CORPORATION, Appellants in No. 14-4202 WALGREEN COMPANY; THE KROGER COMPANY; SAFEWAY, INC.; SUPERVALU, INC.; HEB GROCERY COMPANY L.P., Appellants in No. 14-4203 GIANT EAGLE, INC., Appellant in No. 14-4204 MEIJER INC.; MEIJER DISTRIBUTION, INC., Appellants in No. 14-4205 ROCHESTER DRUG CO-OPERATIVE, INC.; STEPHEN L. LAFRANCE PHARMACY, INC. d/b/a SAJ DISTRIBUTORS; BURLINGTON DRUG COMPANY, INC.; VALUE DRUG COMPANY; PROFESSIONAL DRUG COMPANY, INC.; AMERICAN SALES COMPANY LLC, Appellants in No. 14-4206 A.F.L.-A.G.C. BUILDING TRADES WELFARE PLAN; MAYOR AND CITY COUNCIL OF BALTIMORE, MARYLAND; NEW MEXICO UNITED FOOD AND COMMERCIAL WORKERS UNION'S AND EMPLOYERS' HEALTH AND WELFARE TRUST FUND; LOUISIANA HEALTH SERVICE INDEMNITY COMPANY, d/b/a BLUE CROSS/BLUE SHIELD OF LOUISIANA; BAKERS LOCAL 433 HEALTH FUND; TWIN CITIES BAKERY WORKERS HEALTH AND WELFARE FUND; FRATERNAL ORDER OF POLICE, FORT LAUDERDALE LODGE 31, INSURANCE TRUST FUND; INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS LOCAL 98; NEW YORK HOTEL TRADES COUNSEL & HOTEL ASSOCIATION OF NEW YORK CITY, INC., HEALTH BENEFITS FUND; EDWARD CZARNECKI; EMILIE HEINLE; FRANK PALTER; ANDREW LIVEZEY; EDWARD ELLENSON; JEAN ELLYNE DOUGAN; NANCY BILLINGTON, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, Appellants in No. 14-4602 IN RE: EFFEXOR XR ANTITRUST LITIGATION WALGREEN, CO.; THE KROGER, CO.; SAFEWAY, INC.; SUPERVALU, INC.; HEB GROCERY COMPANY LP; AMERICAN SALES COMPANY, INC., Appellants in No. 15-1184 RITE AID CORPORATION; RITE AID HDQTRS., CORPORATION; JCG (PJC) USA, LLC; MAXI DRUG, INC. d/b/a BROOKS PHARMACY; ECKERD CORPORATION; CVS CAREMARK CORPORATION, Appellants in No. 15-1185 GIANT EAGLE, INC., Appellant in No. 15-1186 MEIJER, INC.; MEIJER DISTRIBUTION, INC., Appellants in No. 15-1187 PROFESSIONAL DRUG COMPANY, INC.; ROCHESTER DRUG CO-OPERATIVE, INC.; STEPHEN L. LAFRANCE HOLDINGS, INC.; STEPHEN L. LAFRANCE PHARMACY, INC. d/b/a SAJ DISTRIBUTORS; UNIONDALE CHEMIST, INC., Appellants in No. 15-1274 PAINTERS DISTRICT COUNCIL NO. 30 HEALTH & WELFARE FUND; MEDICAL MUTUAL OF OHIO, Appellants in No. 15-1323 A.F. of L.-A.G.C. BUILDING TRADES WELFARE PLAN; DARYL DEINO; IBEW-NECA LOCAL 505 HEALTH & WELFARE PLAN; LOUISIANA HEALTH SERVICE INDEMNITY COMPANY d/b/a BLUE CROSS/BLUE SHIELD OF LOUISIANA; MAN-U SERVICE CONTRACT TRUST FUND; MC-UA LOCAL 119 HEALTH & WELFARE PLAN; NEW MEXICO UNITED FOOD AND COMMERCIAL WORKERS UNION'S AND EMPLOYERS' HEALTH AND WELFARE TRUST FUND; PLUMBERS AND PIPEFITTERS LOCAL 572 HEALTH AND WELFARE FUND; SERGEANTS BENEVOLENT ASSOCIATION HEALTH AND WELFARE FUND; PATRICIA SUTTER (TOGETHER “END-PAYOR CLASS PLAINTIFFS”) ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, Appellants in No. 15-1342

          Argued May 19, 2017

         On Appeal from the United States District Court for the District of New Jersey (MDL 2332) / (D.N.J. No. 3-12-cv-02389) / (D.N.J. No. 3-12-cv-02478) / (D.N.J. No. 3-12-cv-04115) / (D.N.J. No. 3-12-cv-04537) / (D.N.J. No. 3-12-cv-05129) / (D.N.J. No. 3-12-cv-06774) / (D.N.J. No. 3-12-cv-07561) / (D.N.J. No. 3-11-cv-05479) / (D.N.J. No. 3-11-cv-05590) / (D.N.J. No. 3-11-cv-05661) / (D.N.J. No. 3-11-cv-06985) / (D.N.J. No. 3-11-cv-07504) / (D.N.J. No. 3-12-cv-03116) / (D.N.J. No. 3-12-cv-03523) District Judge: The Honorable Peter G. Sheridan

          Monica L. Kiley Hangley Aronchick Segal Pudlin & Schiller Maureen S. Lawrence Barry L. Refsin [ARGUED] Hangley Aronchick Segal Pudlin & Schiller Counsel for Appellants Rite Aid Corp., Rite Aid Hdqtrs. Corp., Maxi Drug Inc., Eckerd Corp. and JCG (PJC) USA LLC.

          Anna T. Neill Scott E. Perwin [ARGUED] Lauren C. Ravkind Kenny Nachwalter, P.A. Counsel for Appellants Walgreen Co., Kroger Co., Safeway Inc., Supervalu, Inc., HEB Grocery Co. LP and American Sales Co. LLC.

          David P. Germaine Joseph M. Vanek Vanek, Vickers & Masini, P.C. Moira Cain-Mannix Bernard D. Marcus Erin G. Allen Marcus & Shapira LLP One Oxford Centre 35th Floor Pittsburgh, PA 15219 Counsel for Appellant Giant Eagle, Inc.

          Bradley J. Demuth, Linda P. Nussbaum, Nussbaum Law Group P.C. David P. Germaine Joseph M. Vanek Vanek Vickers & Masini Counsel for Appellants Meijer, Inc. and Meijer Distribution.

          Gregory T. Arnold Kristen A. Johnson Kristie A. LaSalle Thomas M. Sobol [ARGUED] Hagens Berman Sobol & Shapiro LLP Caitlin Coslett Eric L. Cramer Jennifer MacNaughton Daniel Simons David F. Sorensen [ARGUED] Richard D. Schwartz Berger & Montague, P.C., Elena K. Chan Bruce E. Gerstein [ARGUED] Kimberly Hennings Garwin Gerstein & Fisher LLP Peter Kohn Richard D. Schwartz Faruqi & Faruqi LLP Miles Greaves Barry S. Taus Taus Cebulash & Landau, LLP, Erin C. Burns Dianne M. Nast NastLaw LLC Don Barrett Barrett Law Group Counsel for Appellants Direct-Purchaser Class Plaintiffs Rochester Drug Co-Operative, Inc., et al.

          James E. Cecchi [ARGUED] Lindsey H. Taylor Carella, Byrne, Cecchi, Olstein, Brody, & Agnello, P.C. Peter S. Pearlman Cohn Lifland Pearlman Herrmann & Knopf LLP Liaison Counsel for Appellants Direct-Purchaser Class Plaintiffs Rochester Drug Co-Operative, Inc., et al.

          Justin N. Boley Bethany R. Turke Kenneth A. Wexler Wexler Wallace LLP James W. Anderson Vincent J. Esades Renae Steiner David R. Woodward [ARGUED] Heins Mills & Olson, P.L.C. J. Douglas Richards Sharon K. Robertson Cohen Milstein Sellers & Toll, PLLC Michael M. Buchman Alex Straus, Esq. Motley Rice LLC, Jeffrey L. Kodroff John A. Macoretta Spector Roseman Kodroff & Willis Counsel for Appellants End-Payor Class Plaintiffs AFL-AGC Building Trades Welfare Plan, et al.

          Lisa J. Rodriguez, Schnader Harrison Segal & Lewis LLP Woodland Falls Corporate Park Liaison Counsel for Appellants End-Payor Class Plaintiffs AFL-AGC Building Trades Welfare Plan, et al.

          Joseph M. Alioto Jamie L. Miller Theresa Driscoll Moore Alioto Law Firm Timothy A.C. May Gil D. Messina Messina Law Firm, P.C. Lori A. Fanning Marvin A. Miller Matthew E. Van Tine Miller Law LLC Kevin P. Roddy, Wilentz, Goldman & Spitzer, P.A. Mark S. Sandmann Hill Carter Franco Cole & Black, P.C. Counsel for Appellants Painters District Council No. 30 Health & Welfare Fund and Medical Mutual of Ohio.

          Steve D. Shadowen Hilliard & Shadowen LLP Michael A. Carrier Rutgers Law School Counsel for 48 Law, Economics, and Business Professors and the American Antitrust Institute as Amici Curiae in support of Appellants.

          Jonathan E. Nuechterlein, Former General Counsel David C. Shonka, Acting General Counsel Joel Marcus, Director of Litigation Michele Arington, Assistant General Counsel Deborah L. Feinstein, Director Markus H. Meier, Acting Deputy Director Bradley S. Albert, Deputy Assistant Director Elizabeth R. Hilder Heather Johnson Jamie R. Towey Counsel for Federal Trade Commission as Amicus Curiae in support of Appellants.

          Dimitrios T. Drivas Raj S. Gandesha Bryan D. Gant Sheryn E. George Robert A. Milne [ARGUED] Brendan G. Woodard Amy E. Boddorff White & Case LLP Liza M. Walsh Eleonore Ofosu-Antwi Walsh Pizzi O'Reilly & Falanga Counsel for Appellees Pfizer, Inc., Pfizer Ireland Pharmaceuticals, Warner- Lambert Company, Warner-Lambert Company LLC, Wyeth, Inc., Wyeth Pharmaceuticals, Inc., Wyeth-Whitehall Pharmaceuticals LLC and Wyeth Pharmaceuticals Company.

          Jonathan D. Janow John C. O'Quinn Gregory L. Skidmore Edwin J. U Karen N. Walker Kirkland & Ellis LLP Jay P. Lefkowitz, [ARGUED] Joseph Serino, Jr. Steven J. Menashi Kirkland & Ellis LLP Counsel for Appellees Ranbaxy, Inc., Ranbaxy Pharmaceuticals, Inc., Ranbaxy Laboratories Ltd., Teva Pharmaceutical Industries Ltd. and Teva Pharmaceuticals USA, Inc.

          Katherine A. Helm Noah M. Leibowitz Simpson Thacher & Bartlett LLP Victor E. Schwartz Philip S. Goldberg Cary Silverman Shook, Hardy & Bacon L.L.P. Counsel for American Tort Reform Association and Pharmaceutical Research and Manufacturers of America as Amici Curiae in support of Appellees.

          Jonathan D. Hacker Edward Hassi O'Melveny & Myers LLP Counsel for Antitrust Economists as Amici Curiae in support of Appellees.

          Ashley Bass Stephen Bartenstein Andrew D. Lazerow Covington & Burling LLP Counsel for Pharmaceutical Research and Manufacturers of America as Amicus Curiae in support of Appellees.

          Roy Chamcharas Peter J. Curtin William A. Rakoczy Molino Mazzochi & Siwik LLP Brian T. Burgess Goodwin Procter LLP Christopher T. Holding Goodwin Procter LLP Counsel for Generic Pharmaceutical Association as Amicus Curiae in support of Appellees.

          Before: SMITH, Chief Judge, AMBRO, and FISHER, Circuit Judges

          OPINION

          SMITH, CHIEF JUDGE.

         This opinion addresses two sets of consolidated appeals concerning two pharmaceutical drugs: Lipitor and Effexor XR. In both sets of consolidated appeals, plaintiffs allege that the companies holding the patents related to Lipitor and Effexor XR fraudulently procured and enforced certain of those patents. Plaintiffs further allege that those companies holding the patents entered into unlawful, monopolistic settlement agreements with potential manufacturers of generic versions of Lipitor and Effexor XR. The same District Court Judge dismissed the complaints in the Lipitor litigation and dismissed certain allegations in the Effexor litigation. Those decisions relied on plausibility determinations that are now challenged on appeal.

         We begin with a brief summary of the relevant regulatory scheme applicable to pharmaceutical drugs and then detail the factual and procedural backgrounds of these two sets of consolidated appeals. The remainder of the opinion broadly covers two issues. First, in F.T.C. v. Actavis, Inc., 133 S.Ct. 2223 (2013), the Supreme Court concluded that payments from patentees to infringers through "reverse payment settlement agreements" are subject to antitrust scrutiny. Id. at 2227. In both sets of consolidated appeals, plaintiffs allege that the companies holding the pharmaceutical patents and the generic manufacturers entered into such agreements. We are asked to decide whether those allegations are plausible. We conclude, as to both sets of appeals, that they are. Second, regarding only the Lipitor consolidated appeals, we address whether plaintiffs in those appeals pled plausible allegations of fraudulent patent procurement and enforcement, as well as other related misconduct. We again determine that those allegations are indeed plausible. Accordingly, we will reverse the District Court's dismissal of the complaints in the Lipitor litigation, reverse its dismissal of the allegations in the Effexor litigation, and remand for further proceedings.

         I

         The 1984 Drug Price Competition and Patent Term Restoration Act (the "Hatch-Waxman Act"), 98 Stat. 1585, as amended, provides a regulatory framework designed in part to (1) ensure that only rigorously tested pharmaceutical drugs are marketed to the consuming public, (2) incentivize drug manufacturers to invest in new research and development, and (3) encourage generic drug entry into the marketplace. As we have noted previously, the Hatch-Waxman Act contains four key relevant features. See In re Lipitor Antitrust Litig., 855 F.3d 126, 135 (3d Cir. 2017) (Lipitor III), as amended (Apr. 19, 2017); King Drug Co. of Florence v. Smithkline Beecham Corp., 791 F.3d 388, 394 (3d Cir. 2015), cert. denied, 137 S.Ct. 446 (2016).

         First, the Hatch-Waxman Act requires a drug manufacturer wishing to market a new brand-name drug to first submit a New Drug Application ("NDA") to the Food and Drug Administration ("FDA"), see 21 U.S.C. § 355, and then undergo a long, complex, and costly testing process, see 21 U.S.C. § 355(b)(1) (requiring, among other things, "full reports of investigations" into safety and effectiveness; "a full list of the articles used as components"; and a "full description" of how the drug is manufactured, processed, and packed). If this process is successful, the FDA may grant the drug manufacturer approval to market the brand-name drug.

         Second, after that approval, a generic manufacturer can obtain similar approval by submitting an Abbreviated New Drug Application ("ANDA") that "shows that the generic drug has the same active ingredients as, and is biologically equivalent to, the brand-name drug." Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, 566 U.S. 399, 405 (2012) (citing 21 U.S.C. §§ 355(j)(2)(A)(ii), (iv)). This way, a generic manufacturer does not need to undergo the same costly approval procedures to develop a drug that has already received FDA approval. Actavis, 133 S.Ct. at 2228 ("The Hatch-Waxman process, by allowing the generic to piggy-back on the pioneer's approval efforts, 'speed[s] the introduction of low-cost generic drugs to market, ' Caraco, [566 U.S. at 405], thereby furthering drug competition." (first alteration in original)).

         Third, foreseeing the potential for conflict between brand-name and generic drug manufacturers, the Hatch-Waxman Act "sets forth special procedures for identifying, and resolving, related patent disputes." Id. The Hatch-Waxman Act, as well as federal regulations, requires brand-name drug manufacturers to file information about their patents with their NDA. Id. The brand-name manufacturer "is required to list any patents issued relating to the drug's composition or methods of use." Lipitor III, 855 F.3d at 135. That filing must include the patent number and expiration date of the patent. See Caraco, 566 U.S. at 405 (quoting 21 U.S.C. § 355(b)(1)). Upon approval of the brand-name manufacturer's NDA, the FDA publishes the submitted patent information in its "Orange Book, " more formally known as the Approved Drug Products with Therapeutic Equivalence Evaluations. Id. at 405-06.

         Once a patent has been listed in the Orange Book, the generic manufacturer is free to file an ANDA if it can certify that its proposed generic drug will not actually violate the brand manufacturer's patents. Id. at 405; see also id. (The FDA "cannot authorize a generic drug that would infringe a patent."). A generic manufacturer's ANDA certification may state:

(I) that such patent information has not been filed,
(II) that such patent has expired,
(III). . . the date on which such patent will expire, or
(IV) that such patent is invalid or will not be infringed by the manufacture, use, or sale of the new drug for which the application is submitted.

21 U.S.C. § 355(j)(2)(A)(vii). "The 'paragraph IV' route[], automatically counts as patent infringement . . . ." Actavis, 133 S.Ct. at 2228 (citing 35 U.S.C. § 271(e)(2)(A)). As a result, a paragraph IV certification often "means provoking litigation" instituted by the brand manufacturer. Caraco, 566 U.S. at 407.

         If the brand-name manufacturer initiates a patent infringement suit within 45 days of the ANDA filing, the FDA must withhold approval of the generic for at least 30 months while the parties litigate the validity or infringement of the patent. Actavis, 133 S.Ct. at 2228 (citing 21 U.S.C. § 355(j)(5)(B)(iii)). If a court decides the infringement claim within this 30-month period, then the FDA will follow that determination. Id. However, if the litigation is still proceeding at the end of the 30-month period, the FDA may give its approval to the generic drug manufacturer to begin marketing a generic version of the drug. Id. The generic manufacturer then has the option to launch "at risk, " meaning that, if the ongoing court proceeding ultimately determines that the patent was valid and infringed, the generic manufacturer will be liable for the brand-name manufacturer's lost profits despite the FDA's approval. See King Drug Co., 791 F.3d at 396 n.8.

         Fourth, to incentivize generic drug manufacturers to file an ANDA challenging weak patents, the Hatch-Waxman Act provides that the first generic manufacturer to file a paragraph IV certification will enjoy a 180-day exclusivity period. 21 U.S.C. § 355(j)(5)(B)(iv). This exclusivity period prevents any other generic from competing with the brand-name drug, see Actavis, 133 S.Ct. at 2229, which is an opportunity that can be "worth several hundred million dollars, " to the first-ANDA filer, id. (quoting C. Scott Hemphill, Paying for Delay: Pharmaceutical Patent Settlement as a Regulatory Design Problem, 81 N.Y.U. L. Rev. 1553, 1579 (2006)). This 180-day exclusivity period belongs only to the first generic manufacturer to file an ANDA; if the first-ANDA filer forfeits its exclusivity rights, no other generic manufacturer is entitled to it. Id. (citing 21 U.S.C. § 355(j)(5)(D)). Importantly, the brand-name manufacturer is not barred from entering the generic market with its own generic version of the drug-a so-called "authorized generic"-during the 180-day exclusivity period. See Lipitor III, 855 F.3d at 135-36 (citing cases).

         II

         These consolidated appeals concerning Lipitor and Effexor XR involve antitrust challenges related to that pharmaceutical regulatory scheme. This panel previously detailed much of the factual background and procedural history of these appeals. See Lipitor III, 855 F.3d at 136- 42. In relevant part, we repeat and expand on much of that earlier recitation.

         A

         In In re Lipitor Antitrust Litigation, Nos. 14-1402 et al., plaintiffs are a putative class of direct purchasers of branded Lipitor, a putative class of end payors, and several individual retailers asserting direct-purchaser claims.[1] We will refer to these plaintiffs collectively as the "Lipitor plaintiffs." Defendants are Pfizer Inc., Ranbaxy Inc., and their respective corporate affiliates; they will be referred to collectively as the "Lipitor defendants." We proceed by outlining the factual background behind those consolidated appeals and then describing their procedural history.

         1

         Lipitor is a brand-name drug designed to reduce the level of LDL cholesterol in the bloodstream. In 1987, the U.S. Patent and Trademark Office (PTO) granted Pfizer the original patent for Lipitor.[2] That patent-designated U.S. Patent No. 4, 681, 893 (the '893 Patent)-claimed protection for atorvastatin, Lipitor's active ingredient. Although initially set to expire on May 30, 2006, the '893 patent received an extension from the FDA, lengthening the patent's term through March 24, 2010.

         Pfizer obtained additional, follow-on patent protection for Lipitor in December 1993 when the PTO issued U.S. Patent No. 5, 273, 995 (the '995 Patent). That patent claimed protection for atorvastatin calcium, the specific salt form of the active atorvastatin molecule in Lipitor. Lipitor plaintiffs assert that Pfizer committed fraud in the procurement and enforcement of the '995 Patent. They allege that Pfizer submitted false and misleading data to the PTO to support its claim that the cholesterol-synthesis inhibiting activity of atorvastatin calcium was surprising and unexpected. Specifically, Lipitor plaintiffs claim that Pfizer chemists informed senior management that the '893 Patent already covered atorvastatin calcium; Pfizer produced a misleading chart and other data, purportedly cherry-picked, to support its claim that atorvastatin calcium was several times more effective than expected; and, in order to avoid undermining its claim of surprising results, Pfizer intentionally withheld another dataset that contradicted its claim as to the surprising effectiveness of atorvastatin calcium. The PTO originally denied the patent application for atorvastatin calcium as "anticipated" by the '893 Patent. In response, Pfizer submitted a declaration from one of its chemists claiming even greater, i.e., more surprising, results from testing atorvastatin calcium. The PTO again rejected the patent application for atorvastatin calcium based on its contents being covered by the '893 Patent. Pfizer appealed that determination to the PTO's Patent Trial and Appeal Board (PTAB). The PTAB reversed the rejection of Pfizer's patent application, concluding that the application was not anticipated by the '893 Patent. It, however, required further proceedings on Pfizer's application, noting that "[a]n obviousness rejection . . . appear[ed] to be in order." Lipitor JA353 (DPP Orig. Am. Compl. ¶¶ 157-58).[3] Nevertheless, as noted above, the PTO concluded that the patent application claimed nonobvious material and issued the '995 Patent. The '995 Patent expired on June 28, 2011.

         After obtaining the '893 and '995 Patents, Pfizer launched Lipitor in 1997. Following Lipitor's 1997 launch, Pfizer obtained five additional patents, none of which, according to Lipitor plaintiffs, could delay further generic versions of the drug from coming to market. Pfizer listed all Lipitor patents in the FDA's Orange Book, with the exception of certain "process" patents, which could not be listed. Lipitor plaintiffs allege fraud only as to the procurement and enforcement of the '995 Patent.

         In August 2002, Ranbaxy obtained ANDA first-filer status for a generic version of Lipitor. Sometime later in 2002, Ranbaxy notified Pfizer of its paragraph IV certifications, which asserted that Ranbaxy's sale, marketing, or use of generic Lipitor would not infringe any valid Pfizer patent. Pfizer subsequently sued Ranbaxy for patent infringement in the District of Delaware within the 45-day period prescribed by the Hatch-Waxman Act. Pfizer alleged that Ranbaxy's generic would infringe the '893 and '995 Patents. As a result of Pfizer's lawsuit, the FDA withheld approval of Ranbaxy's ANDA for 30 months pursuant to the Hatch-Waxman Act.

         After a bench trial, the Delaware District Court ruled that Pfizer's patents were valid and enforceable and would be infringed by Ranbaxy's generic. Pfizer Inc. v. Ranbaxy Labs. Ltd., 405 F.Supp.2d 495, 525-26 (D. Del. 2005). In doing so, it rejected Ranbaxy's argument that the '995 Patent was procured by inequitable conduct. Id. at 520-25. On appeal, the Federal Circuit affirmed the District Court's ruling that the '893 Patent would be infringed. Pfizer Inc. v. Ranbaxy Labs. Ltd., 457 F.3d 1284, 1286 (Fed. Cir. 2006). But, the Federal Circuit reversed in part, holding that claim 6 of the '995 Patent was invalid. Id. at 1291-92. On remand, the District Court enjoined FDA approval of Ranbaxy's ANDA until March 24, 2010, the date of the '893 Patent's expiration.

         In July 2005, as the 30-month statutory window barring Ranbaxy's generic market entry was closing, Pfizer filed a citizen petition with the FDA stating that the amorphous noncrystalline form of atorvastatin used in generic Lipitor (including in Ranbaxy's, as identified in its ANDA) may be "inferior in quality" to branded Lipitor's crystalline form. Lipitor JA1851. Lipitor plaintiffs claim that this citizen petition was a sham. In particular, they allege that Pfizer's citizen petition ignored both a decade-old FDA policy and FDA statements expressing the immateriality of drug form (i.e., crystalline versus amorphous), ignored Pfizer's own use of the amorphous form of branded Lipitor in its clinical studies, and lacked any evidence to support its claims. In May 2006, the FDA informed Pfizer that it had not yet reached a decision on the petition, citing the need for further review and analysis given the "complex issues" it raised. Lipitor JA1877. The FDA eventually denied the citizen petition in a 12-page decision issued on November 30, 2011.

         In 2007, following the Federal Circuit's ruling invalidating claim 6 of the '995 Patent, Pfizer applied for a reissuance of the '995 Patent to cure the relevant error. Ranbaxy filed an objection to the reissuance with the PTO. As explained below, however, Ranbaxy withdrew its objection, and the PTO reissued the '995 Patent in April 2009, relying on Lipitor's "commercial success, " without addressing whether Pfizer first obtained the patent using allegedly fraudulent submissions.

         During their Lipitor patent dispute, Pfizer and Ranbaxy also litigated a patent-infringement suit regarding a separate drug, Accupril. Pfizer owned the patent on Accupril, enjoying annual sales of over $500 million. Teva Pharmaceuticals first filed an ANDA seeking approval to market a generic version of Accupril. Ranbaxy subsequently filed an ANDA for Accupril as well. Pfizer sued Teva, resulting in Teva being enjoined from selling its generic until expiration of Pfizer's Accupril patent. Meanwhile, Ranbaxy still sought to sell its version of generic Accupril but could not do so because of the 180-day exclusivity period (not yet triggered) available to Teva under the Hatch-Waxman Act. With Teva enjoined from selling its generic Accupril and Ranbaxy prevented from selling its generic because of Teva's first-filer exclusivity right, Teva and Ranbaxy entered into an agreement through which Teva became the exclusive distributor of Ranbaxy's generic. The parties agreed to split the profits from the sales, and Ranbaxy agreed to indemnify Teva for any liability related to the launch of its generic. Ranbaxy received approval for its generic version of Accupril in 2004.

         Shortly after receiving that approval, Ranbaxy launched its generic Accupril, and Pfizer brought suit almost immediately, seeking treble damages for willful infringement. Pfizer also sought a preliminary injunction against Ranbaxy and Teva, informing the court that Ranbaxy's generic sales "decimated" its Accupril sales. The District Court in Pfizer's Accupril action granted the injunction halting Ranbaxy's generic sales, and the Federal Circuit affirmed the grant. Pfizer Inc. v. Teva Pharm. USA, Inc., 429 F.3d 1364, 1383 (Fed. Cir. 2005). Pfizer posted a $200 million bond in conjunction with the District Court's entry of the injunction. After entry of the injunction, Pfizer expressed confidence that it would succeed in obtaining a substantial monetary judgment from Ranbaxy. On June 13, 2007, in light of the disputed Accupril patent's expiration, the District Court vacated the preliminary injunction. The only issues that remained contested were Pfizer's claims for past damages and Ranbaxy's counterclaim as secured by the preliminary injunction bond.

         In March 2008, Pfizer again sued Ranbaxy in the District of Delaware over Lipitor; this time, Pfizer claimed that Ranbaxy's generic Lipitor would infringe Pfizer's two Lipitor-related process patents. Lipitor plaintiffs contend that this litigation was a sham because no imminent threat of harm to Pfizer existed and because Pfizer knew Ranbaxy's generic would not violate those patents. They assert that the actual purpose of Pfizer's suit was to create "the illusion of litigation" so that the parties could enter a settlement agreement. Lipitor JA254 (DPP Sec. Am. Compl. ¶ 137).

         Not long after Pfizer brought suit against Ranbaxy, on June 17, 2008, Pfizer and Ranbaxy executed a near-global litigation settlement-which Lipitor plaintiffs allege constituted an unlawful reverse payment- regarding scores of patent litigations around the world, including the Lipitor and Accupril disputes. The settlement ended the Accupril litigation with prejudice, and brought to a close not only all domestic patent infringement litigation between Pfizer and Ranbaxy pertaining to Lipitor, but also all foreign litigation between the two companies over Lipitor. By the settlement's terms, Ranbaxy agreed to delay its entry in the generic Lipitor market until November 30, 2011. In addition, Pfizer and Ranbaxy negotiated similar market entry dates for generic Lipitor in several foreign jurisdictions. Ranbaxy also paid $1 million to Pfizer in connection with the Accupril litigation, and Pfizer's $200 million injunction bond from the Accupril litigation was released. Ranbaxy further agreed to cease its protests on the '995 Patent's reissuance. (As noted above, the PTO subsequently issued the '995 Patent in March 2009.) Although not alleged in their complaints, the settlement also created a Canadian supply arrangement for generic Lipitor between the parties and resolved other litigation regarding the pharmaceutical drug Caduet.

         Ranbaxy delayed generic entry until November 2011, thus extending Pfizer's exclusivity in the Lipitor market twenty months beyond the expiration of the '893 Patent and five months beyond the expiration of what Ranbaxy alleged was the fraudulently procured '995 Patent. As a result, Ranbaxy's delayed entry created a bottleneck in the entry of generic Lipitor from later ANDA filers. Due to its ANDA first-filer status, Ranbaxy was entitled to the first-filer 180-day generic market exclusivity. Under the settlement agreement, though, Ranbaxy would not trigger that period by entering the generic market until November 2011. That meant that any other would-be generic manufacturer that wanted Ranbaxy's 180-day period to begin earlier than November 2011 needed a court to hold that all of Pfizer's Lipitor patents listed in the Orange Book were invalid or not infringed. Pfizer helped to forestall this possibility, Lipitor plaintiffs assert, through a combination of lawsuits against subsequent ANDA filers. The FDA ultimately approved Ranbaxy's Lipitor ANDA on November 30, 2011, the day Ranbaxy's license to the unexpired Lipitor patents with Pfizer commenced.

         2

         Beginning in late 2011, Lipitor direct purchasers and end payors filed separate antitrust actions in various federal district courts. The cases were subsequently referred to the Judicial Panel on Multidistrict Litigation ("JPML") for coordination. The JPML transferred each case to the District of New Jersey, assigning the matters to District Judge Peter G. Sheridan. See In re Lipitor Antitrust Litig., 856 F.Supp.2d 1355 (J.P.M.L. 2012).

         Thereafter, the direct-purchaser and end-payor plaintiffs filed amended class action complaints; Lipitor individual-retailer plaintiffs likewise filed complaints joining the consolidated proceedings. The complaints raise two substantively identical claims: (1) a monopolization claim under Section 2 of the Sherman Act (15 U.S.C. § 2) or a state analogue against Pfizer, asserting that the company engaged in an overarching anticompetitive scheme that involved fraudulently procuring the '995 Patent from the PTO (Walker Process[4]fraud), falsely listing that patent in the FDA's Orange Book, enforcing the '995 Patent and certain process patents through sham litigation, filing a sham citizen petition with the FDA, and entering into a reverse payment settlement agreement with Ranbaxy; and (2) a claim under Section 1 of the Sherman Act (15 U.S.C. § 1) or a state analogue against both Pfizer and Ranbaxy, challenging the settlement agreement as an unlawful restraint of trade.

         Lipitor defendants filed motions to dismiss all the complaints under Rule 12(b)(6) of the Federal Rules of Civil Procedure. During the pendency of those motions, on May 16, 2013, the District Court stayed proceedings, awaiting the Supreme Court's decision in Actavis. Following that decision on June 17, 2013, the District Court reopened the case and permitted the parties to file supplemental briefs on the pending motions to dismiss.

         On September 5, 2013, the District Court dismissed Lipitor plaintiffs' complaints to the extent they were based on anything other than the reverse payment settlement agreement. In re Lipitor Antitrust Litig., 2013 WL 4780496, at *27 (D.N.J. Sept. 5, 2013) (Lipitor I). The Court specifically rejected the Walker Process fraud, false Orange Book listing, sham litigation, sham FDA citizen petition, and overall monopolistic scheme allegations related to Lipitor plaintiffs' monopolization claims against Pfizer. Id. at *15-23. However, the Court granted leave to file amended complaints focused solely on the reverse payment settlement agreement between Pfizer and Ranbaxy. Id. at *25-27.

         Lipitor plaintiffs filed amended complaints in October 2013. The direct purchasers and end payors attached their prior complaints as exhibits to their new complaints to preserve the allegations that had been dismissed for appeal. Similarly, the independent retailers stated in the first paragraph of their new complaints that they were also preserving the previously dismissed allegations. In November 2013, Lipitor defendants moved to dismiss the amended complaints.

         On September 12, 2014, the District Court dismissed the direct purchaser's amended complaint with prejudice, rejecting the remaining allegations relating to the reverse payment settlement agreement between Pfizer and Ranbaxy. In re Lipitor Antitrust Litig., 46 F.Supp.3d 523 (D.N.J. 2014) (Lipitor II). The complaints of the end payor and individual retailers were dismissed that same day in light of the District Court's dismissal of the direct purchasers' complaint.

         On October 10, 2014, the direct purchasers filed a motion to amend the judgment and for leave to file an amended complaint, contending that the District Court applied "a new, heightened pleading standard." Lipitor JA151. That motion was denied on March 16, 2015. These timely appeals followed.

         B

         In In re Effexor XR Antitrust Litigation, Nos. 15-1184 et al., plaintiffs are a putative class of direct purchasers of branded Effexor XR, a putative class of end payors, two individual third-party payors, and several individual retailers asserting direct-purchaser claims. We will refer to these parties collectively as the "Effexor plaintiffs." Defendants are Wyeth, Inc., Teva Pharmaceutical Industries Ltd., and their respective corporate affiliates. We will likewise refer to these parties collectively as the "Effexor defendants." As with the Lipitor ...


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