Apotex Corp. v. Hospira Healthcare India Private Limited

Background

Apotex brought claims against Hospira Healthcare India Private Ltd. and Hospira, Inc. Hospira Healthcare India and Hospira, Inc. were described as successors to Orchid Chemicals and Pharmaceuticals, Ltd., which had entered into an agreement with Apotex in 2003 to develop, manufacture, supply, and commercialize generic pharmaceutical products. The agreement included an exclusive-supply provision and restrictions on competing with Apotex in the United States. Hospira succeeded Orchid through a contractual novation in 2010.

After an earlier ruling on Hospira’s motion to dismiss, Apotex filed a Second Amended Complaint. The claims at issue here included breach of contract, unfair competition under the Florida Deceptive and Unfair Trade Practices Act, and monopolization and attempted monopolization under Section 2 of the Sherman Antitrust Act. Apotex alleged that Hospira breached the exclusive-supply arrangement, supplied drugs to Apotex’s competitors, sold its own version of cefepime, used confidential pricing information, and closed the facility that manufactured products for Apotex.

Apotex alleged that Hospira monopolized the United States market for cefepime and attempted to monopolize markets for ceftriaxone, cefazolin, cefoxitin, and piperacillin-tazobactam. It sought treble damages for the alleged antitrust violations and punitive damages for the alleged breach of contract.

Motion and legal standards

Hospira moved under Rule 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. The court was required to accept the complaint’s factual allegations as true and draw reasonable inferences for Apotex, but the claims still had to be plausible rather than merely possible.

A monopolization claim requires monopoly power in a relevant market and the willful acquisition or maintenance of that power through prohibited conduct. An attempted-monopolization claim requires anticompetitive conduct, a specific intent to monopolize, and a dangerous probability of achieving monopoly power.

Anticompetitive conduct

The court held that Apotex’s allegations described competition rather than conduct that harmed competition. Hospira’s alleged decision to breach the exclusive-supply arrangement so it could compete directly with Apotex and supply Apotex’s competitors was consistent with a legitimate business purpose: using its position as a manufacturer to compete and earn profits.

The court distinguished anticompetitive conduct from unfair or wrongful conduct. It stated that the alleged behavior might support contract or unfair-competition claims, but that not every sharp business practice or breach of contract violates the antitrust laws.

The court also rejected Apotex’s reliance on the narrow exception involving a refusal to deal. According to the court, the allegations showed that Hospira sought competitive profits rather than sacrificing short-term profits to eliminate competition. The court also noted that Hospira had allegedly had almost no presence in the cefepime market before the alleged breach, which suggested an effort to enter the market as a competitor rather than an effort to use existing market power to exclude Apotex.

Monopoly power and dangerous probability

The court separately held that Apotex had not plausibly alleged actual or threatened monopoly power. Apotex did not adequately explain why each individual drug, together with its branded and AB-rated generic versions, constituted a relevant product market or why potentially interchangeable drugs, including drugs in the same therapeutic classes, should be excluded.

The court further relied on Apotex’s allegations that Hospira could not charge prices above competitive levels, that many manufacturers produced virtually identical drugs, and that generic competition was robust. Although Apotex alleged that Hospira held approximately 56.58% or 56.68% of the cefepime market at one point, it also alleged substantially lower shares at other times and fluctuating market share. The court concluded that these allegations did not establish a sufficiently large or durable share to infer monopoly power.

For the attempted-monopolization claims involving the other drugs, Apotex alleged a 43.75% share for ceftriaxone and a 30.76% share for cefazolin, but did not provide market-share allegations for cefoxitin or piperacillin-tazobactam. The court held that these allegations, together with the alleged competitive conditions and pricing constraints, did not show a dangerous probability that Hospira could insulate its prices from competition.

Disposition

The court granted Hospira’s motion as to Apotex’s antitrust claims and dismissed those claims. It denied Apotex leave to amend the antitrust claims, finding that the defects were substantive and that Apotex had not identified additional facts that could cure them.

The court did not decide Hospira’s challenge to punitive damages at this stage. Because dismissal of the antitrust claims left only state-law claims, and because Apotex and Hospira, Inc. were both identified as Delaware corporations, the court questioned whether diversity jurisdiction remained. The court reserved judgment on whether to exercise supplemental jurisdiction over the remaining state-law claims and, by extension, whether to reach the punitive-damages issue. It ordered each side to submit a supplemental brief by January 17, 2020, and directed the Clerk to terminate the motion docket entry.