IN RE NAMENDA INDIRECT PURCHASER ANTITRUST LITIGATION

Background

Sergeants Benevolent Association Health & Welfare Fund ("SBA") brought this indirect-purchaser antitrust litigation against Forest Laboratories, Actavis PLC, and Merz entities. SBA alleges that the defendants restricted access to Namenda IR, promoted Namenda XR, and entered into agreements with generic manufacturers that delayed generic competition. The current decision did not resolve those underlying antitrust allegations.

SBA sought certification of a class consisting of third-party payors that indirectly purchased, paid for, or reimbursed purchases of Namenda IR, its AB-rated generic equivalents, or Namenda XR in specified states and during the proposed class period. The proposed class excluded, among others, the defendants, fully insured health plans, most governmental entities, and pharmacy benefit managers.

SBA relied on expert reports from Laura R. Craft and others. Craft offered opinions about ascertainability, meaning whether the proposed class could be defined using objective criteria and whether its members could be identified. Defendants moved to exclude Craft’s opinions under Federal Rule of Evidence 702 and the standard from Daubert v. Merrell Dow Pharmaceuticals, Inc.

Legal Framework

The court explained that Rule 23 governs class certification. Among other requirements, a proposed class must be sufficiently numerous, share common legal or factual questions, have a representative with claims typical of the class, and have adequate representation. The proposed class must also be ascertainable, and common issues must predominate over individual ones for the type of damages class SBA sought.

The court held that a complete Daubert inquiry applies when deciding whether to exclude expert evidence offered at the class-certification stage. Daubert requires the court to assess an expert’s qualifications, the reliability of the expert’s methods, and the relevance and helpfulness of the opinions. The court reasoned that class certification can involve factual and legal issues overlapping with the merits, so expert opinions used at that stage must satisfy the same reliability standard that would apply at trial.

Craft’s Opinions and the Court’s Analysis

Craft’s work focused on using transaction-specific pharmaceutical data to identify third-party payors and apply the proposed class exclusions. She identified pharmacies, pharmacy benefit managers, and third-party payors as sources of electronic records for individual prescription purchases. She explained that pharmacy benefit managers process insurance claims and maintain information about the payor, the plan, and the amount paid.

Craft relied on industry regulations, her experience with pharmaceutical data, declarations from representatives of large pharmacy benefit managers, and a data set obtained from OptumRx. That data included more than eight million Namenda purchases from several years between 2012 and 2020. Craft identified fields such as carrier identifiers, account descriptions, employer group identifiers, bank identification numbers, and processor control numbers as information that could help determine the responsible payor and apply exclusions.

Defendants made two principal reliability arguments. First, they argued that Craft’s method was theoretical because SBA and Craft did not possess all the transaction-specific data needed to identify the class. Second, they argued that Craft had not actually used the method to identify the entire class and had difficulty distinguishing third-party payors from administrative agents in part of the OptumRx data.

The court rejected both arguments. It found that the absence of all necessary data at that point did not show that the data was unavailable or that the methodology was unreliable. The court relied on Craft’s experience and on statements from pharmacy benefit managers that they maintained records capable of identifying their third-party payor clients. It also noted that the data could come from sources other than pharmacy benefit managers.

The court further concluded that Craft’s failure to identify every class member before certification did not make her method unreliable. The court stated that counsel had not yet incurred the time and expense required to perform that task before knowing whether a class would be certified. It also found that Craft had explained how the method would work by analyzing a portion of the OptumRx data and by describing how additional data fields could help identify the ultimate payor.

Disposition

Judge Colleen McMahon held that Craft’s opinions were sufficiently reliable and admissible for the class-certification proceedings. The court denied defendants’ motion to exclude her opinions and directed the clerk to close the associated docket entry. The order did not decide SBA’s motion for class certification or the underlying antitrust claims.