IN RE NAMENDA INDIRECT PURCHASER ANTITRUST LITIGATION

Background

The court issued a decision and order addressing the parties’ motions in limine, which are requests to limit evidence or argument before trial, and defendants’ motion for “clarification.” The case concerns indirect-purchaser antitrust claims involving Namenda, the ‘703 patent litigation, settlements with generic-drug manufacturers, and alleged reverse payments. A reverse payment is a payment or other value given by a patent holder to a potential generic competitor in connection with settling patent litigation.

Plaintiffs’ motions

The court ruled on sixteen motions brought by the plaintiff class:

- First motion: The court denied the motion insofar as it sought to bar evidence about Namenda’s drug development, innovation, and discount programs, because those matters could bear on patent issues and damages. The court stated that it would exclude irrelevant evidence, including unrelated COVID-19 and police-related issues. - Second motion: The motion was granted. Defendants’ expert Sue Robinson could not be addressed as “Judge Robinson” during testimony, although her prior judicial career could be disclosed as part of her qualifications. - Third motion: The motion to bar evidence denigrating generic drugs or praising brand-name drugs was denied. - Fourth motion: Defendants could not argue that a large judgment would harm their businesses, the pharmaceutical industry, or drug prices. Plaintiffs likewise could not argue that damages or other relief would affect class members’ businesses, health care, insurance, or related costs or prices. - Fifth motion: The motion was granted to the extent plaintiffs could call themselves “payors.” Defendants could use any accurate description, including “insurers,” because the class included insurers and self-insured entities. - Sixth motion: The court stated that the case was not about police brutality, police misconduct, or a federal investigation involving the Sergeants Benevolent Association. Defendants would need advance permission before asking any question concerning those subjects that they claimed was relevant. - Seventh motion: The motion to exclude certain testimony from defendants’ expert Richard Zimmerer was denied. - Eighth motion: The motion to exclude evidence that defendants’ $34.5 million reverse payment to Mylan was not large was denied. The court held that whether the payment was large was for the trial, and defendants could argue that the value of Forest’s patented drug franchise was a proper comparison point. - Ninth motion: The court explained that settlement evidence could not be used to prove the validity or amount of a claim or for ordinary impeachment under Federal Rule of Evidence 408. Questions about settlements could be allowed if a specific question was relevant to a witness’s bias. Questions about Mylan and plaintiffs’ decision not to sue Mylan could likewise be considered at trial if shown to be relevant in context. - Tenth motion: The court adopted the ruling previously made in the related direct-purchaser litigation concerning evidence about past or present litigation involving the plaintiff class or its counsel. - Eleventh motion: The motion was granted. The court excluded the Dr. Reddy’s “DRL Deal Memo,” finding it inadmissible hearsay, meaning an out-of-court statement offered to prove the truth of what it says. The court also barred experts from relying on or mentioning the memo. It rejected defendants’ arguments that the memo was objective evidence of the patent case’s strength, evidence of the relevant parties’ state of mind, or admissible expert-like material. - Twelfth motion: The motion to exclude the word “unexplained” from discussions of the standard from FTC v. Actavis was denied because that was the word used by Justice Breyer. The court did not decide at this stage precisely what the word meant. - Thirteenth motion: The motion concerning alleged “non-cognizable procompetitive justifications” was denied. The court allowed defendants to argue that litigation uncertainty justified the reverse payments, but not if the argument depended on undisclosed attorney-client information or Forest executives’ subjective beliefs. The court limited such arguments to objective evidence. - Fourteenth motion: The court ruled that double or treble damages and punitive damages would not be mentioned during the liability phase, except as needed to address Mylan’s threatened antitrust complaint. The court raised concerns that state-by-state damages issues could prevent damages from being tried on a class-wide basis and scheduled a conference about that issue. - Fifteenth motion: The motion to exclude evidence or argument about passing overcharges to end payors through higher insurance premiums or government subsidies was denied. - Sixteenth motion: The motion was granted to the extent it barred evidence about class members’ size or financial condition during the liability phase. Such information could be considered during the damages phase if defendants showed that it was relevant to damages. The court confirmed that the trial would be bifurcated, meaning liability and damages would be handled in separate phases.

Defendants’ motions

The court ruled on thirteen motions brought by defendants:

- First motion: The motion concerning the “hard switch” theory was granted in part and denied in part. Evidence about Forest’s 2013–2015 hard-switch strategy, including later-created evidence offered to show earlier intent, was excluded. Documents created during or before the patent settlements and Lexapro Amendment could not be excluded merely because they later related to the hard-switch strategy. Exhibits 1 through 4 to the Miller declaration could be admitted, while Exhibit 5 could not. - Second motion: The court declined to admit third-party assessments, including the DRL Deal Memo, concerning the likely outcome of the patent litigation. Experts could offer opinions based on information Forest and Mylan actually had when evaluating settlement, but defendants could not introduce the Dr. Reddy’s assessment as proof of the patent case’s likely outcome. - Third motion: The motion to exclude testimony concerning allegedly undisclosed damages opinions was denied. Dr. Vogt could testify consistently with the court’s earlier ruling allowing his opinions. - Fourth motion: The motion concerning speculative alternative agreements related to the Lexapro Amendment was denied. The court found that evidence about alternative sources of Medicaid savings could be relevant to the value of the agreement. - Fifth motion: The motion was granted as to the proposed testimony about the Patent Office examiners’ allowance rates, review times, and experience, because the record did not show that Forest knew about and considered those matters when settling. The court otherwise explained that expert testimony about what a reasonable patent lawyer would consider could be admissible if supported by evidence connecting it to Forest’s actual knowledge and decision-making. - Sixth motion: The motion to exclude mention of Mylan’s unfiled and released antitrust claim was denied. - Seventh motion: The motion to exclude evidence about foreign decisions invalidating foreign Namenda patents was denied. The court allowed evidence of the foreign invalidations and the use of the same prior-art references in challenging the U.S. patent, although the foreign decisions themselves did not need to be shown to the jury. - Eighth motion: The motion concerning hearsay opinions quoted in Dr. Davitz’s expert report was denied. Dr. Davitz could explain that he relied on technical experts’ reports in forming his legal expert opinion, but he could not recite the technical experts’ detailed opinions for the jury to consider as proof of their truth. - Ninth motion: The motion to exclude evidence about the profitability of the original Lexapro Agreement was denied because plaintiffs could use that evidence to argue that the settlement payment and Lexapro Amendment were pretextual and that the amendment made economic sense to both Mylan and Forest. - Tenth motion: Dr. Vogt could testify about pay-for-delay damages but not hard-switch damages. Because his existing report combined those categories, he could not testify to the numbers in that report. Plaintiffs were allowed to submit a revised damages report removing the hard-switch damages, without an additional expert deposition at that stage. - Eleventh motion: The motion was denied, but the court ruled that payments covering some or all of class members’ memantine costs must be deducted from actual damages. Whether particular government subsidies or reimbursements reduced a particular payor’s out-of-pocket costs was a factual issue for the jury or other factfinder, subject to cross-examination. - Twelfth motion: The motion concerning acceleration clauses in the Namenda patent settlements was denied as moot because plaintiffs said they did not intend to argue that those clauses were independently anticompetitive or unlawful. - Thirteenth motion: The court excluded Exhibit 1965, a declaration from representatives of settled defendant Teva Pharmaceuticals. The court found that the declaration was hearsay and had not been shown to qualify under the business-records or residual hearsay exceptions.

Merz’s motion

Merz Pharmaceuticals GmbH & Co. KGaA’s motion was granted insofar as it sought to exclude hard-switch evidence used to show specific intent in 2009–2010. Evidence about Merz’s involvement in negotiations leading to the generic settlements remained relevant. The court would decide the admissibility of documents concerning the later Namzaric transaction individually at the final pretrial conference, while documents and testimony about the Namzaric deal created after the Mylan settlement would not be admitted.

Motion for clarification concerning Dr. Vogt

Defendants asked the court to clarify whether Dr. Vogt could continue relying on Susan Marchetti’s excluded opinion that the Lexapro Amendment gave Mylan $30.9 million above fair value. The court explained that Vogt remained qualified, and that his Nash Equilibrium bargaining model remained an accepted model for estimating a possible generic-entry date. However, he could not rely in his testimony on Marchetti’s excluded opinion.

The court gave Vogt an opportunity to file a revised report. He would need either to justify the November 2012 entry date without relying on Marchetti’s views or to select and support another entry date and recalculate damages using the approved bargaining model. The court also allowed defendants to redepose him. The opinion does not expressly state that the clarification motion was “granted” or “denied”; instead, it imposed these requirements and set deadlines subject to possible change.

Disposition and significance

The order resolved the listed motions in limine and the clarification request for purposes of the upcoming trial, directed the clerk to remove the motions from the open-motion list, and left the ultimate liability and damages questions for later proceedings. The classification is procedural because the order controlled trial evidence and expert testimony rather than deciding who prevailed on the underlying antitrust claims.