IN RE NAMENDA INDIRECT PURCHASER ANTITRUST LITIGATION

Background

The lead plaintiff, Sergeants Benevolent Association Health & Welfare Fund, represents a certified class of third-party payors. These entities indirectly purchased or reimbursed purchases of Namenda, a brand-name prescription drug containing memantine. The class includes qualifying third-party payors in numerous jurisdictions for purchases during the period from June 1, 2012, through December 31, 2017, subject to the exclusions listed in the class definition.

The plaintiff class alleges that Forest Laboratories, Actavis, and Merz used settlements with generic manufacturers to delay the market entry of generic Namenda. The class’s remaining liability theory is the alleged “pay-for-delay” theory based on those reverse-payment settlements. The court had previously declined to certify the class as to a separate “hard switch” theory because individualized issues predominated for that theory.

The court had certified the class in February 2021. After discussing damages issues in connection with motions in limine, the court received defendants’ motion to decertify the class, at least as to damages and initially framed as potentially applying to all issues. The decision ultimately addresses and denies decertification of the class as to damages.

Arguments

Defendants argued that the damages portion of the case could not be tried on a class-wide basis. They challenged the plaintiff class’s expert damages model, asserting that it failed to account adequately for government subsidies, premium “pass-ons,” Pharmacy Benefit Manager rebates and discounts, and other differences among class members’ transactions. Defendants also argued that differences among the antitrust, consumer-protection, unjust-enrichment, and enhanced-damages laws of 27 jurisdictions created interstate and intra-class conflicts.

The plaintiff class argued that aggregate damages were permissible and that individualized damages issues did not require decertification because common issues predominated for liability. The class maintained that its expert had accounted for relevant rebates, discounts, reimbursements, and other offsets in estimating the class’s total overcharge.

Legal standard

A court may modify or revoke class certification before final judgment if later developments show that the requirements for a class action are no longer met. The court explained, however, that decertification generally requires a significant intervening event or a compelling reason to reconsider the earlier certification decision. The party seeking decertification bears a heavy burden, particularly when the request comes close to trial and could prejudice class members.

For a class certified under Rule 23(b)(3), common legal or factual questions must predominate over questions affecting only individual members. Individualized damages issues alone do not defeat predominance when common issues concerning liability remain more substantial.

Court’s analysis

The court found that defendants identified no significant intervening event since class certification. It therefore treated the motion largely as a belated attempt to reargue issues already decided during class certification. The court also considered the timing of the motion, noting that trial was scheduled to begin about a month later.

The court held that common issues predominated because liability would be determined through common proof concerning the alleged reverse-payment settlements. The existence of individualized damages questions did not change that conclusion.

The court also held that aggregate damages were permissible. The remaining class theory involved a single alleged form of antitrust injury: the difference between what class members paid for branded Namenda and what they would have paid for generic Namenda in a hypothetical market without the alleged pay-for-delay conduct. The court distinguished a Supreme Court decision involving a damages model that combined multiple rejected theories of liability. Here, the court found that the proposed model was tied to the single theory being tried.

The court stated that the expert had analyzed rebate and discount data and adjusted the overcharge calculations for relevant offsets. Defendants could cross-examine the expert about any omitted rebates, reimbursements, or other offsets. The jury would be instructed not to award aggregate damages exceeding the class’s actual total injury. Individual class members would later need to submit proof of their own purchases and actual out-of-pocket losses during the claims process. That later individualized proof did not prevent a jury from determining the size of an aggregate damages award.

Finally, the court held that differences among state laws concerning punitive or other enhanced damages did not require decertification. The court concluded that the common evidence relating to liability would also inform whether enhanced damages were warranted, while differences among state standards could be handled through jury instructions and specially designed verdict forms.

Disposition

The court denied defendants’ motion to decertify the class as to damages. The clerk was directed to close the motion at Docket Number 897. The opinion does not state a separate disposition of any broader request to decertify the class on all issues beyond its ruling denying decertification as to damages.