Eisai, Inc. v. Sanofi Aventis U.S., LLC

821 F.3d 394, 2016 U.S. App. LEXIS 8148
CourtCourt of Appeals for the Third Circuit
DecidedMay 4, 2016
Docket14-2017
StatusPublished
Cited by42 cases

This text of 821 F.3d 394 (Eisai, Inc. v. Sanofi Aventis U.S., LLC) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Eisai, Inc. v. Sanofi Aventis U.S., LLC, 821 F.3d 394, 2016 U.S. App. LEXIS 8148 (3d Cir. 2016).

Opinion

OPINION

ROTH, Circuit Judge:

The antitrust laws are concerned with “the protection of competition, not *399 competitors.” 1 Eisai complains that the conduct of Sanofi Aventis U.S., LLC, and Sanofi U.S. Services, Inc., (Sanofi) jointly and severally harmed competition in the market for anticoagulant drugs by preventing hospitals from replacing Lovenox, one of Sanofi’s drugs, with competing drugs. The facts, however, do not bear out Eisai’s characterization of .market events. For the-reasons stated below,-we conclude that what Eisai calls “payoffs” were, in reality, discounts offered by Sano-fi to its customers; what Eisai calls “agreements with hospitals to block access” were, in reality, provisions proscribing. customers from favoring competing drugs over Lovenox; what Eisai. calls “a campaign of ‘fear, uncertainty, and doubt’ ” was, in reality, Sanofi’s marketing of Love-nox. Analyzing Eisai’s claims under the rule -of reason, we find no evidence that Sanofi’s actions caused broad harm to the competitive nature of the anticoagulant market. To the extent that- Sanofi’s conduct caused damage to its competitors, that is not a harm for which Congress has prescribed a remedy. We will therefore affirm the order of the District' Court, granting summary judgment in ..favor of Sanofi..

I.

A.

Lovenox is an anticoagulant drug used in the treatment and prevention of deep vein thrombosis (DVT), a condition in which blood clots develop iñ a person’s veins. Lovenox belongs to a category of injectable, anticoagulant drugs known as low molecular weight heparin .(LMWH). Lovenox was the first LMWH approved by the Food and Drug Administration and has been sold by Sanofi in the United States since 1993. Lovenox has at least seven FDA-approved uses (known as indications), including the treatment 'of certain severe forms of heart attack.

Fragmin is a competing injectable LMWH, which Pfizer, (Inc., initially sold only abroad. In September 2005, Pfizer sold Eisai an exclusive.license to market, sell, and distribute Fragmin in the United States. .Fragmin has five FDA-approved indications, some of which overlap Love-nox’s indications. Fragmin is also indicated to reduce the reoccurrence of symptomatic venous thromboembolism' in' cancer patients, while Lovenox is not. Lovenox, however, is indicated for treating certain more severe forms of heart attack, an indication that Fragmin does not' have.

The relevant'product market also consists of two other injectable anticoagulant drugs, Innohep and Arixtra. Innohep, a LMWH, was manufactured and sold by LEO Pharma Inc. in the;United States from 2000 to 2011. ■ Arixtra is an injectable anticoagulant- approved by - the FDA in 2001 and sold in the United States by GlaxoSmithKline from 2005 to 2010. While not a LMWH, Arixtra is clinically comparable to LMWHs in its treatment of DVT. , . :

Relevant to Eisai’s claims is the market for .Lovenox,- Fragmin, Innohep, and Arix-tra in the-United States from September 27, 2005 (when Eisai was able to begin selling Fragmin) until July 25, 2010 (when Sanofi ended certain marketing practices after a generic entered the- market). During that .time, Lovenox had the most indications óf the four drugs, the largest sales force, and maintained a market share ■ of 81.5% to 92.3%. Fragmin had-the second largest market share at 4.3% to 8.2%.

*400 B.

Eisai’s antitrust claims relate to Sanofi’s marketing of Lovenox to U.S. hospitals. Most hospitals are members of group purchasing organizations (GPOs), which negotiate drug contracts and discounts from pharmaceutical companies on behalf of their members. From Septembér 2005 until July 2010, Sanofi offered GPOs the “Lovenox Acute Contract Value Program’’ (Program), featuring a contractual offer to sell Lovenox on certain terms and conditions. Eisai’s allegations of anticompeti-tive conduct relate to three elements of this program: (1) market-share and volume discounts, (2) a restrictive formulary access clause, and (3) aggressive sales tactics used to market the program.

(1)Under the terms of the Program, hospitals received price discounts based on the volume of Lovenox they purchased and their market-share calculation tied to their purchases of the four anticoagulant drugs. 2 The Program generally treated a GPO’s members as individual customers when determining the volume and market share. When a hospital’s purchases of Lovenox were below 75% of its total purchases of LMWHs, it received a flat 1% discount regardless of the volume of Lovenox purchased. But when a hospital increased its market share above that threshold, it would .receive an increasingly higher discount based on a combination of the volume purchased and the market share. For example, in 2008, the discount ranged from 9% to 30% of the wholesale price. Additionally, if certain criteria were met, a multi-hospital system could have the hospitals’ volumes and market shares calculated as one entity. For a multi-hospital system, the discount started at 15% for a market share meeting the threshold, and increased to 30%.

Although this discount structure motivated GPOs to purchase more Lovenox, they were not contractually obligated to do so. The consequence of not obtaining 75% market share was that a customer would receive only the 1% discount. If a customer chose to terminate the contract, it was required- to give thirty days’ notice and could still purchase Lovenox “off contract” at the wholesale price.

(2) The Program also included a formu-lary access- clause that limited a hospital’s ability to give certain drugs priority status on its formulary. Generally, a hospital maintains a formulary, a list of medications approved for use in the hospital based on factors such as a drug’s cost, safety, and efficacy. The formulary access clause in the Lovenox contract required customers to provide Lovenox with unrestricted formulary access for all FDA-approved Lovenox indications so' that the availability of Lovenox was not more restricted or- limited than the availability of Fragmin, Innohep, or-Arixtra. Hospitals were also forbidden by the contract to adopt any restrictions or limitations on marketing or promotional programs for Lovenox. In essence, the contract did not prohibit members from putting other anticoagulant drugs on their formularies, but did prohibit them from favoring those drugs over Lovenox. Noncompliance with the contract did not limit a customer’s access, to Lovenox; it merely caused a customer’s discount to drop to the 1% base level.

(3) According to Eisai, Sanofi further engaged in a long-term campaign to discredit Fragmin by spreading “fear, uncertainty and doubt” about its safety and *401 efficacy.

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821 F.3d 394, 2016 U.S. App. LEXIS 8148, Counsel Stack Legal Research, https://law.counselstack.com/opinion/eisai-inc-v-sanofi-aventis-us-llc-ca3-2016.