Meijer, Inc. v. Barr Pharmaceuticals, Inc.

572 F. Supp. 2d 38, 2008 U.S. Dist. LEXIS 65863, 2008 WL 3903389
CourtDistrict Court, District of Columbia
DecidedAugust 11, 2008
DocketCivil Action 05-2195 (CKK), 06-494(CKK), 06-795(CKK)
StatusPublished
Cited by6 cases

This text of 572 F. Supp. 2d 38 (Meijer, Inc. v. Barr Pharmaceuticals, Inc.) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Meijer, Inc. v. Barr Pharmaceuticals, Inc., 572 F. Supp. 2d 38, 2008 U.S. Dist. LEXIS 65863, 2008 WL 3903389 (D.D.C. 2008).

Opinion

MEMORANDUM OPINION

COLLEEN KOLLAR-KOTELLY, District Judge.

Currently before the Court are three antitrust cases filed by the direct purchasers (and certain assignees of direct purchasers) of Ovcon 35 (“Ovcon”), a brand-name oral contraceptive marketed by Warner Chilcott. 1 Plaintiffs allege that Defendant Barr Pharmaceuticals, Inc. (“Barr”), a manufacturer of Ovcon, entered into an illegal agreement with Warner Chilcott to delay the market entry of Barr’s generic version of Ovcon in exchange for $20 million. 2 According to Plaintiffs, this agreement violated Section 1 of the Sherman Act, 15 U.S.C. § 1, by denying direct purchasers of Ovcon the benefits of generic competition and causing them to pay higher prices for Ovcon. Plaintiffs have moved for partial summary judgment on the issue of whether Barr’s agreement with Warner Chilcott constituted a per se unreasonable restraint of trade. Barr has filed a cross-motion for summary judgment, arguing (among other things) that its agreement with Warner Chilcott should be examined under a rule of reason analysis, and that the procompetitive benefits of the agreement outweighed any of its alleged anti-competitive effects.

After a searching review of the parties’ motions, including the mountainous attachments thereto, applicable statutory authority and case law, and the entire record herein, the Court holds that the agreement between Barr and Warner Chilcott must be evaluated under the rule of reason and cannot be condemned as a per se unlawful restraint of trade. The Court further holds that genuine issues of material fact exist with respect to the proper definition of the relevant product market in this case, and that these factual issues preclude entry of summary judgment. Accordingly, the Court shall DENY Plaintiffs’ Motion for Partial Summary Judgment, and shall GRANT-IN-PART and DENY-IN-PART Defendant’s Motion for Summary Judgment, for the reasons that follow.

I. BACKGROUND

A. Factual Background

This case arises in the context of the manufacturing and sale of brand-name *41 (“branded”) and generic drugs. 3 Warner Chilcott and Barr are pharmaceutical companies that develop, manufacture, market, and distribute drugs of varying application. Pis.’ Stmt. ¶¶ 1, 2. In January 2000, Warner Chilcott purchased Ovcon, a branded oral contraceptive, from Bristol Myers Squibb (“BMS”). Def.’s Stmt. ¶ 6; Pis.’ Stmt ¶¶ 38. Because Warner Chilcott did not have the ability to manufacture Ovcon itself, it also entered into a supply agreement obligating BMS to supply Warner Chilcott with all of its requirements for Ovcon, as well as any line extensions (i.e., additional Ovcon-related products). 4 Def.’s Stmt. ¶ 7. Ovcon became one of Warner Chilcott’s highest revenue-producing products while under agreement with BMS. Pis.’ Stmt. ¶ 40. Nevertheless, Ov-con was not subject to patent protection, and in September 2001, Barr filed an application with the United States Food and Drug Administration (“FDA”) seeking approval to market a generic version of Ov-con. 5 Id. ¶ 2.

The parties offer conflicting descriptions of the Warner Chilcott — BMS supply rela *42 tionship. Barr maintains that Warner Chilcott was frustrated with BMS because its shipments of Ovcon were consistently-delayed and inadequate, causing Warner Chilcott to “often [run] out of supply.” Def.’s Stmt. ¶¶ 8-10. See also Def.’s Mot., Ex. 44 at 1 (2/6/01 Email from C. Yodice to T. Beer) (“the Ovcon schedules are at least 4 to 5 months overdue”); id., Ex. 45 at 1 (8/21/01 Email from J. Nicol to I. Flores and R. Velez) (“We’re looking for updates on the following issues so we can provide Warner Chilcott with the most recent information. They continue to be concerned about significant delays and frequent changes in availability dates.”); id., Ex. 73 at 29:17-29:21 (Depo. Tr. of Leland Cross) (“Q: What is Warner Chilcott’s judgment as to whether [BMS] was an adequate supplier of Ovcon? A: I could tell you my assessment, and they were the worst supplier that I have come across in 25 years in the industry”). Barr argues that these supply problems caused Warner Chilcott to seek out Barr as an alternative supplier of Ovcon. See Def.’s Opp’n at 6.

Plaintiffs advance a very different view concerning BMS’s performance under its contract with Warner Chilcott, which Plaintiffs characterize as “adequate.” Pis.’ Resp. Stmt. ¶ 8. Plaintiffs argue that, “[o]n average, BMS provided Warner Chilcott with more than three months of Ovcon inventory.” Id. Plaintiffs also argue that Warner Chilcott’s supply problems were self-induced because Warner Chilcott purposefully “bled down” its Ovcon inventory when it incorrectly anticipated FDA-approval (and a corresponding product launch) of a chewable version of Ovcon. Id. ¶ 10. Plaintiffs conclude that, based on evidence in the record, Warner Chilcott sought to enter into an agreement with Barr because it knew that the market entry of a generic version of Ovcon would substantially diminish its sales and profits. See, e.g., Pis.’ Mot., Ex. 9 at 2 (5/13/08 Board Minutes) (“[t]he biggest risk to the Company is the introduction of a generic version of Ovcon”); Def.’s Resp. Stmt., Ex. C at 4, 201:23-25 (Depo. Tr. of Roger Boissonneault) (discussing the market entry of Barr’s generic Ovcon and indicating that Warner Chilcott “would lose 50 percent of [its] business in the first year. That’s the general metric for a generic coming into the marketplace for an oral contraceptive”); Pis.’ Mot., Ex. 10 at 1 (1/20/03 Email from W. Poll to J. Smith) (estimating that Ovcon sales would increase from $61 million in 2003 to $78 million in 2005 if no generic were introduced, and would decrease to $18 million if a generic were launched in 2003). 6

The parties’ conflicting views are also reflected in their divergent characterizations of Warner Chilcott’s plans to develop a chewable version of Ovcon. According to Plaintiffs, Warner Chilcott planned to convert Ovcon patients to a chewable version of Ovcon that would not have a generic equivalent as a way of protecting its Ovcon share. Pis.’ Stmt. ¶ 63; Pis.’ Opp’n, Ex. 12 at 2 (3/15/02 Report) (describing a strategy to “delay generic entry,” “protect Ovcon,” and indicating that “[p]hysieians will NOT be asked to write ‘Ovcon Chewable’ initially,” but “[i]f generic becomes available, new strategy will ask physicians to write ‘Chewable’ ”). See also Pis.’ Opp’n, Ex. 27 at 3 (8/25/03 Brand Plan) (“The major threat this year to Ovcon is the inevitable launch of a generic by Barr *43 Labs. The strategy is to launch Ovcon 35 chewable as soon as possible, keep regular Ovcon 35 on the market, and switch as much of the existing business to chewable as quick as possible ...

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Bluebook (online)
572 F. Supp. 2d 38, 2008 U.S. Dist. LEXIS 65863, 2008 WL 3903389, Counsel Stack Legal Research, https://law.counselstack.com/opinion/meijer-inc-v-barr-pharmaceuticals-inc-dcd-2008.