Citations
- 686 F.3d 197
Full opinion text
OPINION OF THE COURT
SLOVITER, Circuit Judge.
In this appeal, we consider the antitrust implications of an agreement by a manufacturer of a generic drug that, in return for a payment by the patent holder, agrees to drop its challenge to the patent and refrain from entering the market for a specified period of time.
A secondary issue concerns the certification by the District Court of a class of antitrust plaintiffs. Specifically, we must determine whether the antitrust injury allegedly suffered by class members can be shown through common proof, i.e. proof applicable to all plaintiffs, and whether there are insurmountable conflicts preventing named plaintiffs from adequately representing the members of the class.
These appeals arise out of the settlement of two patent cases involving the drug K-Dur 20 (“K-Dur”), which is manufactured by Schering-Plough Corporation (“Schering”). Plaintiffs are Louisiana Wholesale Drug Company, Inc., on behalf of a class of wholesalers and retailers who purchased K-Dur directly from Schering and nine individual plaintiffs, including CVS Pharmacy, Inc., Rite Aid Corporation, and other pharmacies. Defendants are Schering and Upsher-Smith Laboratories (“Upsher Smith”).
I. STATUTORY AND REGULATORY FRAMEWORK
K-Dur is Schering’s brand-name sustained-release potassium chloride supplement. Sustained-release potassium chloride is used to treat potassium deficiencies, including those that arise as a side effect of the use of diuretic products to treat high blood pressure.
Schering did not hold a patent for the potassium chloride salt itself, as that compound is commonly known and not patentable. Instead, Schering held a formulation patent on the controlled release coating it applied to the potassium chloride crystals. Schering identified patent number 4,863,-743 (“the '743 patent”) as the patent that would be infringed by the production of a generic version of K-Dur. Schering assigned the '743 patent to its subsidiary Key Pharmaceuticals, Inc. The '743 patent was set to expire on September 5, 2006.
By statute, a pharmaceutical company must obtain from the Food and Drug Administration (“FDA”) approval before it may market a prescription drug. 21 U.S.C. § 355(a). For a new drug, the approval process requires submission of a New Drug Application (“NDA”), which includes exhaustive information about the drug, including safety and efficacy studies, the method of producing the drug, and any patents issued on the drug’s composition or methods of use. Id. § 355(b)(1). The FDA publishes the patent information submitted in NDAs in the “Approved Drug Products with Therapeutic Equivalence Evaluations,” otherwise known as the “Orange Book.” See FDA Electronic Orange Book, http://www.fda.gov/eder/ob/.
In 1984, attempting to jumpstart generic competition with name brand pharmaceuticals, Congress passed the Drug Price Competition and Patent Term Restoration Act, commonly known as the Hatch-Wax-man Act. Pub.L. No. 98-417, 98 Stat. 1585 (1984). The Hatch-Waxman Act amended the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 301-399, to permit a potential manufacturer of a generic version of a patented drug to file an abbreviated application for approval with the FDA. See 21 U.S.C. § 355(j). This short form application, known as an Abbreviated New Drug Application (“ANDA”), may rely on the FDA’s prior determinations of safety and efficacy made in considering the application of the patented drug. Id. §355