Microsoft word - 08-24-12 nexium final complaint

Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 1 of 58 IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
FRATERNAL ORDER OF POLICE MIAMI LODGE 20, INSURANCE TRUST FUND, Individually And On Behalf Of All Others Similarly Situated, Civil Action No. ASTRAZENECA LP, AKTIEBOLAGET HASSLE, ASTRAZENECA AB, RANBAXY PHARMACEUTICALS, INC., RANBAXY INC. JURY TRIAL DEMANDED RANBAXY LABORATORIES, LTD., TEVA PHARMACEUTICAL INDUSTRIES, LTD., TEVA USA, INC., DR. REDDY'S LABORATORIES LTD., and DR. REDDY'S LABORATORIES, INC., Defendants. CLASS ACTION COMPLAINT
Plaintiff Fraternal Order of Police Miami Lodge 20, Insurance Trust Fund ("Plaintiff" or "FOP"), on behalf of itself and all others similarly situated, files this Class Action Complaint ("Complaint") against Defendants AstraZeneca LP, Aktiebolaget Hassle, AstraZeneca AB (collectively "AstraZeneca"), Ranbaxy Pharmaceuticals, Inc., Ranbaxy Inc. and Ranbaxy Laboratories Ltd. (collectively, "Ranbaxy"), Teva Pharmaceutical Industries, Ltd., Teva USA, Inc. (collectively, "Teva"), Dr. Reddy's Laboratories Ltd., and Dr. Reddy's Laboratories, Inc. (collectively, "Dr. Reddy's") (together the "Generic Defendants," and together with AstraZeneca, the "Defendants"), based upon personal knowledge as to facts pertaining to it, and upon information and belief as to all other matters, and alleges as follows: Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 2 of 58 NATURE OF THE ACTION
This action arises out of Defendants' conspiracy to allocate, and unreasonably restrain trade in, the market for delayed-release esomeprazole magnesium, sold by AstraZeneca under the brand name Nexium. Nexium is a proton pump inhibitor prescribed to patients for the healing of erosive esophagitis, maintenance of erosive esophagitis, and treatment of symptomatic gastroesophageal reflux disease. To protect its over $3 billion in annual Nexium sales from the threat of generic competition, AstraZeneca entered into non-competition agreements with each of the Generic Defendants, agreeing to pay the Generic Defendants substantial sums in exchange for their agreement to delay marketing their less expensive generic versions of Nexium for as many as six years or more, i.e., until May 27, 2014 (the "Exclusion Payment Agreements" or simply the "Agreements"). The Generic Defendants did, in fact, delay marketing their less-expensive versions of Nexium; but for the Agreements, generic versions of Nexium would have been available to Plaintiff and members of the Class in the United States as early as April 14, 2008, when the 30-month stay of FDA approval of Ranbaxy's generic Nexium product expired. Generic versions of brand name drugs contain the same active ingredient, and are determined by the Food and Drug Administration ("FDA") to be just as safe and effective as their brand name counterparts. The only material difference between generic and brand name drugs is their price: generics are usually at least 25% less expensive than their brand name counterparts when there is a single generic competitor, and this discount typically increases to 50% to 80% (or more) when there are multiple generic competitors on the market for a given brand. The launch of a generic drug thus usually brings huge cost savings for all drug Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 3 of 58 Those same savings are viewed as a grave threat by brand name drug companies such as AstraZeneca. The Federal Trade Commission estimates that about one year after market entry, the generic version takes over 90% of the brand's unit sales and sells for 15% of the price of the brand name product. In order to delay the drastic loss of its monopoly profits from Nexium, AstraZeneca engineered a scheme whereby it would buy its way out of both competition with the Generic Defendants and the chance that its Nexium patents would be invalidated. Specifically, AstraZeneca agreed to pay the Generic Defendants to defer entering the market until May 27, 2014 and to drop their challenges to the Nexium patents. AstraZeneca and the Generic Defendants attempted to disguise these payments (frequently called "Exclusion Payments" or "Reverse Payments") as payments to compensate them for: (i) supplying a portion of AstraZeneca's Nexium supply, including esomeprazole magnesium, the active pharmaceutical ingredient ("API") in Nexium, for distributing authorized generic versions of two other AstraZeneca drugs, felodipine capsules (brand name, Plendil) and 40 mg omeprazole tablets (brand name, Prilosec) (with respect to Ranbaxy); or (ii) forgiveness of a contingent liability (with respect to Teva and Dr. Reddy's). Defendants intentionally concealed the true purpose and nature of their exclusion payments, in an attempt to escape liability under the antitrust laws. Although the Exclusion Payment Agreements purported to settle patent infringement suits that AstraZeneca filed against the Generic Defendants with respect to patents that purportedly cover Nexium, AstraZeneca used the strength of its wallet as opposed to the strength of its patents to obtain the agreement of the Generic Defendants not to launch their generic Nexium products. In light of the substantial possibility that AstraZeneca's Nexium patents would be invalidated and/or that the Generics' products would be adjudged non- Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 4 of 58 infringing—in which case AstraZeneca would have been unable to keep generic versions of Nexium from swiftly eradicating the vast majority of Nexium sales—AstraZeneca agreed to share its monopoly rents with the Generic Defendants as the quid pro quo for the Generic Defendants' agreement not to compete with AstraZeneca in the delayed-release esomeprazole magnesium market until May 27, 2014. Like AstraZeneca, the Generic Defendants knew that it would be more profitable to be paid not to compete than to enter the market. Had the Generic Defendants all launched generic versions of Nexium, as they were preparing and poised to do, the competition among them would have driven down the price of generic Nexium. Once there are multiple generic versions of the same brand drug available, the generic behaves like a commodity, with little to distinguish one generic from another except price. While such competitive generic sales are still profitable, it can be more profitable to be paid by the brand company not to compete. The Generic Defendants were well aware of these market dynamics, and knew that, rather than entering the market and competing, they could make more profit by agreeing to delay entry in exchange for a portion of AstraZeneca's monopoly profits from Nexium, paid in the form of an Exclusion Payment. And that is precisely what happened. AstraZeneca and Ranbaxy also knew and intended that their Exclusion Payment Agreement would prevent still other generic companies from launching their own generic Nexium before Ranbaxy did, thereby creating a bottleneck. As the first filer of an Abbreviated New Drug Application ("ANDA") for generic Nexium, Ranbaxy is entitled to market its generic Nexium for 180 days free from competition from other generic Nexium products. The operation of the Exclusion Payment Agreement between AstraZeneca and Ranbaxy can block any other generic Nexium products from coming to market until 180 days after May 27, 2014 because, Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 5 of 58 absent circumstances discussed below, FDA will not approve subsequently-filed ANDAs until the first-filer's exclusivity period has run, which will not occur until 180 days after Ranbaxy Although it is possible that Ranbaxy could forfeit its 180-day exclusivity if it does not begin commercial marketing of its generic Nexium products within 75 days of a court decision that all of the patents listed in the FDA's book of Approved Drug Products with Therapeutic Equivalence Evaluations, commonly referred to as the "Orange Book," for Nexium are invalid or not infringed, AstraZeneca made sure that the second and third ANDA-filers for Nexium—Teva and Dr. Reddy's—would not break the bottleneck caused by its Exclusion Payment Agreement with Ranbaxy by obtaining such a court decision. When Teva and Dr. Reddy's neared a court determination on the issue of invalidity and/or non-infringement of the Nexium patents, AstraZeneca paid them too, pursuant to the Exclusion Payments Agreements, to drop their patent challenges and stay out of the market until after Ranbaxy was permitted to enter the market under Ranbaxy's Exclusion Payment Agreement with AstraZeneca. 10. But for one or more of the unlawful Agreements at issue here, generic versions of Nexium would have entered the market as early as April 14, 2008, once the 30-month stay of FDA approval of Ranbaxy's Nexium products expired. FDA had granted tentative approval to Ranbaxy's Nexium product on February 5, 2008, which, absent the illegal Agreements complained of herein, would have been converted to a final approval on or about April 14, 2008. Thus, absent Defendants' illegal Agreements not to compete, Plaintiff and the members of the Class would have already been able to purchase, and would have purchased, generic delayed- release esomeprazole magnesium at significantly lower prices, rather than being forced to pay high prices for branded Nexium because of Defendants' illegal Agreements in restraint of trade. Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 6 of 58 11. Defendants' unlawful Exclusion Payment Agreements were designed to and did in fact: (a) preclude the entry of less expensive generic versions of delayed-release esomeprazole magnesium in the United States; (b) fix, raise, maintain or stabilize the price of delayed-release esomeprazole magnesium products; (c) permit AstraZeneca to maintain a monopoly in the United States for delayed-release esomeprazole magnesium; and (d) allocate 100% of the United States delayed-release esomeprazole magnesium market to AstraZeneca. 12. This action is brought as a class action on behalf of all consumers and third-party payors (collectively "End-Payor Class") in the United States of America and Puerto Rico who purchased or paid for branded and/or generic Nexium products, other than for re-sale, since April 14, 2008 (see Class Definition below). Plaintiff seeks a judgment declaring that Defendants' Exclusion Payment Agreements, as further described below, are unlawful under Section 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2. Plaintiff also seeks an injunction pursuant to Section 16 of the Clayton Act, 15 U.S.C. § 26, enjoining the continuation of the anti-competitive Agreements. Unless enjoined, Defendants' unlawful conduct will continue unchecked and Plaintiff and the End-Payor Class will continue to bear the financial brunt of Defendants' antitrust violations. 13. Plaintiff also asserts claims for compensatory and/or treble damages and equitable relief for continuing violations of state antitrust and/or consumer protection laws, and for unjust enrichment and disgorgement under common law. A. Plaintiff
14. Fraternal Order of Police Miami Lodge 20, Insurance Trust Fund is a governmental plan established and funded through contributions from the City of Miami and the plan's members, who are current and retired sworn officers of the City of Miami Police Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 7 of 58 Department and their dependents. FOP was established pursuant to a duly executed Trust Agreement for the purpose of providing medical, surgical and hospital care or benefits, including prescription drug benefits, to its members. FOP maintains its principal place of business at 400 NW 2nd Avenue, Miami, Florida and, thus, is a citizen of Florida. B. Defendants.
15. Defendant AstraZeneca LP is a limited partnership organized under the laws of Delaware, having its principal place of business in Wilmington, Delaware. AstraZeneca LP holds an approved New Drug Application from the FDA for a delayed-release esomeprazole magnesium formulation that it sells throughout the United States under the brand name Nexium. 16. Defendant AstraZeneca AB is a company organized and existing under the laws of Sweden, having its principal place of business in Sodertalje, Sweden. 17. Defendant Aktiebolaget Hassle is a company organized and existing under the laws of Sweden, having its principal place of business in Molndal, Sweden. 18. Defendant Ranbaxy Pharmaceuticals, Inc. is a company organized and existing under the laws of Florida, with its principal place of business at 9431 Florida Mining Blvd. East, Jacksonville, Florida, and having its place of business at 600 College Road East, Suite 2100, Princeton, New Jersey. Ranbaxy Pharmaceuticals, Inc. is a wholly-owned subsidiary of Ranbaxy Laboratories Limited. 19. Defendant Ranbaxy Laboratories Limited is a public limited liability company organized and existing under the laws of India, with a principal place of business located at Plot 90, Sector 32, Gurgaon-122001 (Haryana), India. 20. Defendant Ranbaxy, Inc. is a Delaware corporation, having a place of business at 600 College Road East, Suite 2100, Princeton, New Jersey. Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 8 of 58 21. Defendants Ranbaxy Pharmaceuticals, Inc., Ranbaxy Laboratories Limited, and Ranbaxy, Inc. are engaged in the worldwide marketing, production and distribution of generic pharmaceutical products. 22. Defendant Teva Pharmaceutical Industries, Ltd. is an Israeli corporation having its principal place of business at 5 Basel St, P.O. Box. 3190, Petach Tkva 49131, Israel. 23. Defendant Teva Pharmaceuticals USA, Inc. is a Delaware corporation, having a principal place of business at 1090 Horsham Road, P.O. Box 1090, North Wales, Pennsylvania. 24. Defendants Teva Pharmaceutical Industries, Ltd. and Teva Pharmaceuticals USA, Inc. are the largest generic manufacturer of pharmaceuticals in the world. 25. Defendant Dr. Reddy's Laboratories, Ltd. is an Indian pharmaceutical company with its principal place of business at Door No 8-2-337, Road No 3, Banjara Hills, Hyderabad – 500034, Andhra Pradesh, India. 26. Defendant Dr. Reddy's Laboratories, Inc. is a New Jersey corporation with its principal place of business at 200 Somerset Corp. Blvd., Bridgewater, New Jersey. On information and belief, Dr. Reddy's Laboratories, Inc. is a wholly-owned subsidiary of Dr. Reddy's Laboratories, Ltd. 27. All of Defendants' actions described in this Complaint are part of, and in furtherance of, the unlawful conduct alleged herein, and were authorized, ordered, and/or done by Defendants' various officers, agents, employees, or other representatives while actively engaged in the management of Defendants' affairs (or that of their predecessors-in-interest) within the course and scope of their duties and employment, and/or with the actual, apparent, and/or ostensible authority of Defendants. Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 9 of 58 JURISDICTION AND VENUE
28. This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332(d) because this is a class action in which the aggregate amount in controversy exceeds $5,000,000 and at least one member of the putative class is a citizen of a state different from that of one of the Defendants. 29. This Court also has jurisdiction over this matter pursuant to 15 U.S.C. § 26 and 28 U.S.C. §§ 1331 and 1337 in that Plaintiff brings claims under Section 16 of the Clayton Act, 15 U.S.C. § 26, for injunctive and equitable relief to remedy Defendants' violations of Sections 1 and 2 of the Sherman Antitrust Act, 15 U.S. C. §§ 1 and 2. The Court has supplemental jurisdiction over Plaintiff's pendent state law claims pursuant to 28 U.S.C. § 1367. 30. Venue is appropriate within this district under Section 12 of the Clayton Act, 15 U.S.C. § 22, and 28 U.S.C. §1391(b) and (c), because Defendants transact business within this district and the interstate trade and commerce, hereinafter described, is carried out, in substantial part, in this district. REGULATORY BACKGROUND
The Regulatory Structure for Approval of Generic Drugs and the Substitution of
Generic Drugs for Brand Name Drugs
31. Under the Federal Food, Drug, and Cosmetic Act ("FDCA"), manufacturers who create a new drug product must obtain the approval of the FDA to sell the new drug by filing a New Drug Application ("NDA"). 21 U.S.C. §§ 301-392. An NDA must include submission of specific data concerning the safety and effectiveness of the drug, as well as any information on applicable patents. 21 U.S.C. § 355(a), (b). 32. When the FDA approves a brand name manufacturer's NDA, the brand manufacturer may list in the Orange Book any patents that the brand manufacturer believes could Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 10 of 58 reasonably be asserted against a generic manufacturer who makes, uses, or sells a generic version of the brand name drug prior to the expiration of the listed patents. Patents issued after NDA approval may be listed in the Orange Book within thirty days of issuance. 21 U.S.C. §§ 355(b)(1) & (c)(2). 33. The FDA relies completely on the brand name manufacturer's truthfulness about patent validity and applicability, as it does not have the resources or authority to verify the manufacturer's patents for accuracy or trustworthiness. In listing patents in the Orange Book, the FDA merely performs a ministerial act. The Hatch-Waxman Amendments
34. The Hatch-Waxman Amendments, enacted in 1984, simplified the regulatory hurdles for prospective generic manufacturers by eliminating the need for them to file lengthy and costly NDAs. See Drug Price Competition and Patent Term Restoration Act, Pub. L. No. 98-417, 98 Stat. 1585 (1984). A generic manufacturer seeking approval to sell a generic version of a brand name drug may instead file an ANDA. An ANDA relies on the scientific findings of safety and effectiveness included in the brand name drug manufacturer's original NDA, and must further show that the generic drug contains the same active ingredient(s), dosage form, route of administration, and strength as the brand name drug, and is absorbed at the same rate and to the same extent as the brand drug—that is, that the generic drug is pharmaceutically equivalent and bioequivalent (together, "therapeutically equivalent") to the brand name drug. The FDA assigns generic drugs that are therapeutically equivalent to their brand-name counterpart an "AB" rating. 35. The FDCA and Hatch-Waxman Amendments operate on the presumption that bioequivalent drug products containing identical amounts of the same active ingredients, having the same route of administration and dosage form, and meeting applicable standards of strength, quality, purity and identity, are therapeutically equivalent and may be substituted for one Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 11 of 58 another. Bioequivalence demonstrates that the active ingredient of the proposed generic drug would be present in the blood of a patient to the same extent and for the same amount of time as the branded counterpart. 21 U.S.C. § 355(j)(8)(B). 36. Congress enacted the Hatch-Waxman Amendments to expedite the entry of legitimate (non-infringing) generic competitors, thereby reducing healthcare expenses nationwide. Congress also sought to protect pharmaceutical companies' incentives to create new and innovative products. 37. The Hatch-Waxman Amendments achieved both goals, advancing substantially the rate of generic product launches, and ushering in an era of historic high profit margins for brand name pharmaceutical companies. In 1983, before the Hatch-Waxman Amendments, only 35% of the top-selling drugs with expired patents had generic alternatives; by 1998, nearly all did. In 1984, prescription drug revenue for branded and generic drugs totaled $21.6 billion, with generic drugs accounting for 18.6% of prescriptions. By 2009, total prescription drug revenue had soared to $300 billion, with generic drugs accounting for 75% of prescriptions. Paragraph IV Certifications
38. To obtain FDA approval of an ANDA, a generic manufacturer must certify that the generic drug addressed in its ANDA will not infringe any patents listed in the Orange Book. Under the Hatch-Waxman Amendments, a generic manufacturer's ANDA must contain one of four certifications: that no patent for the brand name drug has been filed with the FDA (a "Paragraph I certification"); that the patent for the brand name drug has expired (a "Paragraph II certification"); that the patent for the brand name drug will expire on a particular date and the generic company does not seek to market its generic product Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 12 of 58 before that date (a "Paragraph III certification"); or that the patent for the brand name drug is invalid or will not be infringed by the generic manufacturer's proposed product (a "Paragraph IV certification"). 39. If a generic manufacturer files a Paragraph IV certification, a brand name manufacturer has the ability to delay FDA approval of its ANDA simply by suing the ANDA applicant for patent infringement. If the brand name manufacturer initiates a patent infringement action against the generic filer within forty-five days of receiving notification of the Paragraph IV certification ("Paragraph IV Litigation"), the FDA will not grant final approval to the ANDA until the earlier of (a) the passage of thirty months, or (b) the issuance of a decision by a court that the patent is invalid or not infringed by the generic manufacturer's ANDA. Until one of those conditions occurs, the FDA may grant "tentative approval," but cannot authorize the generic manufacturer to go to market with its product. FDA may grant an ANDA tentative approval when it determines that the ANDA would otherwise be ready for final approval but for the 30-month stay. 40. As an incentive to spur generic companies to seek approval of generic alternatives to branded drugs, the first generic manufacturer to file an ANDA containing a Paragraph IV certification typically gets a period of protection from competition from other generic versions of the drug. For Paragraph IV certifications made after December 2003, the first generic applicant receives 180 days of market exclusivity (unless some forfeiture event, like that discussed below, occurs). This means that the first approved generic is the only available generic for at least six 41. Brand name manufacturers can "game the system" by listing patents in the Orange Book (even if such patents are not eligible for listing) and suing any generic competitor Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 13 of 58 that files an ANDA with a Paragraph IV certification (even if the competitor's product does not actually infringe the listed patents) in order to delay final FDA approval of an ANDA for up to thirty months. That brand name manufacturers often sue generics under Hatch-Waxman simply to delay generic competition—as opposed to enforcing a valid patent that is actually infringed by the generic—is demonstrated by the fact that generic firms have prevailed in Paragraph IV Litigation, by obtaining a judgment of invalidity or non-infringement or by the patent holder's voluntary dismissal, in cases involving 73% of the drug products studied. 42. The first generic applicant can help the brand manufacturer "game the system" by delaying not only its own market entry, but also the market entry of all other generic manufacturers. The first generic applicant, by agreeing not begin marketing its generic drug, thereby delays the start of the 180-day period of generic market exclusivity, a tactic called exclusivity "parking." This tactic creates a "bottleneck" because later generic applicants cannot launch until the first generic applicant's 180-day exclusivity has elapsed or is forfeited. Forfeiture Provisions Under the MMA
43. On December 8, 2003, Congress enacted the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 ("MMA") in order to make it more difficult for brand and generic pharmaceutical companies to conspire in order to delay the start of the first- filer's 180-day period of generic market exclusivity. The MMA outlines a number of conditions under which an ANDA applicant forfeits its eligibility for 180-day exclusivity, making way for other ANDA filers to launch their generic products. 44. Under the "failure to market" provision, a first ANDA applicant will forfeit 180- day exclusivity if it fails to market its generic drug by the later of: (a) the earlier of the date that is (i) 75 days after receiving final FDA approval; or (ii) 30 months after the date it submitted its ANDA; or (b) the date that is 75 days after the date as of which, as to each of the patents that Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 14 of 58 qualified the first applicant for exclusivity (i.e., as to each patent for which the first applicant submitted a Paragraph IV certification), at least one of the following has occurred: (i) a final decision of invalidity or non-infringement; (ii) a settlement order entering final judgment that includes a finding that the patent is invalid or not infringed; or (iii) the NDA holder delists the patent from the FDA Orange Book. 45. Brand name manufacturers and first-filing generics are able to structure their settlements in order to intentionally skirt the failure-to-market provisions and keep the 180-day exclusivity bottleneck in place by, for example, settling their litigation before a final judgment of invalidity or non-infringement can be entered with respect to each of the patents for which the first applicant submitted a Paragraph IV certification or seeking a consent judgment settling the litigation that does not include a finding that all of the patents for which the first applicant submitted a Paragraph IV certification were invalid or not infringed. When that happens, in order to trigger a forfeiture and gain access to the market, subsequent ANDA applicants are forced to obtain a judgment that all patents for which the first filing generic company filed Paragraph IV certifications are invalid or not infringed. This may require the subsequent ANDA applicant to initiate a declaratory judgment action over patents that the brand company did not assert against it in a Paragraph IV Litigation. The Benefits of Generic Drugs
46. Typically, AB-rated generics cost much less than their branded counterparts. Because of the price differentials, and other institutional features of the pharmaceutical industry, generic versions are liberally and substantially substituted by pharmacists when presented with a prescription for the brand-name counterpart. Since passage of the Hatch-Waxman Amendments, every state has adopted substitution laws that either require or permit pharmacies to substitute Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 15 of 58 AB-rated generic equivalents for branded prescriptions (unless the prescribing physician has specifically ordered otherwise by writing on the prescription "dispense as written"). 47. There is an incentive to choose the less expensive generic equivalent in every link in the prescription drug chain. As a result of federal reimbursement rules and the industry pricing structure, pharmacies typically earn a higher markup on generics. Private health insurers similarly offer direct incentives to pharmacies to substitute cheaper generic products for more expensive branded ones. Health insurers are contractually obligated to pay for the bulk of their members' prescriptions, whether filled with branded or generic drugs, so they offer their members lower copays for generic drugs in order to encourage the use of generics. Members also face the threat of increased health insurance premiums if branded prescription drug costs continue to rise. 48. As more generic equivalents compete with each other, prices decline even further as a result of competition among the generic manufacturers, and pharmacy substitution and thus the loss of sales volume by the brand name drug to the corresponding generic accelerates. And the speed with which generic drugs take over the market is increasing: in a sample of drugs losing patent protection between 1991 and 1993, generics held, on average, a 44% market share after one year; by 2008, generic versions could capture as much as 86% to 97% of the market within the first month of availability. Generic competition enables all members of the proposed Class to: (a) purchase generic versions of the drug at substantially lower prices; and/or (b) purchase the brand name drug at a reduced price. 49. However, until a generic version of the brand name drug enters the market, there is no bioequivalent generic drug to substitute for and compete with the brand name drug, and therefore the brand name manufacturer can continue to charge supracompetitive prices profitably Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 16 of 58 without losing all or a substantial portion of its brand name sales. As a result, brand-name drug manufacturers, who are well aware of generics' rapid erosion of their brand name sales, have a strong incentive to delay the introduction of generic competition into the market, including by using tactics such as the Agreements alleged above and below. FACTUAL ALLEGATIONS
Defendants' Unlawful Conduct
AstraZeneca Files Paragraph IV Litigation Against the Generic Defendants
50. Nexium is a prescription proton pump inhibitor ("PPI") used to treat heartburn and related conditions. The active ingredient in Nexium is esomeprazole magnesium. Its pharmacological profile, and thus its side effect and efficacy profile, is different than other PPIs, H2 blockers and non-prescription antacids that are used to treat the same or similar conditions. Those other drugs are not AB-rated to Nexium, cannot be automatically substituted for Nexium by pharmacists, do not exhibit substantial cross-price elasticity of demand with respect to Nexium, and thus are not economic substitutes for, nor reasonably interchangeable with, 51. On December 3, 1999, AstraZeneca submitted NDA 21-153 seeking FDA approval to market esomeprazole magnesium delayed-release capsules in 20 mg and 40 mg strengths under the brand name Nexium for the healing of erosive esophagitis, maintenance of healing of erosive esophagitis, and treatment of symptomatic gastroesophageal reflux disease. The FDA approved AstraZeneca's NDA for Nexium on February 20, 2001. 52. In connection with its Nexium NDA, AstraZeneca listed at least thirteen patents in the FDA Orange Book as covering Nexium or a method of using Nexium (the "Nexium patents"). Although the Nexium patents purport to cover, among other things, compounds and pharmaceutical compositions comprised of magnesium salts of esomeprazole, and methods of Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 17 of 58 using those compounds and compositions, there existed a substantial risk that the patents would be invalidated upon a challenge from generic manufacturers. 53. Among other reasons, the Nexium patents are inherently weak because the esomeprazole "invention" described in the various Nexium patents is prima facie obvious in light of the prior art, including, but not limited to, AstraZeneca's prior PPI drug, Prilosec. 54. The active ingredient in Prilosec is omeprazole. Omeprazole is a "racemate," which is a substance consisting of equal parts of two different isomers of the same molecule. The different isomers, known as "enantiomers," are non-superimposable mirror images of one another but are otherwise identical. Human hands are commonly used to illustrate this principle. A person's left hand and right hand are non-superimposable mirror images of each other. Pairs of enantiomers share many chemical and physical properties, though they may exhibit very different biologic activity. For example, it is commonly known that one enantiomer of the pair will be more biologically active than the other. 55. A 20 mg dose of the racemate omeprazole contains 10 mg of the left-handed or "S" (for sinister, the Latin word for "left-handed") enantiomer and 10 mg of the right-handed or "R" enantiomer. Nexium, which contains esomeprazole, the S-enantiomer of omeprazole, is simply Prilosec without the less active R-enantiomer. 56. Under well-settled patent law principles, in the case of chemical compounds where the prior art is close enough to the claimed invention to give one skilled in the relevant chemical art the motivation to make close relatives of the prior art compound, like enantiomers, there arises a presumption of obviousness, i.e., a prima facie case of obviousness. Accordingly, enantiomers like Nexium are frequently assumed to be prima facie obvious in light of their racemates, shifting the burden to the patentee to establish validity. Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 18 of 58 57. AstraZeneca faced substantial risk that its Nexium patents would be invalidated through patent litigation. In fact, the European Patent Office has ruled, first in 2006 and then again in 2011, in connection with opposition proceedings brought by generic manufacturers, including at least Generic Defendant Teva, that two European Nexium patents—which are similar to U.S. Nexium patents—were not just presumed to be invalid, but actually were invalid and thus revoked for failing to satisfy the "inventive step" requirement, which is analogous to obviousness under U.S. patent law. 58. Because the Nexium patents are particularly susceptible to attack on validity grounds, generic companies were eager to apply for FDA approval to market generic versions of Nexium prior to the expiration of the Nexium patents. 59. On or about October 14, 2005, Generic Defendant Ranbaxy notified AstraZeneca that it had filed ANDA No. 77-830, seeking to market generic versions of Nexium containing 20 mg and 40 mg of esomeprazole magnesium in delayed-release capsules. Ranbaxy's notice letter included a Paragraph IV certification that the commercial manufacture, use and/or sale of its generic Nexium product would not infringe any valid claim of any patent that expired after October 2007 listed in the FDA Orange Book as covering Nexium or a method of using Nexium. 60. On November 21, 2005, AstraZeneca filed suit in the United States District Court for the District of New Jersey pursuant to Hatch-Waxman, alleging that Ranbaxy's generic Nexium product would infringe six patents, five of which were Orange Book-listed: U.S. Patent No. 5,714,504 (the "'504 patent"); U.S. Patent No. 5,877,192 (the "'192 patent); U.S. Patent No. 6,875,872 (the "'872 patent"); U.S. Patent No. 6,428,810 (the "'810 patent"); U.S. Patent No. 6,369,085 (the "'085 patent"); and U.S. Patent No. 5,948,789 (the "'789 patent"). Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 19 of 58 61. On or about January 26, 2006, Generic Defendant Teva notified AstraZeneca that it had filed ANDA No. 78-003, seeking to market generic versions of Nexium containing 20 mg and 40 mg of esomeprazole magnesium in delayed-release capsules. Teva's notice letter included a Paragraph IV certification that the commercial manufacture, use and/or sale of its generic product would not infringe any valid claim of any patent listed in the FDA Orange Book as covering Nexium or a method of using Nexium. 62. On March 8, 2006, AstraZeneca filed suit against Teva in the United States District Court for the District of New Jersey pursuant to Hatch-Waxman, alleging that Teva's generic Nexium product would infringe five of the patents listed in the Orange Book for Nexium: the '504; '192; '872; '810; and '085 patents. Subsequently, AstraZeneca amended its complaint by dropping its allegation that Teva infringed the '810 patent and adding an allegation that Teva infringed the '789 patent and U.S. Patent No. 7,411,070 (the "'070 patent"). 63. On August 17, 2006, Generic Defendant Dr. Reddy's notified AstraZeneca that it had filed ANDA No. 78-279, seeking to market generic versions of Nexium containing 20 mg and 40 mg of esomeprazole magnesium in delayed-release capsules. Dr. Reddy's notice letter included a Paragraph IV certification that the commercial manufacture, use and/or sale of its generic product would not infringe any valid claim of seven of the Orange Book-listed patents, including the '085 and the '810 patents. On December 4, 2007, Dr. Reddy's amended its ANDA to assert that its proposed generic Nexium product would not infringe the '504, '192 or '872 patents, or that those patents were invalid. 64. On January 17, 2008, AstraZeneca filed suit in the United States District Court for the District of New Jersey pursuant to Hatch-Waxman, alleging that Dr. Reddy's generic Nexium product would infringe three of the patents listed in the Orange Book for Nexium: the Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 20 of 58 '504; '872; and '085 patents. In reply to Dr. Reddy's answer, AstraZeneca also asserted that Dr. Reddy's proposed generic Nexium product would infringe the '192 patent. 65. AstraZeneca's actions against the Generic Defendants were consolidated, and the Generic Defendants conducted discovery supporting a host of defenses focusing on: (1) the enforceability of the Nexium patents; (2) the validity of the Nexium patents' claims; and (3) the strength of AstraZeneca's infringement allegations. AstraZeneca and the Generic Defendants entered Exclusion Payment Agreements before any dispositive motions relating to the Generic Defendants' substantive challenges to the patents were decided. 66. To prevent generic entry using just its patents (rather than pay-offs), AstraZeneca would have had to show that each of the generic Nexium products infringed its patents and defeat each of the generic companies' invalidity arguments. AstraZeneca instead decided to protect its monopoly by paying all of the Generic Defendants to withdraw their challenges to the validity and enforceability of its patents and delay their introduction of generic Nexium. And that is precisely what it has done, in concert with the Generic Defendants. AstraZeneca and Ranbaxy Enter an Exclusion Payment Agreement
67. On or about April 14, 2008, shortly after discovery ended and before the court could issue any substantive rulings, AstraZeneca and Ranbaxy entered into the AstraZeneca/Ranbaxy Exclusion Payment Agreement. Pursuant to that Agreement, AstraZeneca ended its litigation against first-filer Ranbaxy, and a consent judgment was entered by the court on the exact same day that the 30-month stay of FDA approval of Ranbaxy's generic Nexium product expired. 68. Under the Exclusion Payment Agreement, Ranbaxy agreed to: (a) admit that the '504, '192, '789, '085, '810 and '872 patents were enforceable and valid; (b) admit that its generic Nexium products would infringe the '504, '192, '789 and '872 patents (but not the '810 Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 21 of 58 or '085 patents); and (c) delay launching its generic Nexium product until May 27, 2014 unless otherwise specifically authorized by the Agreement. 69. As the quid pro quo for Ranbaxy's agreement to drop its challenge to the Nexium patents listed above and to delay entry of its generic Nexium product until May 27, 2014, AstraZeneca agreed, pursuant to the Agreement, to pay Ranbaxy hundreds of millions of dollars. Shortly after AstraZeneca and Ranbaxy entered the Agreement, Ranbaxy's Chief Executive Officer, Malvinder Singh, boasted that the Agreement would give Ranbaxy as much as $1.5 billion in revenue between the date of the Agreement and the end of its 180-day marketing exclusivity in 2014. Singh characterized the Agreement as "the biggest and most comprehensive settlement to date by any generic company globally." Upon information and belief, AstraZeneca has already paid Ranbaxy millions of dollars under their Agreement. 70. Although AstraZeneca's payments to Ranbaxy under the Agreement are characterized as payments for Ranbaxy's performance of manufacturing and distribution services for AstraZeneca, those characterizations are pretextual. In fact, the payments from AstraZeneca to Ranbaxy were for Ranbaxy's agreement to delay generic competition to Nexium for over six years. Absent Ranbaxy's agreement to delay entry into the market with generic Nexium, AstraZeneca would not have agreed to designate Ranbaxy as a supplier of Nexium and Nexium API, or as the authorized generic distributor for Plendil or Prilosec, and/or would not have agreed to the price and/or other terms that it did under those provisions of the Agreement. AstraZeneca paid Ranbaxy for delayed market entry of generic Nexium. AstraZeneca Enters Exclusion Payment Agreements with Teva and Dr.
Reddy's to Strengthen the Bottleneck Created by the AstraZeneca/Ranbaxy
Exclusion Payment Agreement
71. On April 30, 2008, shortly after AstraZeneca and Rabaxy entered their Agreement, Generic Defendant Teva filed a declaratory judgment action against AstraZeneca Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 22 of 58 seeking a ruling of invalidity and non-infringement regarding the remaining Orange Book-listed patents that AstraZeneca did not sue Teva for infringing in connection with Teva's generic Nexium ANDA. Teva filed its declaratory judgment action in an attempt to obtain a favorable judgment regarding all Orange Book-listed Nexium patents and thus uncork the FDA approval bottleneck caused by AstraZeneca's settlement with first-filer Ranbaxy, which (absent some other forfeiture event) ensures that Ranbaxy will not trigger its 180-day marketing exclusivity until May 27, 2014. Dr. Reddy's followed in May 2008 with its own declaratory judgment action seeking a ruling of non-infringement with respect to the unasserted Orange Book-listed 72. In response to AstraZeneca's motion to dismiss its declaratory judgment action for lack of jurisdiction, Teva accused AstraZeneca of gaming the system "to take advantage of what [Teva] contends is an invalid and illegitimate patent monopoly." According to Teva, as a result of the Exclusion Payment Agreement between AstraZeneca and Ranbaxy, if it could not "challenge the patents in suit, the patents will represent a six-year barrier to anyone entering the market, regardless of whether they are valid or would be infringed. In those circumstances, [Teva] would be precluded from marketing its product and the public would not have access to lower-priced esomeprazole even though no legitimate patent rights protect defendants' monopoly." 73. The court denied in substantial part AstraZeneca's motion to dismiss the declaratory judgment actions, but granted AstraZeneca's motion to stay the declaratory action pending resolution of the main infringement action. Although on reconsideration the court permitted the declaratory judgment actions to proceed, AstraZeneca succeeded in delaying for Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 23 of 58 approximately six months Teva's and Dr. Reddy's efforts to obtain a court judgment that could allow them to enter the market ahead of May 27, 2014. a. AstraZeneca and Teva Enter an Exclusion Payment Agreement

74. In the interim, however, Teva and AstraZeneca entered into the AstraZeneca/Teva Agreement. Although claim construction was briefed during the summer of 2009, AstraZeneca and Teva, pursuant to their Agreement, repeatedly asked the court to postpone construing the contested claims of the Nexium patents. The protracted delay meant that the court had issued no substantive rulings as of January 7, 2010. On or about that date, AstraZeneca and Teva entered into the AstraZeneca/Teva Exclusion Payment Agreement, which ended the litigation between AstraZeneca and Teva. 75. Under the Exclusion Payment Agreement, Teva agreed to: (a) admit that all patents then listed in the Orange Book as covering Nexium "are all enforceable and valid with respect to certain products;" (b) admit that its generic Nexium product would infringe the '504, '192, '789, '085, '872 and '070 patents; and (c) delay launching its generic Nexium until May 27, 2014 unless otherwise specifically authorized by the Agreement. 76. As the quid pro quo for Teva's agreement to drop its challenge to the Nexium patents and to delay entry of its generic Nexium product until May 27, 2014, AstraZeneca agreed, pursuant to the Agreement, to pay Teva. That payment came in the form of AstraZeneca's forgiveness of Teva from a contingent liability. 77. Teva had an enormous contingent liability to AstraZeneca. On September 9, 2004, Teva had commenced an "at risk" launch of generic Prilosec, which was manufactured by its marketing partner Impax. In 2008, the Federal Circuit affirmed the district court's ruling that the Prilosec patents were valid and infringed by Impax's generic Prilosec product. Because Teva Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 24 of 58 and Impax shared the risk with respect to any damages associated with the sale of the generic Prilosec product, there was substantial risk that Teva would owe AstraZeneca potentially massive infringement damages resulting from years of infringing generic Prilosec sales. As part of and simultaneously with their Exclusion Payment Agreement, Teva and AstraZeneca agreed that Teva would pay only an amount that AstraZeneca characterized as not financially material to account for its past infringing Prilosec sales. By forgiving the substantial part of Teva's contingent liability to it with respect to a different drug, AstraZeneca paid Teva. 78. The true purpose and effect of AstraZeneca's payment to Teva was to delay generic competition to Nexium until May 27, 2014. Absent Teva's agreement to delay entry into the market with generic Nexium, AstraZeneca would not have forgiven Teva substantially all of the contingent liability and/or would not have done so on the terms that it did. AstraZeneca paid Teva for delayed market entry of generic Nexium. b. AstraZeneca and Dr. Reddy's Enter an Exclusion Payment Agreement
79. On or about January 28, 2011, before the court could issue any dispositive decision regarding the validity or infringement of the Nexium patents, AstraZeneca and Dr. Reddy's entered the AstraZeneca/Dr. Reddy's Exclusion Payment Agreement, which ended the litigation between AstraZeneca and Dr. Reddy's and delayed entry of Dr. Reddy's generic Nexium products until May 27, 2014 unless specifically authorized by the Agreement. Dr. Reddy's made no admissions regarding validity or infringement. 80. As the quid pro quo for Dr. Reddy's agreement to drop its challenge to the Nexium patents and to stay out of the Nexium market until May 27, 2014, AstraZeneca agreed to pay Dr. Reddy's by forgiving Dr. Reddy's from an outstanding contingent liability. Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 25 of 58 81. Dr. Reddy's had a substantial contingent liability to AstraZeneca. Dr. Reddy's had launched its generic version of AstraZeneca's Accolate product "at risk" in November of 2010, following a summary judgment opinion in Dr. Reddy's favor that AstraZeneca had appealed at the time of the Agreement. By agreeing, as part of and simultaneously with the Agreement, to drop its appeal and thereby remove the risk that Dr. Reddy's would have to pay substantial damages with respect to its generic Accolate sales, AstraZeneca paid Dr. Reddy's under the Agreement. 82. The true purpose and effect of AstraZeneca's payment to Dr. Reddy's was to delay generic competition to Nexium until May 27, 2014. Absent Dr. Reddy's agreement to delay entry into the market with generic Nexium, AstraZeneca would not have forgiven Dr. Reddy's of the contingent liability against it and/or would not have done so on the terms that it did. AstraZeneca paid Dr. Reddy's for delayed market entry of generic Nexium. 83. By paying Teva and Dr. Reddy's not to market their generic Nexium products before May 27, 2014, and by doing so before the court could rule on the validity or infringement of the Nexium patents, AstraZeneca ensured that the second and third ANDA-filers could not dislodge the FDA approval bottleneck created by its Agreement with first-filer Ranbaxy. Anticompetitive Purpose and Effect of the Agreements
84. AstraZeneca's payments to the Generic Defendants under the exclusion payment agreements demonstrate Defendants' anticompetitive purpose and intent. 85. The Agreements harmed Plaintiff and the Class by depriving them of a market in which manufacturers and distributors of generic drugs make their decisions about challenging patents, defending appeals and entering markets free from the influence of cash payments and other consideration. Contrary to the purpose of the Hatch-Waxman Act, the Agreements have enabled AstraZeneca and the Generic Defendants to: (a) preclude the entry of less expensive Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 26 of 58 generic versions of Nexium products in the United States; (b) fix, raise, maintain or stabilize the price of Nexium products; (c) permit AstraZeneca to maintain a monopoly in the U.S. market for Nexium products; and (d) allocate 100% of the U.S. market for delayed-release esomeprazole magnesium to AstraZeneca. 86. But for the Agreements: (i) Ranbaxy (or another ANDA filer) would have received final marketing approval from the FDA on or about April 14, 2008 and Ranbaxy or another ANDA filer would have begun selling AB-rated generic versions of Nexium shortly thereafter; and (ii) an increasingly competitive market for delayed-release esomeprazole magnesium would have emerged following the expiration of Ranbaxy's 180-day exclusivity period, as additional generic manufacturers entered the market. 87. Defendants' unlawful concerted action has delayed or prevented the sale of generic Nexium in the United States, and unlawfully enabled AstraZeneca to sell Nexium at artificially inflated, supra-competitive prices. But for Defendants' illegal conduct, generic competition to Nexium would have occurred already, because one or more of the Generic Defendants would have already entered with its generic version of Nexium. CLASS ACTION ALLEGATIONS
88. Plaintiff brings this action on behalf of itself and, under Fed. R. Civ. P. 23(a) and (b)(3), as representatives of an End-Payor Class defined as follows: All persons or entities in the United States and its territories who purchased and/or paid for some or all of the purchase price for Nexium and/or its AB-rated generic equivalents in any form, for consumption by themselves, their families, or their members, employees, insureds, participants, or beneficiares (the "Class" or the "End-Payor Class"), other than for resale, during the period April 14, 2008 through and until the anticompetitive effects of Defendants' unlawful conduct cease (the "Class Period"). For purposes of the Class definition, persons or entities "purchased" Nexium or Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 27 of 58 its generic equivalent if they paid or reimbursed some or all of the purchase price. 89. The following persons or entities are excluded from the proposed End-Payor a. Defendants and their officers, directors, management, employees, subsidiaries, or b. All governmental entities, except for governmental funded employee benefit c. All persons or entities who purchased Nexium or its AB-rated generic equivalent for purposes of resale or directly from Defendants or their affiliates; d. Fully insured health plans (i.e., Plans that purchased insurance from another third- party payor covering 100% of the Plan's reimbursement obligations to its members); e. Any "flat co-pay" consumers whose purchases were paid in part by a third party payor and whose co-payment was the same regardless of the retail purchase price; f. Any "brand loyalist" consumers or third-party payors who purchased Nexium and who did not purchase any AB-rated generic equivalent after such generics became available; and g. The judges in this case and any members of their immediate families. 90. Members of the End-Payor Class are so numerous that joinder is impracticable. Plaintiff believes that the Class includes hundreds of thousands, if not millions, of consumers, and thousands of third-party payors. 91. Plaintiff's claims are typical of the claims of the members of the End-Payor Class. Plaintiff and all members of the End-Payor Class were damaged by the same wrongful conduct of Defendants, i.e., they paid artificially inflated prices for Nexium and were deprived of the benefits of earlier and more robust competition from cheaper generic versions of Nexium as a result of Defendants' wrongful conduct. Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 28 of 58 92. Plaintiff will fairly and adequately protect and represent the interests of the End- Payor Class. The interests of the Plaintiff are coincident with, and not antagonistic to, those of the End-Payor Class. 93. Plaintiff is represented by counsel with experience in the prosecution of class action antitrust litigation, and with particular experience with class action antitrust litigation involving pharmaceutical products. 94. Questions of law and fact common to the members of the End-Payor Class predominate over questions that may affect only individual Class members because Defendants have acted on grounds generally applicable to the entire End-Payor Class, thereby making overcharge damages with respect to the End-Payor Class as a whole appropriate. Such generally applicable conduct is inherent in Defendants' wrongful conduct. 95. Questions of law and fact common to the End-Payor Class include, but are not whether Defendants conspired to willfully maintain and/or enhance AstraZeneca's monopoly power over Nexium and its generic equivalents; whether Defendants conspired to suppress generic competition to Nexium; whether Defendants entered into an unlawful agreement in restraint of trade; whether, pursuant to the Agreements, the Generic Defendants agreed to delay their entry into the market with generic Nexium; whether, pursuant to the Agreements, AstraZeneca compensated the Generic Defendants; whether AstraZeneca's compensation to the Generic Defendants was for a purpose other than delayed entry of generic Nexium; whether AstraZeneca's compensation to the Generic Defendants was necessary to yield some procompetitive benefit that is cognizable and non-pretextual; Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 29 of 58 whether the Agreements created a bottleneck to generic competition; whether one or more of the Agreements is per se illegal, illegal under a "quick look" analysis, or illegal under the rule of reason; whether AstraZeneca possessed monopoly power over Nexium; whether the law requires definition of a relevant market when direct proof of monopoly power is available and, if so, the definition of the relevant whether the activities of Defendants as alleged herein have substantially affected interstate commerce; whether, and to what extent, Defendants' conduct caused antitrust injury (i.e., overcharges) to Plaintiffs and the members of the Class; and the quantum of aggregate overcharge damages to the Class. 96. Class action treatment is a superior method for the fair and efficient adjudication of the controversy. Such treatment will permit a large number of similarly situated persons to prosecute their common claims in a single forum simultaneously, efficiently, and without the unnecessary duplication of evidence, effort, or expense that numerous individual actions would engender. The benefits of proceeding through the class mechanism, including providing injured persons or entities a method for obtaining redress on claims that could not practicably be pursued individually, substantially outweighs potential difficulties in management of this class action. 97. Plaintiff knows of no special difficulty to be encountered in the maintenance of this action that would preclude its maintenance as a class action. INTERSTATE COMMERCE
98. At all material times, AstraZeneca manufactured, promoted, distributed, and sold substantial amounts of Nexium in a continuous and uninterrupted flow of commerce across state and national lines and throughout the United States. Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 30 of 58 99. At all material times, Defendants transmitted funds, as well as contracts, invoices and other forms of business communications and transactions, in a continuous and uninterrupted flow of commerce across state and national lines in connection with the sale of Nexium and/or AB-rated bioequivalents. 100. In furtherance of their efforts to monopolize and restrain competition in the market for delayed-release esomeprazole magnesium, Defendants employed the United States mails and interstate and international telephone lines, as well as means of interstate and international travel. The activities of Defendants were within the flow of and have substantially affected interstate commerce. MONOPOLY POWER AND MARKET DEFINITION
101. At all relevant times, AstraZeneca had monopoly power over delayed-release esomeprazole magnesium because it had the power to maintain the price of the drug it sold as Nexium at supracompetitive levels without losing substantial sales to other products prescribed and/or used for the same purposes as Nexium, with the exception of AB-rated generic versions of 102. A small but significant, non-transitory price increase for Nexium by AstraZeneca would not have caused a significant loss of sales. 103. Nexium does not exhibit significant, positive cross-elasticity of demand with respect to price with any product other than AB-rated generic versions of Nexium. 104. Because of, among other reasons, its use and varying ability to heal erosive esophagitis, maintain the healing of erosive esophagitis, and treat symptomatic gastroesophageal reflux disease, Nexium is differentiated from all products other than AB-rated generic versions Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 31 of 58 105. AstraZeneca needed to control only Nexium and its AB-rated generic equivalents, and no other products, in order to maintain the price of Nexium profitably at supracompetitive prices. Only the market entry of a competing, AB-rated generic version of Nexium would render AstraZeneca unable to profitably maintain its current prices of Nexium without losing substantial 106. AstraZeneca also sold Nexium at prices well in excess of marginal costs, and in excess of the competitive price, and enjoyed high profit margins. 107. Defendants have had, and exercised, the power to exclude and restrict competition to Nexium and AB-rated bioequivalents. 108. AstraZeneca, at all relevant times, enjoyed high barriers to entry with respect to competition to the relevant product market due to patent and other regulatory protections and high costs of entry and expansion. 109. To the extent that Plaintiff is legally required to prove monopoly power circumstantially by first defining a relevant product market, Plaintiff alleges that the relevant market is delayed-release esomeprazole magnesium (i.e., Nexium and its AB-rated generic equivalents). During the period relevant to this case, AstraZeneca has been able to profitably maintain the price of delayed-release esomeprazole magnesium well above competitive levels. 110. The relevant geographic market is the United States and its territories. 111. At all relevant times, AstraZeneca's market share in the relevant market was and remains 100%, implying a substantial amount of monopoly power. MARKET EFFECTS AND DAMAGES TO THE CLASS
112. Ranbaxy's ANDA was in approvable condition as of February 5, 2008 when it received tentative approval. FDA issues tentative approval only when it determines that an ANDA would otherwise be ready for final approval but for the 30-month stay. Were it not for Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 32 of 58 the AstraZeneca/Ranbaxy Agreement, Ranbaxy would have received final FDA approval on or about April 14, 2008, the date the 30-month stay of FDA approval expired. Generic Nexium products would have entered the market shortly thereafter. 113. FDA has not given Ranbaxy's generic Nexium ANDA final approval solely because FDA knows that the AstraZeneca/Ranbaxy Exclusion Payment Agreement prevents Ranbaxy from selling generic Nexium until May 27, 2014. By practice, FDA organizes its priorities around "rate limiters," and the AsraZeneca/Ranbaxy Agreement is a rate limiter that has caused FDA to wait to issue formal, written approval to Ranbaxy's ANDA. 114. Defendants' Exclusion Payment Agreements had the purpose and effect of restraining competition unreasonably and injuring competition by protecting Nexium from generic competition. Defendants' actions allowed AstraZeneca to maintain a monopoly and to exclude competition in the market for delayed-release esomeprazole magnesium, to the detriment of Plaintiff and all other members of the Class. 115. Defendants' Exclusion Payment Agreements have delayed generic competition and unlawfully enabled AstraZeneca to sell Nexium without generic competition. But for Defendants' illegal conduct, one or more generic competitors would have begun marketing AB- rated generic versions of Nexium by April 14, 2008 or shortly thereafter. 116. The generic manufacturers seeking to sell generic Nexium had extensive experience in the pharmaceutical industry, including in obtaining approval for ANDAs and marketing generic pharmaceutical products, manufacturing commercial launch quantities adequate to meet market demand, and, where appropriate, paying and receiving consideration for selective waiver and/or relinquishment of 180-day first-to-file marketing exclusivities. Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 33 of 58 117. Defendants' Exclusion Payment Agreements, which delayed introduction into the United States marketplace of generic versions of Nexium, have caused Plaintiff and the Class to pay more than they would have paid for delayed-release esomeprazole magnesium absent Defendants' illegal conduct. 118. Typically, generic versions of brand name drugs are initially priced significantly below the corresponding branded drug to which they are AB-rated. As a result, upon generic entry, end-payors rapidly substitute generic versions of the drug for some or all of their purchases. As more generic manufacturers enter the market, prices for generic versions of a drug predictably plunge even further due to competition among the generic manufacturers, and, correspondingly, the brand name drug loses even more of its market share to the generic versions of the drug. This price competition enables all purchasers of the drugs to: (a) purchase generic versions of a drug at substantially lower prices, and/or (b) purchase the brand name drug at a reduced price. Consequently, brand name drug manufacturers have a keen financial interest in delaying the onset of generic competition, and purchasers experience substantial cost inflation from that delay. 119. But for the Exclusion Payment Agreements, end-payors, such as Plaintiff and members of the Class, would have paid less for delayed-release esomeprazole magnesium by (a) substituting purchases of less-expensive AB-rated generic Nexium for their purchases of more- expensive branded Nexium, (b) receiving discounts on their remaining branded Nexium purchases, and (c) purchasing generic Nexium at lower prices sooner. 120. Moreover, due to Defendants' Exclusion Payment Agreements, other generic manufacturers were discouraged from and/or delayed in (a) developing generic versions of Nexium, and/or (b) challenging the validity or infringement of the Nexium patents in court. Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 34 of 58 121. During the Class Period, Plaintiff and other members of the Class purchased substantial amounts of Nexium. As a result of Defendants' illegal conduct as alleged herein, Plaintiff and other members of the Class were compelled to pay, and did pay, artificially inflated prices for delayed-release esomeprazole magnesium. Plaintiff and the other Class members paid prices for delayed-release esomeprazole magnesium that were substantially greater than the prices that they would have paid absent the illegal conduct alleged herein, because: (1) Class members were deprived of the opportunity to purchase lower-priced generic Nexium instead of expensive brand-name Nexium; and (2) Class members paid artificially inflated prices for delayed-release esomeprazole magnesium. 122. As a consequence, Plaintiff and other members of the Class have sustained substantial losses and damage to their business and property in the form of overcharges, the exact amount of which will be the subject of proof at trial. 123. Thus, Defendants' unlawful conduct deprived Plaintiff and the Class of the benefits of competition that the antitrust laws were designed to ensure. VII. ANTITRUST IMPACT
124. During the relevant period, Plaintiff and members of the Class purchased substantial amounts of Nexium indirectly from Defendants and/or purchased substantial amounts of AB-rated Nexium bioequivalent generic indirectly from Defendants or others. As a result of Defendants' illegal conduct, members of the End-Payor Class were compelled to pay, and did pay, artificially inflated price for their delayed-release esomeprazole magnesium requirements. Those prices were substantially greater than the prices that members of the Class would have paid absent the illegal conduct alleged herein, because: (1) the price of brand-name Nexium was artificially inflated by Defendants' illegal conduct, (2) Class members were deprived of the opportunity to purchase lower-priced generic versions of Nexium, and/or (3) the price of AB- Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 35 of 58 rated Nexium generic (delayed-release esomeprazole magnesium) was artificially inflated by Defendants' illegal conduct. 125. As a consequence, Plaintiff and members of the Class have sustained substantial losses and damage to their business and property in the form of overcharges. The full amount and forms and components of such damages will be calculated after discovery and upon proof at 126. General economic theory recognizes that any overcharge at a higher level of distribution generally results in higher prices at every level below. 127. Wholesalers and retailers passed on the inflated prices of Nexium and AB-rated generic Nexium to the End-Payors defined herein. 128. AstraZeneca's anticompetitive actions enabled it to indirectly charge consumers and third-party payors prices in excess of what it otherwise would have been able to charge absent its unlawful actions individually and with Generic Manufacturers. 129. The prices were inflated as a direct and foreseeable result of AstraZeneca's anticompetitive conduct individually and with Generic Manufacturers. 130. The inflated prices the End-Payor Class paid are traceable to, and the foreseeable result of, the overcharges by AstraZeneca and the Generic Manufacturers. VIII. CLAIMS FOR RELIEF
FIRST CLAIM FOR RELIEF
For Declaratory and Injunctive Relief Under Section 16 of the Clayton Act for
Defendants' Violations of Sections 1 and 2 of the Sherman Act
(Asserted Against AstraZeneca and Ranbaxy; AstraZeneca and Teva; and
AstraZeneca and Dr. Reddy's)
131. Plaintiff repeats and incorporates by reference each preceding and succeeding paragraph as though fully set forth herein. Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 36 of 58 132. The Exclusion Payment Agreements between AstraZeneca and each of the Generic Defendants involve: (a) a payment from AstraZeneca to the respective Generic Defendant; and (b) an agreement by the Generic to delay marketing its generic Nexium until May 27, 2014. The payments from AstraZeneca to the Generic Defendants under the Agreements were the quid pro quo for the Generic Defendants' agreement to delay marketing their generic versions of Nexium for as long as six years or more. Absent the payments, the Generic Defendants would not have agreed to delay marketing their generic versions of Nexium until May 27, 2014. 133. The purpose and effect of the unlawful Exclusion Payment Agreements between AstraZeneca and each of the Generic Defendants was to allocate 100% of the delayed-release esomeprazole magnesium market in the United States to AstraZeneca; delay the sales of generic Nexium products for up to over six years; and fix the price at which consumers and other End- Payor Plaintiffs would pay for delayed-release esomeprazole magnesium at the higher, branded 134. Each of the Exclusion Payment Agreements covered a sufficiently substantial percentage of the relevant market to harm competition. 135. Each of the Exclusion Payment Agreements constitutes a continuing contract, combination and conspiracy in restraint of trade in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. Each of the Exclusion Payment Agreements is a horizontal market allocation and price fixing agreement between actual or potential competitors that is unlawful under the per se, "quick look" or rule of reason standard. The purpose and effect of the payments flowing from AstraZeneca to the Generic Defendants under the agreements was to delay generic competition to Nexium and there is and was no legitimate, nonpretextual, precompetitive business Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 37 of 58 justification for the payment that outweighs is harmful effect. Even if there were some such conceivable justification, the payment was not necessary to achieve such a purpose. 136. In addition, through the Exclusion Payment Agreements, Defendants knowingly and intentionally conspired to maintain and enhance AstraZeneca's monopoly power in the relevant market and to exclude the Generic Defendants' generic Nexium from the market for as long as six years or more. 137. At all relevant times, AstraZeneca possessed substantial market power (i.e., monopoly power) in the relevant market. AstraZeneca possessed the power to control prices in, prevent prices from falling in, and exclude competitors from the relevant market. 138. The goal, purpose and/or effect of the Exclusion Payment Agreements were to maintain and extend AstraZeneca's monopoly power in the United States market for delayed- release esomeprazole magnesium in violation of Sherman Act Section 2, 15 U.S.C. § 2. The Exclusion Payment Agreement prevented and/or delayed generic competition to Nexium and enabled AstraZeneca to continue charging supracompetitive prices for Nexium without a substantial loss of sales. 139. AstraZeneca and the Generic Defendants knowingly and intentionally conspired to maintain and enhance AstraZeneca's monopoly power in the relevant market. 140. AstraZeneca and the Generic Defendants specifically intended that the Exclusion Payment Agreements would maintain AstraZeneca's monopoly power in the relevant market, and injured Plaintiff and the Class thereby. 141. AstraZeneca and the Generic Defendants each committed at least one overt act in furtherance of the conspiracy. Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 38 of 58 142. As a direct and proximate result of Defendants' unlawful restraint of trade and unlawful maintenance and conspiracy to maintain AstraZeneca's monopoly power, Plaintiff and members of the Class were harmed as described herein. 143. Plaintiff and the Class, pursuant to Fed. R. Civ. P. 57 and 18 U.S.C. § 2201(a) hereby seeks a declaratory judgment that Defendants' conduct as described herein violates Sections 1 and 2 of the Sherman Act. 144. Plaintiff and the Class further seeks equitable and injunctive relief pursuant to Section 16 of the Clayton Act, 15 U.S.C. § 26, and other applicable law, to correct for the anticompetitive market effects caused by the unlawful conduct of Defendants, and other relief so as to assure that similar anticompetitive conduct does not occur in the future. SECOND CLAIM FOR RELIEF
For Conspiracy to Monopolize Under State Law
(Asserted Against AstraZeneca and Ranbaxy; AstraZeneca and Teva; and
AstraZeneca and Dr. Reddy's)
145. Plaintiff hereby repeats and incorporates by reference each preceding and succeeding paragraph as though fully set forth herein. 146. At all relevant times, AstraZeneca possessed substantial market power (i.e., monopoly power) in the relevant market. AstraZeneca possessed the power to control prices in, prevent prices from falling in, and exclude competitors from the relevant market. 147. Through the Exclusion Payment Agreements, Defendants knowingly and intentionally conspired to maintain and enhance AstraZeneca's monopoly power in the relevant market and to exclude the Generic Defendants' generic Nexium from the market for as long as six years or more in violation of Section 2 of the Sherman Act. The Exclusion Payment Agreements between AstraZeneca and each of the Generic Defendants allocated 100% of the delayed-release esomeprazole magnesium market in the United States to AstraZeneca; delayed Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 39 of 58 the sales of generic Nexium products for up to over six years; and fixed the price at which consumers and other End-Payor Plaintiffs would pay for delayed-release esomeprazole magnesium at the higher, branded price. 148. AstraZeneca and the Generic Defendants specifically intended that the Exclusion Payment Agreements would maintain AstraZeneca's monopoly power in the relevant market, and injured Plaintiff and the Class thereby. 149. AstraZeneca and the Generic Defendants each committed at least one overt act in furtherance of the conspiracy. 150. As a direct and proximate result of Defendants' unlawful restraint of trade and unlawful maintenance and conspiracy to maintain AstraZeneca's monopoly power, Plaintiff and members of the Class paid artificially inflated prices for their delayed-release esomeprazole magnesium requirements as described herein, and were harmed as a result. 151. By engaging in the foregoing conduct, Defendants have violated the following a. Defendants have intentionally and wrongfully engaged in a conspiracy to monopolize the relevant market in violation of Arizona Rev. Stat. §§ 44-1401, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Arizona by members of the Class. b. Defendants have intentionally and wrongfully engaged in a conspiracy to monopolize the relevant market in violation of Cal. Bus. Code §§ 16700, et seq., and Code §§ 17200, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in California by members of the Class. Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 40 of 58 c. Defendants have intentionally and wrongfully engaged in a conspiracy to monopolize the relevant market in violation of D.C. Code Ann. §§ 28-45031, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in the District of Columbia by members of the Class. d. Defendants have intentionally and wrongfully engaged in a conspiracy to monopolize the relevant market in violation of Fla. Stat. §§ 501. Part II, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Florida by members of the Class, and this conduct constitutes a predicate act under the Florida Deceptive Practices Act. e. Defendants have intentionally and wrongfully engaged in a conspiracy to monopolize the relevant market in violation of Kan. Stat. Ann. §§ 50-101, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Kansas by members of the Class. f. Defendants have intentionally and wrongfully engaged in a conspiracy to monopolize the relevant market in violation of Me. Rev. Stat. Ann. 10, § 1101, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Maine by members of the Class. g. Defendant have intentionally and wrongfully engaged in a conspiracy to monopolize the relevant market in violation of Mass. Ann. Laws ch. 93, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Massachusetts by members of the Class. h. Defendants have intentionally and wrongfully engaged in a conspiracy to monopolize the relevant market in violation of Mich. Comp. Laws Ann. §§ Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 41 of 58 445.771, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Michigan by members of the Class. i. Defendants have intentionally and wrongfully engaged in a conspiracy to monopolize the relevant market in violation of Minn. Stat. §§ 325D.52, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Minnesota by members of the Class. j. Defendants have intentionally and wrongfully engaged in a conspiracy to monopolize the relevant market in violation of Miss. Code Ann. §§ 75-21-1, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Mississippi by members of the Class. k. Defendants have intentionally and wrongfully engaged in a conspiracy to monopolize the relevant market in violation of Neb. Code Ann. §§ 59-801, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Nebraska by members of the Class. l. Defendants have intentionally and wrongfully engaged in a conspiracy to monopolize the relevant market in violation of Nev. Rev. Stat. Ann. § 598A, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Nevada by members of the Class, in that thousands of sales of Nexium took place at Nevada pharmacies, purchased by Nevada end-payors at supracompetitive prices caused by Defendants' conduct. m. Defendants have intentionally and wrongfully engaged in a conspiracy to monopolize the relevant market in violation of N.M. Stat. Ann. §§ 57-1-1, et seq., Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 42 of 58 with respect to purchases of Nexium and AB-rated generic equivalents in New Mexico by members of the Class. n. Defendants have intentionally and wrongfully engaged in a conspiracy to monopolize the relevant market in violation of New York General Business Law § 340, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in New York by members of the Class. o. Defendants have intentionally and wrongfully engaged in a conspiracy to monopolize the relevant market in violation of N.C. Gen. Stat. §§ 75-1, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in North Carolina by members of the Class. p. Defendants have intentionally and wrongfully engaged in a conspiracy to monopolize the relevant market in violation of N.D. Cent. Code § 51-08.1-01, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in North Dakota by members of the Class. q. Defendants have intentionally and wrongfully engaged in a conspiracy to monopolize the relevant market in violation of Or. Rev. Stat. §§ 646.705, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Oregon by members of the Class. r. Defendants have intentionally and wrongfully engaged in a conspiracy to monopolize the relevant market in violation of S.D. Codified Laws Ann. § 37-1, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in South Dakota by members of the Class. Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 43 of 58 s. Defendants have intentionally and wrongfully engaged in a conspiracy to monopolize the relevant market in violation of Tenn. Code Ann. §§ 47-25-101, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Tennessee by members of the Class, in that the actions and transactions alleged herein substantially affected Tennessee, with thousands of end-payors in Tennessee paying substantially higher prices for Nexium and AB-rated generic equivalents at Tennessee pharmacies. t. Defendants have intentionally and wrongfully engaged in a conspiracy to monopolize the relevant market in violation of Utah Code Ann. §§ 76-10-911, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Utah by members of the Class. u. Defendants have intentionally and wrongfully engaged in a conspiracy to monopolize the relevant market in violation of Vt. Stat. Ann. 9, § 2453, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Vermont by members of the Class. v. Defendants have intentionally and wrongfully engaged in a conspiracy to monopolize the relevant markets in violation of W.Va. Code §§ 47-18-1, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in West Virginia by members of the Class. w. Defendants have intentionally and wrongfully engaged in a conspiracy to monopolize the relevant market in violation of Wis. Stat. § 133.01, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Wisconsin by members of the Class, in that the actions and transactions alleged herein Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 44 of 58 substantially affected the people of Wisconsin, with thousands of end-payors in Wisconsin paying substantially higher price for Nexium at Wisconsin pharmacies. 152. Plaintiff and members of the Class have been injured in their business or property by reason of Defendants' antitrust violations alleged in this Claim. Their injuries consist of: (1) being denied the opportunity to purchase lower-priced generic delayed-release esomeprazole magnesium products, and (2) paying higher prices for delayed-release esomeprazole magnesium products than they would have paid in the absence of Defendants' conduct. These injuries are of the type the laws of the above States and the District of Columbia were designed to prevent, and flow from that which makes Defendants' conduct unlawful. 153. Plaintiff and the Class seek damages and multiple damages as permitted by law for their injuries by Defendants' violations of the aforementioned statutes. THIRD CLAIM FOR RELIEF
For Conspiracy and Combination in Restraint of Trade Under State Law
(Asserted Against AstraZeneca and Ranbaxy; AstraZeneca and Teva; and
AstraZeneca and Dr. Reddy's)
154. Plaintiff hereby incorporates each preceding and succeeding paragraph as though fully set forth herein. 155. The Exclusion Payment Agreements between AstraZeneca and each of the Generic Defendants involve: (a) a payment from AstraZeneca to the respective Generic Defendant; and (b) an agreement by the Generic to delay marketing its generic Nexium until May 27, 2014. The payments from AstraZeneca to the Generic Defendants under the Agreements were the quid pro quo for the Generic Defendants' agreement to delay marketing their generic versions of Nexium for as long as six years or more. Absent the payments, the Generic Defendants would not have agreed to delay marketing their generic versions of Nexium until May 27, 2014. Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 45 of 58 156. The purpose and effect of the payments flowing from AstraZeneca to the Generic Defendants under the agreements was to delay generic competition to Nexium and there is and was no legitimate, nonpretextual, precompetitive business justification for the payment that outweighs is harmful effect. Even if there were some such conceivable justification, the payment was not necessary to achieve such a purpose. 157. The purpose and effect of the unlawful Exclusion Payment Agreements between AstraZeneca and each of the Generic Defendants was to allocate 100% of the delayed-release esomeprazole magnesium market in the United States to AstraZeneca; delay the sales of generic Nexium products for up to over six years; and fix the price at which consumers and other End- Payor Plaintiffs would pay for delayed-release esomeprazole magnesium at the higher, branded 158. Each of the Exclusion Payment Agreements covered a sufficiently substantial percentage of the relevant market to harm competition. 159. As a direct and proximate result of Defendants' unlawful restraint of trade and unlawful maintenance and conspiracy to maintain AstraZeneca's monopoly power, Plaintiff and members of the Class paid artificially inflated prices for their delayed-release esomeprazole magnesium requirements as described herein, and were harmed as a result. 160. By engaging in the foregoing conduct, Defendants have violated the following a. Defendants have intentionally and wrongfully engaged in a combination and conspiracy in restraint of trade in violation of Arizona Rev. Stat. §§ 44-1401, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Arizona by members of the Class. Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 46 of 58 b. Defendants have intentionally and wrongfully engaged in a combination and conspiracy in restraint of trade in violation of Cal. Bus. Code §§ 16700, et seq., and Code §§ 17200, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in California by members of the Class. c. Defendants have intentionally and wrongfully engaged in a combination and conspiracy in restraint of trade in violation of D.C. Code Ann. §§ 28-45031, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in the District of Columbia by members of the Class. d. Defendants have intentionally and wrongfully engaged in a combination and conspiracy in restraint of trade in violation of Fla. Stat. §§ 501. Part II, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Florida by members of the Class, and this conduct constitutes a predicate act under the Florida Deceptive Practices Act. e. Defendants have intentionally and wrongfully engaged in a combination and conspiracy in restraint of trade in violation of Kan. Stat. Ann. §§ 50-101, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Kansas by members of the Class. f. Defendants have intentionally and wrongfully engaged in a combination and conspiracy in restraint of trade in violation of Me. Rev. Stat. Ann. 10, § 1101, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Maine by members of the Class. g. Defendant have intentionally and wrongfully engaged in a combination and conspiracy in restraint of trade in violation of Mass. Ann. Laws ch. 93, et seq., Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 47 of 58 with respect to purchases of Nexium and AB-rated generic equivalents in Massachusetts by members of the Class. h. Defendants have intentionally and wrongfully engaged in a combination and conspiracy in restraint of trade in violation of Mich. Comp. Laws Ann. §§ 445.771, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Michigan by members of the Class. i. Defendants have intentionally and wrongfully engaged in a combination and conspiracy in restraint of trade in violation of Minn. Stat. §§ 325D.52, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Minnesota by members of the Class. j. Defendants have intentionally and wrongfully engaged in a combination and conspiracy in restraint of trade in violation of Miss. Code Ann. §§ 75-21-1, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Mississippi by members of the Class. k. Defendants have intentionally and wrongfully engaged in a combination and conspiracy in restraint of trade in violation of Neb. Code Ann. §§ 59-801, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Nebraska by members of the Class. l. Defendants have intentionally and wrongfully engaged in a combination and conspiracy in restraint of trade in violation of Nev. Rev. Stat. Ann. § 598A, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Nevada by members of the Class, in that thousands of sales of Nexium took place Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 48 of 58 at Nevada pharmacies, purchased by Nevada end-payors at supracompetitive prices caused by Defendants' conduct. m. Defendants have intentionally and wrongfully engaged in a combination and conspiracy in restraint of trade in violation of N.M. Stat. Ann. §§ 57-1-1, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in New Mexico by members of the Class. n. Defendants have intentionally and wrongfully engaged in a combination and conspiracy in restraint of trade in violation of New York General Business Law § 340, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in New York by members of the Class. o. Defendants have intentionally and wrongfully engaged in a combination and conspiracy in restraint of trade in violation of N.C. Gen. Stat. §§ 75-1, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in North Carolina by members of the Class. p. Defendants have intentionally and wrongfully engaged in a combination and conspiracy in restraint of trade in violation of N.D. Cent. Code § 51-08.1-01, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in North Dakota by members of the Class. q. Defendants have intentionally and wrongfully engaged in a combination and conspiracy in restraint of trade in violation of Or. Rev. Stat. §§ 646.705, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Oregon by members of the Class. Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 49 of 58 r. Defendants have intentionally and wrongfully engaged in a combination and conspiracy in restraint of trade in violation of S.D. Codified Laws Ann. § 37-1, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in South Dakota by members of the Class. s. Defendants have intentionally and wrongfully engaged in a combination and conspiracy in restraint of trade in violation of Tenn. Code Ann. §§ 47-25-101, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Tennessee by members of the Class, in that the actions and transactions alleged herein substantially affected Tennessee, with thousands of end-payors in Tennessee paying substantially higher prices for Nexium and AB-rated generic equivalents at Tennessee pharmacies. t. Defendants have intentionally and wrongfully engaged in a combination and conspiracy in restraint of trade in violation of Utah Code Ann. §§ 76-10-911, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Utah by members of the Class. u. Defendants have intentionally and wrongfully engaged in a combination and conspiracy in restraint of trade in violation of Vt. Stat. Ann. 9, § 2453, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Vermont by members of the Class. v. Defendants have intentionally and wrongfully engaged in a combination and conspiracy in restraint of trade in violation of W.Va. Code §§ 47-18-1, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in West Virginia by members of the Class. Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 50 of 58 w. Defendants have intentionally and wrongfully engaged in a combination and conspiracy in restraint of trade in violation of Wis. Stat. § 133.01, et seq., with respect to purchases of Nexium and AB-rated generic equivalents in Wisconsin by members of the Class, in that the actions and transactions alleged herein substantially affected the people of Wisconsin, with thousands of end-payors in Wisconsin paying substantially higher price for Nexium at Wisconsin pharmacies. 161. Plaintiff and members of the Class have been injured in their business or property by reason of Defendants' antitrust violations alleged in this Claim. Their injuries consist of: (1) being denied the opportunity to purchase lower-priced generic delayed-release esomeprazole magnesium products, and (2) paying higher prices for delayed-release esomeprazole magnesium products than they would have paid in the absence of Defendants' conduct. These injuries are of the type the laws of the above States and the District of Columbia were designed to prevent, and flow from that which makes Defendants' conduct unlawful. 162. Plaintiff and the Class seek damages and multiple damages as permitted by law for their injuries by Defendants' violations of the aforementioned statutes. FOURTH CLAIM FOR RELIEF
For Unfair And Deceptive Trade Practices Under State Law
(Asserted Against All Defendants)
163. Plaintiff hereby incorporates each preceding and succeeding paragraph as though fully set forth herein. 164. Defendants engaged in unfair competition or unfair, unconscionable, deceptive or fraudulent acts or practices in violation of the state consumer protection statutes listed below. As a direct and proximate result of Defendants' anticompetitive, deceptive, unfair, unconscionable, and fraudulent conduct, Plaintiff and class members were deprived of the opportunity to Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 51 of 58 purchase a generic version of Nexium and forced to pay higher prices. By engaging in the foregoing conduct, Defendants have violated the following state Unfair and Deceptive Trade Practices and Consumer Fraud laws: a. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Ariz. Rev. Stat. § 44-1522, et seq., with respect to purchases of Nexium and AB-rated bioequivalents in Arizona by members of the b. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Cal. Bus. & Prof. Code § 17200, et seq., with respect to purchases of Nexium and AB-rated bioequivalents in California by members of c. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Fla. Stat. § 501.201, et seq., with respect to purchases of Nexium and AB-rated bioequivalents in Florida by members of the Class. d. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of 815 ILCS § 505/1, et seq., with respect to purchases of Nexium and AB-rated bioequivalents in Illinois by members of the Class. e. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Kan. Stat. § 50-623, et seq., with respect to purchases of Nexium and AB-rated bioequivalents in Kansas by members of the Class. f. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of 5 Me. Rev. Stat. § 207, et seq., with respect to purchases of Nexium and AB-rated bioequivalents in Maine by members of the Class. Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 52 of 58 g. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Mass. Gen. L. Ch. 93A, et seq., with respect to purchases of Nexium and AB-rated bioequivalents in Massachusetts by members of the Class, with thousands of Massachusetts end-payors paying substantially higher prices for Nexium and AB-rated bioequivalents in actions and transactions occurring substantially within Massachusetts. h. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Mich. Stat. § 445.901, et seq., with respect to purchases of Nexium and AB-rated bioequivalents in Michigan by members of the Class. i. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Minn. Stat. § 8.31, et seq., with respect to purchases of Nexium and AB-rated bioequivalents in Minnesota by members of the Class. j. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Neb. Rev. Stat. § 59-1601, et seq., with respect to purchases of Nexium and AB-rated bioequivalents in Nebraska by members of k. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Nev. Rev. Stat. § 598.0903, et seq., with respect to purchases of Nexium and AB-rated bioequivalents in Nevada by members of the l. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of N.H. Rev. Stat. § 358-A: 1, et seq., with respect to Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 53 of 58 purchases of Nexium and AB-rated bioequivalents in New Hampshire by members of the Class. m. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of N.M. Stat. § 57-12-1, et seq., with respect to purchases of Nexium and AB-rated bioequivalents in New Mexico by members of the Class. n. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of N.Y. Gen. Bus. Law § 349, et seq., with respect to purchases of Nexium and AB-rated bioequivalents in New York by members of o. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of N.C. Gen. Stat. § 75-1.1, et seq., with respect to purchases of Nexium and AB-rated bioequivalents in North Carolina by members p. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of S.D. Code Laws § 37-24-1, et seq., with respect to purchases of Nexium and AB-rated bioequivalents in South Dakota by members q. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Tenn. Code § 47-18-101, et seq., with respect to purchases of Nexium and AB-rated bioequivalents in Tennessee by members of Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 54 of 58 r. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of Utah Code § 13-11-1, et seq., with respect to purchases of Nexium and AB-rated bioequivalents in Utah by members of the Class. s. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of 9 Vt. § 2451 et seq., with respect to purchases of Nexium and AB-rated bioequivalents in Vermont by members of the Class. t. Defendants have engaged in unfair competition or unfair or deceptive acts or practices in violation of West Virginia Code § 46A-6-101, et seq., with respect to purchases of Nexium and AB-rated bioequivalents in West Virginia by members 165. Plaintiff and members of the Class have been injured in their business and property by reason of Defendants' anticompetitive, unfair or deceptive acts alleged in this Claim. Their injury consists of paying higher prices for Nexium and/or AB-rated bioequivalents than they would have paid in the absence of these violations. This injury is of the type the state consumer protection statutes were designed to prevent and directly results from Defendants' unlawful conduct. FIFTH CLAIM FOR RELIEF
Unjust Enrichment
(Asserted Against All Defendants)
166. Plaintiff hereby incorporates each preceding and succeeding paragraph as though fully set forth herein. 167. Defendants have benefited from splitting the monopoly profits on AstraZeneca's Nexium sales resulting from the unlawful and inequitable acts alleged in this Complaint. Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 55 of 58 168. Defendants' financial benefits resulting from their unlawful and inequitable conduct are traceable to overpayments for delayed-release esomeprazole magnesium by Plaintiff and members of the Class. 169. Plaintiff and the Class have conferred upon Defendants an economic benefit, in the nature of profits resulting from unlawful overcharges and monopoly profits, to the economic detriment of Plaintiff and the Class. 170. It would be futile for Plaintiff and the Class to seek a remedy from any party with whom they had privity of contract. Defendants have paid no consideration to anyone for any benefits received indirectly from Plaintiff and the Class. 171. It would be futile for Plaintiff and the Class to seek to exhaust any remedy against the immediate intermediary in the chain of distribution from which it indirectly purchased Nexium or its generic equivalents, as they are not liable and would not compensate Plaintiffs for unlawful conduct caused by Defendants. 172. The economic benefit of overcharges and unlawful monopoly profits derived by Defendants through charging supracompetitive and artificially inflated prices for Nexium and/or its generic equivalents is a direct and proximate result of Defendants' unlawful practices. 173. The financial benefits derived by Defendants rightfully belongs to Plaintiff and the Class, as Plaintiff and the Class paid anticompetitive and monopolistic prices during the Class Period, inuring to the benefit of Defendants. 174. It would be inequitable under the laws of all states and jurisdictions within the United States for the Defendants to be permitted to retain any of the overcharges for Nexium and/or AB-rated bioequivalents derived from Defendants' unfair and unconscionable methods, acts and trade practices alleged in this Complaint. Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 56 of 58 175. Defendants should be compelled to disgorge in a common fund for the benefit of Plaintiff and the Class all unlawful or inequitable proceeds received by them. 176. A constructive trust should be imposed upon all unlawful or inequitable sums received by Defendants traceable to Plaintiff and the Class. 177. Plaintiff and the Class have no adequate remedy at law. DEMAND FOR JUDGMENT
WHEREFORE, Plaintiff, on behalf of itself and the End-Payor Class, demands judgment for the following relief: Determine that this action may be maintained as a class action pursuant to Fed. R. Civ. P. 23(a) and (b)(3), and direct that reasonable notice of this action, as provided by Fed. R. Civ. P. 23(c)(2), be given to the Class and declare the Plaintiff representative of the End-Payor Declare that the conduct alleged herein is in violation of Sections 1 and 2 of the Sherman Act, of the other statutes set forth above, and of the common law of unjust enrichment under the laws of all states and jurisdictions within the United States; Enjoin Defendants from continuing the illegal activities alleged herein; Enter joint and several judgments against Defendants in favor of Plaintiff and the End-Payor Class; Grant Plaintiff and the Class equitable relief in the nature of disgorgement, restitution, and the creation of a construction trust to remedy Defendants' unjust enrichment; Award the End-Payor Class damages and, where applicable, treble, multiple, punitive, and/or other damages, in an amount to be determined at trial, including interest; Award Plaintiff and the End-Payor Class their costs of suit, including reasonable attorneys' fees as provided by law; and Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 57 of 58 Grant such other further relief as is necessary to correct for the anticompetitive market effects caused by the unlawful conduct of Defendants, and as the Court deems just. JURY DEMAND
Pursuant to Fed. Civ. P. 38, Plaintiff on behalf of itself and the proposed Class demand a trial by jury on all issues so triable. Dated: August 24, 2012 Respectfully submitted, By: s/Natalie Finkelman Bennett Natalie Finkelman Bennett (PA Bar # 57197) James C. Shah (PA Bar # 80337) Jayne A. Goldstein (PA Bar # 48048) SHEPHERD, FINKELMAN, MILLER & SHAH, LLP 35 East State Street, Media PA 19063 Telephone: 610-891-9880 Facsimile: 610-891-9883 Email: [email protected] [email protected] [email protected] Steve D. Shadowen HILLIARD & SHADOWEN LLC 39 West Main Street Mechanicsburg, Pennsylvania 17055 Telephone: 1-855-344-3298 Email: [email protected] Anne Fornecker HILLIARD & SHADOWEN LLC 106 East 6th Street, Suite 900 Austin, Texas 78701 Telephone: 512-322-5339 Email: [email protected] Case 2:12-cv-04893-LDD Document 1 Filed 08/24/12 Page 58 of 58 Karen Leser-Grenon SHEPHERD, FINKELMAN, MILLER & SHAH, LLP 65 Main Street, Chester CT 06412 Telephone: 860-526-1100 Facsimile: 860-526-1120 Email: [email protected] Attorneys for Plaintiff and the Class

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