Ethypharm S.A. France v. Abbott Laboratories , 707 F.3d 223 ( 2013 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 11-3602
_____________
ETHYPHARM S.A. FRANCE,
Appellant
v.
ABBOTT LABORATORIES
_______________
On Appeal from the United States District Court
for the District of Delaware
(D.C. No. 08-cv-00126)
District Judge: Hon. Sue L. Robinson
_______________
Argued
September 25, 2012
Before: McKEE, Chief Judge, JORDAN, and VANASKIE,
Circuit Judges.
(Filed: January 23, 2013)
_______________
Carlos T. Angulo, Esq.
Dwight P. Bostwick, Esq. [ARGUED]
Zuckerman Spaeder
1800 M Street, NW – Ste. 1000
Washington, DC 20036
Austen C. Endersby, Esq.
Gregory B. Williams, Esq.
Fox Rothschild
919 North Market Street – Ste. 1300
Wilmington, DE 19801
Counsel for Appellant
Sean M. Brennecke, Esq.
Klehr Harrison Harvey Branzburg
919 North Market Street – Ste. 1000
Wilmington, DE 19803
William F. Cavanaugh, Jr., Esq. [ARGUED]
Chad J. Peterman, Esq.
Thomas W. Pippert, Esq.
Edward R. Tempesta, Esq.
Timothy Waters, Esq.
Patterson, Belknap, Webb & Tyler
1133 Avenue of the Americas
New York, NY 10036
David J. Margules, Esq.
Bouchard, Margules & Friedlander
222 Delaware Avenue - #1400
Wilmington, DE 19801
2
Stuart N. Senator, Esq.
Jeffrey I. Weinberger, Esq.
Munger, Tolles & Olson
355 S. Grand Avenue – 35th Fl.
Los Angeles, CA 90071
Counsel for Appellee
_______________
OPINION OF THE COURT
_______________
JORDAN, Circuit Judge.
Ethypharm S.A. France (“Ethypharm”) appeals the
judgment of the United States District Court for the District
of Delaware granting Abbott Laboratories (“Abbott”)
summary judgment on Ethypharm‟s antitrust and state law
claims. Although the District Court ruled in Abbott‟s favor, it
had earlier denied Abbott‟s motion to dismiss, a motion
premised on the assertion that Ethypharm lacked standing to
bring antitrust claims under §§ 1 and 2 of the Sherman
Antitrust Act. Abbott has pressed its standing argument on
appeal, and we conclude that the District Court erred in
holding there is antitrust standing in this case. Because
Ethypharm‟s state law claims have not been argued on
appeal, the District Court‟s judgment on those claims will
remain undisturbed, but we will vacate the District Court‟s
grant of summary judgment as to the federal claims and will
remand with directions that they be dismissed for
Ethypharm‟s lack of standing.
3
I. Background
A. Facts1
Ethypharm is a privately held French corporation that
develops and manufactures pharmaceutical drug products.
The drug at issue in this case is a fenofibrate2 developed and
manufactured by Ethypharm and carrying the brand name
Antara®. Because, as Ethypharm observes, entry into the
United States pharmaceutical market requires “substantial
time and resources,” it does not sell Antara directly in the
United States. (J.A. at 122.) Instead, its business model was
to “enter into a license and distribution agreement with a
company in the United States.” (J.A. at 122.) Thus, in 2001,
1
Because we are primarily reviewing the District
Court‟s denial of Abbott‟s motion to dismiss for lack of
antitrust standing, we take as true all the factual allegations in
the complaint and the reasonable inferences that can be drawn
from those facts. Sheridan v. NGK Metals Corp., 609 F.3d
239, 262 n.27 (3d Cir. 2010); see also In re Warfarin Sodium
Antitrust Litig., 214 F.3d 395, 398-99 (3d Cir. 2000)
(applying Rule 12(b)(6) on motion to dismiss for lack of
antitrust standing). To the extent we recount facts outside of
the complaint, we do so for informational purposes only and
do not rest our decision on those facts.
2
“Fenofibric acid, the active metabolite of fenofibrate,
produces reductions in total cholesterol, LDL cholesterol,
apolipoprotein B, total triglycerides and triglyceride rich
lipoprotein (VLDL) in treated patients.” Physicians’ Desk
Reference 565 (66th ed. 2012).
4
it entered into a Development, License, and Supply
Agreement (“DLS”) with Reliant Pharmaceuticals, Inc.
(“Reliant”), an American company, pursuant to which Reliant
would sell Antara in this country. The DLS stated that
Ethypharm would provide Reliant with the finished
pharmaceutical product, or, at Reliant‟s option, the drug in
bulk, which could then be encapsulated.
Reliant “was responsible for obtaining regulatory
approval for the drug, preparing appropriate packaging
material, and then marketing the drug through the efforts of a
large, motivated, and experienced sales force.” (J.A. at 122.)
To that end, the DLS granted exclusive rights to Reliant in the
United States and allowed it to seek approval with the U.S.
Food and Drug Administration (“FDA”) to market and sell
Antara.3 Ethypharm explains in its Complaint4 that Reliant‟s
role in exclusively marketing, selling, and obtaining FDA
approval for Antara was critical because, without the
“mechanism of the license and distribution agreement,
Ethypharm would be foreclosed from the United States
market.” (J.A. at 122.) Thus, without Reliant‟s, or some
similar distributor‟s, willingness to take on the risk and
expense of gaining FDA approval and marketing Antara, the
drug could never have reached the United States market.
3
The DLS also gave Ethypharm a right of first refusal
should Reliant seek to divest its rights in Antara.
4
Ethypharm filed its initial complaint on March 3,
2008. After Abbott filed a motion to dismiss that complaint,
Ethypharm filed its Amended Complaint, the operative
pleading, on July 2, 2008. For simplicity, we refer to the
Amended Complaint as the Complaint.
5
Consistent with the DLS, Reliant sought FDA
approval of Antara pursuant to § 505(b)(2) of the Food, Drug,
and Cosmetics Act (“FDCA”). 21 U.S.C. § 355(b)(2).
Reliant thus began the process of complying with the
complex regulatory regime that governs how pharmaceuticals
come to market in the United States. Before a drug can be
released, it must be approved by the FDA pursuant to the
FDCA, 21 U.S.C. §§ 301 et seq. The manufacturer of a new
branded drug must submit detailed safety and efficacy data
for the drug to the FDA in a New Drug Application (“NDA”).
Id. § 355(a), (b)(1). The NDA must also list “the patent
number and the expiration date of any patent which claims
the drug … or which claims a method of using such drug.”
Id. § 355(b)(1). After approval, information about the
branded drug, including patent information, is published by
the FDA in a publication entitled “Approved Drug Products
with Therapeutic Equivalence Evaluations,” which is
generally called the “Orange Book,” after the color of its
cover. See generally FDA Electronic Orange Book,
http://www.accessdata.fda.gov/scripts/cder/ob/default.cfm
(last visited Dec. 3, 2012).
The Drug Price Competition and Patent Term
Restoration Act of 1984 (the “Hatch-Waxman Act”), codified
at 21 U.S.C. §§ 355, 360cc and 35 U.S.C. §§ 156, 271, 282,
provides a framework for the introduction of generic versions
of previously approved branded drugs. Under that
framework, a generic manufacturer may submit an
Abbreviated New Drug Application (“ANDA”) to the FDA.
21 U.S.C. § 355(j). The ANDA process allows the generic
manufacturer to incorporate efficacy and safety data
submitted to the FDA in the NDA for a branded drug, as long
6
as the generic drug is shown to be bioequivalent to that
branded drug. Id. § 355(j)(2)(A).
There is also a third kind of application that a drug
manufacturer may use to obtain FDA approval, and that is the
route Reliant chose for Antara. Under § 505(b)(2) of the
FDCA, a drug manufacturer may file an NDA for a drug that
is not entirely new but is not simply a generic version of a
branded drug. For drugs that have changes from a branded
drug, such that an ANDA application is unavailable, but
whose changes are so slight that a manufacturer may rightly
rely on the “full reports of investigations,” 21 U.S.C.
§ 355(b)(1), of the original drug to establish the new drug‟s
safety and efficacy, an NDA may be filed pursuant to
§ 505(b)(2), even though those investigations “were not
conducted by or for the applicant and … the applicant has not
obtained a right of reference or use from the person by or for
whom the investigations were conducted,” id. § 355(b)(2).
The § 505(b)(2) applicant must submit additional data to the
FDA that demonstrates that any differences between the
original drug and the § 505(b)(2) drug will not affect the
§ 505(b)(2) drug‟s safety and efficacy. See 21 C.F.R.
§ 314.54(a) (providing that § 505(b)(2) applications must
provide data that supports any modification of the drug from
the relied upon NDA). But, having done that, a § 505(b)(2)
applicant can avoid preclinical and certain human studies
necessary in full NDA applications.
Finally, much as when filing an ANDA application, a
§ 505(b)(2) applicant must certify whether its drug will
infringe any patents listed in the Orange Book. 21 U.S.C.
§ 355(b)(2)(A). Those certifications are as follows: “(i) that
such patent information has not been filed (ii) that such patent
7
has expired, (iii) of the date on which such patent will expire,
or (iv) that such patent is invalid or will not be infringed by
the manufacture, use, or sale of the new drug for which the
application is submitted … .” Id. § 355(b)(2)(A)(i)-(iv).
Rather than conducting its own clinical studies, Reliant
depended on the data of another, already approved,
fenofibrate drug called TriCor®, which was developed by a
French company named Laboratories Fournier (“Fournier”)
and distributed by Abbott in the United States.5 Antara
received FDA approval in November 2004, and Reliant began
marketing the drug in February 2005. Reliant chose not to
make a certification under § 505(b)(2)(A)(iv) that Antara did
not infringe any patents in the Orange Book or that those
patents were invalid, but elected to market Antara
immediately after gaining FDA approval.6 That marketing
exposed Reliant to a possible infringement suit from Abbott,
5
Fournier granted Abbott an exclusive license to
manufacture and sell TriCor in the United States. Abbott
listed the patents for TriCor in the Orange Book.
6
As explained above, a § 505(b)(2) applicant must
make a certification pursuant to 21 U.S.C. § 355(b)(2)(A).
Although Ethypharm admits in its Complaint that Reliant did
not make a Paragraph IV certification, it also states in that
Complaint that “Reliant provided notice of a regulatory filing
and certification to Abbott in February 2004.” (J.A. at 137.)
The record is unclear what certification Reliant made, and it
is also unclear what the consequences of not making a
certification would have been for Reliant. Neither party
contends that such failure is relevant here.
8
making Reliant‟s launch of Antara “at risk.”7 In a
prophylactic maneuver, Reliant filed a declaratory judgment
action in the United States District Court for the District of
Delaware in June 2004, seeking a declaration of non-
infringement with respect to four of Abbott‟s fenofibrate
patents, U.S. Patent Nos. 6,074,670 (the “‟670 patent”),
6,277,405 (the “‟405 patent”), 6,589,552 (the “‟552 patent”),
and 6,652,881 (the “‟881 patent”). Reliant also argued that
the patents were unenforceable due to inequitable conduct.
Abbott counterclaimed for infringement of two of the four
patents. Despite that lawsuit, Antara‟s net sales in 2005 were
$23.5 million, and for the first half of 2006 they were $18.9
million.
In April 2006, Abbott and Reliant settled their patent
dispute. Fournier, TriCor‟s developer, was also a party to the
settlement. The three entered into a Settlement Term Sheet
(“STS”) providing that Abbott and Fournier would grant a
non-exclusive license to Reliant for the patents that were the
subject of the lawsuit, along with U.S. Patent No. 4,895,726(the “‟726 patent”), another fenofibrate patent. (See J.A. at
247 (“Abbott and Fournier would grant Reliant a non-
exclusive license … under the [patents] to exploit [Antara8] in
7
In its Complaint, Ethypharm says that “Abbott
responded in writing [to Reliant‟s regulatory filings] with a
thinly-veiled threat to bring suit.” (J.A. at 137.)
8
The STS also provided for a specific set of products
that could be manufactured by Reliant:
[T]he 43 mg, 87 mg and 130 mg fenofibrate
capsule products that are the subject of
Reliant‟s New Drug Application 21–695, as
9
the United States … .”).) In exchange, “Reliant would make
quarterly royalty payments to Abbott and Fournier in the total
amount of 7% of Net Sales.”9 (J.A. at 248.) If, however,
Reliant was acquired or it sold off the Antara portion of its
business,10 the new owner would not receive the benefit of a 7
supplemented and/or amended from time to
time. Reliant Products do not include (i) any
pharmaceutical products where fenofibrate is
not the sole active ingredient, (ii) any
combination therapy products or (iii) any
products in a form other than a 43 mg, 87 mg or
130 mg fenofibrate capsule.
(J.A. at 246.) Thus, the STS would not allow Reliant to
create new doses or combination drugs that would be covered
by the non-exclusive license.
9
The STS defines Net Sales as “the gross invoiced
sales of the Reliant Products in the Territory under the
License Agreement … .” (J.A. at 244.) The STS defines the
Reliant Products to be “the 43 mg, 87 mg and 130 mg
fenofibrate capsule products that are the subject of Reliant‟s
New Drug Application 21-695 … .” (J.A. at 246.)
10
The STS referred to this as a “Change of Control,”
which was to include “the sale, lease, exchange, license or
other disposition of all or substantially all of such Reliant[‟s]
assets related to … [Antara] and … Reliant[‟s] other assets …
.”; “a merger, consolidation, share exchange or similar
corporate transaction as a result of which the holders of”
Reliant‟s stock no longer owned the company; or “the
acquisition” of Reliant by any person or company. (J.A. at
249.)
10
percent royalty; instead, “the License Fee … would increase
to 10% of Net Sales.” (Id.) Relevant here, § 8 of the STS
(the “Restricted Entity provision”) provided that:
The license would contain additional customary
terms and conditions including, without
limitation, the following: … (ii) no assignment,
sublicense or other transfer of any rights
relating to the Reliant Products (including the
right to market and promote the Reliant
Products) except: … (e) to acquirers … of any
portion of Reliant [or its business] relating to
the Reliant Products other than pursuant to a
Change of Control, provided that any
assignment, sublicense or other transfer of
rights granted pursuant to Section 8(ii)(e), (A)
to a Restricted Entity or Affiliate thereof, shall
require the prior written consent of Abbott and
(B) to any entity other than a Restricted Entity
or Affiliate thereof shall be limited to [the ‟726,
‟670, ‟405, ‟552 and ‟881 patents] unless
Abbott consents to the assignment, sublicense
or other transfer (in which case, Reliant‟s rights
to [the patents and their continuations] may be
included).
(J.A. at 255-56.) That provision effectively foreclosed
Reliant from assigning its rights in Antara to any “Restricted
Entity” or partnering with such an entity to market Antara in
the United States. The term “Restricted Entity” was defined
to include, as the District Court summarized it, “about 20
large pharmaceutical companies, 10 generic companies[,] and
a few specialty pharmaceutical companies.” (J.A. at 10.)
11
In April 2006, Abbott and Reliant entered a stipulation
of dismissal of the patent litigation in accordance with the
STS. A few months later, in July 2006, Reliant sold to
Oscient Pharmaceutical Company (“Oscient”) the exclusive
rights to market and sell Antara in the United States. Oscient,
a business that did not appear on the Restricted Entity list,
paid Reliant $78 million for the exclusive rights to Antara,
plus the cost of Reliant‟s remaining Antara inventory.11
Ethypharm had a right of first refusal under the DLS,
pursuant to which it could “acquire all rights in relation with
[Antara] and the relevant Intellectual Property and
Confidential Information belonging to RELIANT … .” (J.A.
at 320.) But it declined to exercise that right and instead
approved the sale to Oscient. Abbott, however, exercising its
rights under the DLS, did not give its approval. As a result,
Reliant was only able to assign its license to the five Abbott
patents contained in the STS and not any future continuation
11
Although called a “New Drug Application,” an
approved NDA is no longer an “application” in the commonly
understood sense of the word. It is, rather, the approval to
participate in the United States pharmaceutical market. See
21 C.F.R. § 314.105(a) (explaining that once notice of an
approved application is received by letter, marketing of the
drug may begin, unless the FDA or some other provision of
law has delayed that effective date). The rights to an NDA
are readily transferrable between owners, so long as the new
owners comply with certain regulatory requirements. See id.§ 314.72(a) (“An applicant may transfer ownership of its
application.”); id. § 314.72(b) (“The new owner shall advise
FDA about any change in the conditions in the approved
application under § 314.70 … .”).
12
or divisional applications. (See J.A. at 255 (noting that an
assignment of Reliant‟s license from Abbott “to any entity
other than a Restricted Entity or Affiliate thereof shall be
limited to [the ‟726, ‟670, ‟405, ‟552 and ‟881 patents] unless
Abbott consents to the assignment, sublicense or other
transfer (in which case, Reliant‟s rights to [the patents and
their continuations] may be included).”).)
Oscient had some initial success with Antara. Sales in
2007 and 2008 were approximately $53.6 million and $73.8
million respectively, up from $42.5 million in 2006. But
sales stagnated in 2009, with Oscient losing market share to
generic fenofibrate manufacturers. By the summer of 2009,
Oscient had discontinued its promotion of Antara and filed
for bankruptcy. Lupin, a manufacturer of generic
pharmaceuticals, purchased the rights to Antara for $38
million from Oscient‟s bankruptcy estate, and, although
Lupin is currently attempting to grow the market for the drug,
its CEO testified that it is a difficult task because Abbott had
solidified its place in the market while Oscient was
floundering. To that end, as of 2010, Antara‟s market share
was only 2 to 4 percent, a far cry from the 25 to 33 percent
Reliant initially hoped to capture when it launched Antara,
but in line with the 2.2 and 3.4 percent market share Reliant
had actually captured in 2005 and 2006, respectively.
B. Procedural History
Believing that the failure of Antara to compete with
TriCor was a direct result of Abbott‟s patent suit against
Reliant and of the resulting STS, particularly the Restricted
Entity provision, Ethypharm filed this action against Abbott.
The Complaint features antitrust and sham litigation claims
13
under §§ 1 and 2 of the Sherman Act. See 15 U.S.C. § 1(“Every contract, combination in the form of trust or
otherwise, or conspiracy, in restraint of trade or commerce
among the several States, or with foreign nations, is declared
to be illegal.”); id. § 2 (“Every person who shall monopolize,
or attempt to monopolize, or combine or conspire with any
other person or persons, to monopolize any part of the trade
or commerce among the several States, or with foreign
nations, shall be deemed guilty of a felony … .”), as well as a
number of state law claims, including unfair competition,
tortious interference with contract, tortious interference with
prospective economic advantage, and common law restraint
of trade. According to Ethypharm, the STS was designed to
make sure that Antara would be put in the hands of a
company with “limited resources and a relatively small sales
force,” so that it could not effectively compete with TriCor.
(J.A. at 11.)
In addition to citing the allegedly anticompetitive
nature of the Restricted Entity provision, Ethypharm averred
that the 7 percent royalty payment Reliant owed to Abbott
restrained Ethypharm‟s ability to compete because, by
collecting a royalty from Ethypharm‟s exclusive distributor,
Abbott weakened Antara‟s profitability. Ethypharm also
claimed that the provisions of the STS preventing Oscient
from developing new combination drugs or different doses of
Antara further restricted the ability of Antara to compete
against TriCor.
Abbott initially moved to dismiss the Complaint for
lack of antitrust standing, but the District Court denied that
motion, holding that Ethypharm had the necessary standing to
sue. The Court determined that “a foreign name-brand
14
manufacturer, which does not itself market and distribute its
product in the United States but does so through an exclusive
United States distributor, is entitled to avail itself of the
protection of the antitrust laws for the purpose of challenging
the conduct of a manufacturer of a competing brand name
drug.” (J.A. at 11, 35.)12
Following discovery, Abbott moved for summary
judgment. The District Court granted that motion,
determining that Ethypharm had not presented enough
evidence from which a reasonable jury could find a causal
connection between the alleged antitrust injury and the
damage it suffered. Specifically, the Court concluded there
was insufficient evidence that Abbott‟s allegedly
anticompetitive conduct caused Antara‟s failure in the market
and, therefore, Ethypharm‟s antitrust claim was untenable.
(See J.A. at 20 (“Put simply, there are many market
influences that may have contributed to Oscient‟s failure with
Antara.”).)13
12
The District Court did grant Abbott‟s motion to
dismiss Ethypharm‟s “unlawful restraint of trade” claim.
Specifically, Abbott contended that Delaware‟s Antitrust Act,
which codified a restraint of trade claim, see Del. Code Ann.
tit. 6, § 2103, preempted a common law restraint of trade
claim. Ethypharm failed to respond to that argument, and the
Court concluded that that failure doomed the claim. (See J.A.
at 43 (dismissing Ethypharm‟s restraint of trade claim
because it failed to “articulate in some manner how its
pleading meets the legal requirements of its claims”).
13
The District Court also granted summary judgment
in favor of Abbott on Ethypharm‟s sham litigation claims.
Ethypharm does not dispute that determination on appeal.
15
Ethypharm timely appealed.
In addition, the District Court granted summary
judgment in favor of Abbott on Ethypharm‟s state law claims.
With respect to those claims, Ethypharm says, in a footnote at
the close of its Opening Brief before us, that the District
Court dismissed its state law claims without articulating a
basis for that ruling. (See Appellant‟s Opening Br. at 61 n.27
(“The district court‟s decision did not separately address
Ethypharm‟s three remaining state common law claims for
unfair competition.”).) In response, Abbott states it “is clear
[as to why] the district court decided to dismiss the state law
claims: Ethypharm cannot prove injury in fact.” (Appellee‟s
Br. at 58-59; J.A. at 20.) We have consistently held that “[a]n
issue is waived unless a party raises it in its opening brief, and
for those purposes a passing reference to an issue ... will not
suffice to bring that issue before this court.” Laborers’ Int’l
Union of N. Am., AFL-CIO v. Foster Wheeler Energy Corp.,
26 F.3d 375, 398 (3d Cir. 1994) (internal quotation marks
omitted); see John Wyeth & Bro. Ltd. v. CIGNA Int’l Corp.,
119 F.3d 1070, 1076 (3d Cir. 1997) (“[A]rguments raised in
passing (such as, in a footnote), but not squarely argued, are
considered waived.”); see also SmithKline Beecham Corp. v.
Apotex Corp., 439 F.3d 1312, 1320 n.6 (Fed. Cir. 2006)
(“[A]rguments raised in footnotes are not preserved.”). Thus,
Ethypharm waived its appeal of its state law claims. And
because of Ethypharm‟s waiver, and because the District
Court had diversity jurisdiction over those state law claims,
see infra note 14, we will not disturb the District Court‟s
grant of summary judgment for Abbott with respect to
Ethypharm‟s state law claims.
16
II. Discussion14
Abbott argues that the District Court erred in
concluding that Ethypharm had standing to bring its antitrust
claims. Specifically, Abbott says that Ethypharm does not
compete with it because Ethypharm is not a supplier of
Antara in the United States and, therefore, it cannot claim to
14
The District Court had jurisdiction over the federal
antitrust claims pursuant to 28 U.S.C. § 1331 and over the
state law claims both as pendent claims pursuant to § 1367,
and under diversity jurisdiction pursuant to § 1332 because
Ethypharm is a French company, Abbott is an Illinois
corporation, and the amount in controversy exceeds $75,000.
We have jurisdiction under 28 U.S.C. § 1291.
Our review of the District Court‟s denial of Abbott‟s
motion to dismiss for lack of standing is plenary. Fowler v.
UPMC Shadyside, 578 F.3d 203, 206 (3d Cir. 2009). We
take as true all the factual allegations in the Complaint and
the reasonable inferences that can be drawn from those facts,
Sheridan v. NGK Metals Corp., 609 F.3d 239, 262 n.27 (3d
Cir. 2010), but we disregard legal conclusions and
“[t]hreadbare recitals of the elements of a cause of action,
supported by mere conclusory statements,” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009). “To survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face.”
Sheridan, 609 F.3d at 262 n.27 (internal quotation marks
omitted). “A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Id. (internal quotation marks omitted).
17
have been harmed by any anticompetitive conduct here. In
short, it lacks antitrust standing.15
Standing is a threshold requirement in all actions in
federal court. It is moored in the constitutional principle that
the judiciary‟s power only extends to cases or controversies.
See U.S. Const. art. III, § 2; Lujan v. Defenders of Wildlife,
504 U.S. 555, 560 (1992). Constitutional standing is
“augmented by consideration of prudential limitations.” City
of Pittsburgh v. W. Penn Power Co., 147 F.3d 256, 264 (3d
Cir. 1998). For plaintiffs suing under federal antitrust laws,16
one of the prudential limitations is the requirement of
15
Although Abbott did not file a cross-appeal, its
standing argument is properly before us because it is “well
established that an appellee may, without taking a cross-
appeal, support the judgment as entered through any matter
appearing in the record, though his argument may attack the
lower court‟s reasoning or bring forth a matter overlooked or
ignored by the court.” EF Operating Corp. v. Am. Bldgs.,
993 F.2d 1046, 1048 (3d Cir. 1993). We have held that
antitrust standing “is simply another element of proof for an
antitrust claim, rather than a predicate for asserting a claim in
the first place.” Sullivan v. DB Invs., Inc., 667 F.3d 273, 307
(3d Cir. 2011) (en banc), cert. denied, 132 S. Ct. 1876 (2012).
Thus, by that reasoning, failure to establish antitrust standing
is a merits issue properly before us.
16
Section 4 of the Clayton Act provides the statutory
authorization for a private antitrust suit: “[A]ny person who
shall be injured in his business or property by reason of
anything forbidden in the antitrust laws” may maintain a
private action for treble damages.” 15 U.S.C. § 15.
18
“antitrust standing.” W. Penn Power Co., 147 F.3d at 264.17
It does not affect the subject matter jurisdiction of the court,
as Article III standing does, but prevents a plaintiff from
recovering under the antitrust laws. Gerlinger v. Amazon.com
Inc., 526 F.3d 1253, 1256 (9th Cir. 2008).
17
Although not free from debate, we have explained
that antitrust standing is based on prudential principles. See
W. Penn Power Co., 147 F.3d at 264 (“Thus, the crux of the
issue in this case is whether the City satisfies the „prudential‟
requirements of standing; that is, does the City have „antitrust
standing,‟ and is the plaintiff a proper party to bring a private
antitrust action?”); see also Palmyra Park Hosp. Inc. v.
Phoebe Putney Mem’l Hosp., 604 F.3d 1291, 1299 (11th Cir.
2010) (“To have antitrust standing, a party must do more than
meet the basic „case or controversy‟ requirement that would
satisfy constitutional standing; instead, the party must show
that it satisfies a number of prudential considerations aimed at
preserving the effective enforcement of the antitrust laws.”
(internal quotation marks omitted)); cf. Erwin Chemerinski,
Federal Jurisdiction § 2.3.6 (5th ed. 2007) (explaining
prudential standing requirement that a plaintiff be within the
zone of interest protected by a statute). We have also
indicated, however, that, at least in a state law context,
antitrust standing is a kind of “statutory standing.” Sullivan,
667 F.3d at 307 (characterizing state law antitrust claims as
involving “statutory standing”). In this case, whether the
standing inquiry is characterized as “prudential” or
“statutory” makes no difference because neither deprives us
of Article III jurisdiction and both bar a plaintiff‟s ability to
recover.
19
The Supreme Court, in Associated General
Contractors of California, Inc. v. California State Council of
Carpenters, 459 U.S. 519 (1983), articulated several factors
to be considered when deciding whether a complainant has
antitrust standing. We have organized those factors (the
“AGC factors”) into the following multifactor test:
(1) the causal connection between the antitrust
violation and the harm to the plaintiff and the
intent by the defendant to cause that harm, with
neither factor alone conferring standing; (2)
whether the plaintiff‟s alleged injury is of the
type for which the antitrust laws were intended
to provide redress; (3) the directness of the
injury, which addresses the concerns that liberal
application of standing principles might
produce speculative claims; (4) the existence of
more direct victims of the alleged antitrust
violations; and (5) the potential for duplicative
recovery or complex apportionment of
damages.
In re Lower Lake Erie Iron Ore Antitrust Litig., 998 F.2d
1144, 1165-66 (3d Cir. 1993). The second factor, antitrust
injury, “is a necessary but insufficient condition of antitrust
standing.” Barton & Pittinos, Inc. v. SmithKline Beecham
Corp., 118 F.3d 178, 182 (3d Cir. 1997). If it is lacking, we
need not address the remaining AGC factors.
Generally, antitrust injury – that is, “injury of the type
the antitrust laws were intended to prevent and that flows
from that which makes [the] defendants‟ acts unlawful,”
20
Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477,
489 (1977) – “is limited to consumers and competitors in the
restrained market and to those whose injuries are the means
by which the defendants seek to achieve their anticompetitive
ends,” W. Penn Allegheny Health Sys., Inc. v. UPMC, 627
F.3d 85, 102 (3d Cir. 2010). Ethypharm, of course, does not
claim to be a consumer. Therefore, for Ethypharm to have
standing it must be either a competitor in the defined relevant
market or it must have suffered such injuries as “are the
means by which the defendant[] seek[s] to achieve [its]
anticompetitive ends.” Id.Abbott contends that Ethypharm fits neither
qualification. First, Abbott argues that Ethypharm is not a
supplier of Antara in the United States but only an offerer of
intellectual property licenses and raw materials, which are not
interchangeable with the drug that Abbott offers. Second,
Abbott contends that “Ethypharm‟s alleged injury is not the
„means‟ by which Abbott” allegedly restrained competition.
(Appellee‟s Br. at 43.) Abbott reasons that it effectuated its
allegedly illegal restraint of trade without any need to affect
Ethypharm because Abbott needed only to place restrictions
on Reliant, the sole United States distributor of Antara.
Ethypharm counters that it produces not just raw
materials but a finished drug that directly competes with
Abbott‟s product. According to Ethypharm, the fact that it
markets and sells Antara through an exclusive distributor to
bring that product to the United States is irrelevant. Thus,
Ethypharm argues, its “offering of the manufactured product
is reasonably interchangeable with Abbott‟s offering of
TriCor.” (Appellant‟s Reply Br. at 17 (internal quotation
marks omitted).) Ethypharm also contends that even if it did
21
not directly compete with Abbott, it has suffered antitrust
injury because the harm caused by Abbott to Ethypharm is
“inextricably intertwined with Abbott‟s alleged wrongdoing.”
(Id. (internal quotation marks omitted).)
In making their arguments about whether Ethypharm
and Abbott are competitors in the relevant market, the parties
focus on two of our precedents in particular, Barton &
Pittinos, Inc. v. SmithKline Beecham Corp., 118 F.3d 178 (3d
Cir. 1997), and Carpet Group International v. Oriental Rug
Importers Association, Inc., 227 F.3d 62 (3d Cir. 2000),
abrogated on other grounds by Animal Sci. Prods., Inc. v.
China Minmetals Corp., 654 F.3d 462 (3d Cir. 2011).18 In
Barton & Pittinos, we determined that a drug marketing
company did not have antitrust standing to sue a drug
manufacturer after the manufacturer chose to sever its
relationship with the marketer. Barton & Pittinos had entered
into an agreement with SmithKline to market SmithKline‟s
hepatitis-B vaccine to nursing homes. Barton & Pittinos
would solicit orders from nursing homes and pass those
orders on to a third party, General Injectables and Vaccines,
Inc. (“GIV”), “which would buy the vaccine from
[SmithKline] and then resell it to the nursing homes.” Barton
& Pittinos, 118 F.3d at 179. Previously, pharmacists had
supplied nursing homes with SmithKline‟s vaccine, and those
18
Abbott‟s argument relies heavily on our non-
precedential opinion in SigmaPharm, Inc. v. Mutual Pharm.
Co., 454 F. App‟x 64 (3d Cir. 2011). We do not address that
case, see 3d Cir. I.O.P. 5.7 (2010) (“The court by tradition
does not cite to its not precedential opinions as authority.”),
but instead look to the case upon which SigmaPharm rests its
reasoning, our precedential opinion in Barton & Pittinos.
22
pharmacists complained to SmithKline about the arrangement
with Barton & Pittinos. In response to those complaints,
SmithKline terminated its arrangement with Barton &
Pittinos. Barton & Pittinos then brought suit contending that
SmithKline had conspired with the pharmacists to restrain
competition in the distribution of the vaccine, in violation of
§ 1 of the Sherman Act.
We held that Barton & Pittinos had no standing to
avail itself of the antitrust laws because it was not a
competitor in the market and, accordingly, could not suffer
antitrust injury. Speaking for the court, then-Judge Alito
reasoned that Barton & Pittinos was essentially an advertiser
and not a competitor in the relevant drug market. Id. at 182.
We first defined the proper market, as Barton & Pittinos had,
as “all hepatitis-B vaccine sold to nursing homes in the
United States.” Id. at 182 (internal quotation marks omitted).
Then, we considered whether Barton & Pittinos was a
competitor by determining if there was cross-elasticity of
demand between the pharmacists‟ offerings and Barton &
Pittinos‟s offerings. In analyzing that question, we focused
not on the overall marketing program devised by SmithKline,
but on what Barton & Pittinos itself offered. That is, Barton
& Pittinos offered marketing services but did not have direct
access to the vaccine and could not supply the vaccine to
nursing homes without GIV. The pharmacists, in contrast,
could supply nursing homes directly with the vaccine.
Because nursing homes only had indirect access to the
vaccine through Barton & Pittinos, “there was no cross-
elasticity of demand as between the pharmacists‟ offerings
and [Barton & Pittinos‟s] offerings; no matter how much the
pharmacists raised the price of the package of the goods and
23
services that they offered, the nursing homes could not have
switched to [Barton & Pittinos].” Id. at 183.
We concluded that Barton & Pittinos‟s position as an
advertiser made its injury different from the type of injury
that the antitrust laws were designed to redress. See id. at 184
(“Because [Barton & Pittinos] was thus not a competitor or
consumer in the market in which trade was allegedly
restrained by the antitrust violations pled by [Barton &
Pittinos], we hold that [its] alleged injury is not „antitrust
injury,‟ meaning injury „of the type that the antitrust statute
was intended to forestall.‟” (quoting Associated Gen.
Contractors, 459 U.S. at 540)). Barton & Pittinos thus lacked
antitrust standing.
In contrast to Barton & Pittinos, we concluded in
Carpet Group International that a plaintiff did have antitrust
standing. Carpet Grp. Int’l, 227 F.3d at 78. In that case,
Carpet Group International sought to provide a direct link
between oriental rug manufacturers and domestic retailers,
cutting out middlemen wholesalers, who were united by a
trade group, the Oriental Rug Importers Association. Carpet
Group International bypassed the wholesalers by inviting
manufacturers and retailers to trade shows where the retailers
could buy directly from the manufacturers. Carpet Group
International also organized buying trips where the retailers
could go abroad to see and directly purchase rugs. Oriental
Rug Importers responded by, among other tactics, threatening
not to buy from any manufacturer who attended a trade show
or sold directly to a retailer during a buying trip. Those
actions prompted Carpet Group International to bring an
antitrust action.
24
Oriental Rug Importers relied on Barton & Pittinos to
argue that Carpet Group International did not have antitrust
standing. We noted, however, that Carpet Group
International‟s role in the oriental rug market was different
from Barton & Pittinos‟s role in the relevant drug market.
Barton & Pittinos, as an unlicensed entity, could not supply
drugs to consumers, but, in contrast, Carpet Group
International and Oriental Rug Importers could and did offer
the exact same service to consumers – a way to procure rugs
from manufacturers. “In other words, there [was] a cross-
elasticity of demand between the plaintiffs‟ offering and the
defendants‟ offering.” Id. at 77; see id. (“If the
wholesaler/importers raised the prices at which they sold
oriental rugs to domestic retailers, those retailers could go to
[Carpet Group International‟s] trade shows and purchase rugs
there directly from manufacturers.”). Thus, the injury that
Carpet Group International claimed to have suffered was an
antitrust injury.
As one might expect, Abbott contends that this case is
controlled by Barton & Pittinos, and Ethypharm says it is not
and that Carpet Group is the pertinent authority. Although
this is a closer case than Barton & Pittinos because
Ethypharm does manufacture a product ultimately sold in the
relevant market, we think Abbott has the better of the
arguments. Ethypharm is not a competitor because, in the
highly regulated pharmaceutical market in this country, there
is no cross-elasticity of demand between Ethypharm‟s
offerings and Abbott‟s offerings. In this case, as in Barton &
Pittinos, customers in the United States cannot purchase the
drug at issue from Ethypharm. Ethypharm structured its
business in a way that assured that only Reliant or someone to
whom Reliant sold the rights to Antara could supply the drug.
25
Ethypharm has chosen, for reasons sufficient to itself, not to
seek the necessary approval to sell pharmaceuticals in the
United States.19 It is thus forbidden to compete in the
relevant market. Because of its choice to leave to an
exclusive licensee the responsibility of obtaining FDA
approval for Antara and of selling and marketing that drug in
the United States, there is no cross-elasticity of demand
between what Ethypharm can lawfully offer, i.e., bulk drug
sales from outside the United States to an FDA-approved
entity, and what Abbott offers, a finished pharmaceutical
product within the United States.
Indeed, Ethypharm‟s own Complaint defines the
relevant market in this case as the sale of fenofibrate products
in the United States. (J.A. at 143 (“For purposes of this
Complaint, the relevant geographic market is the United
States. The relevant product market is products containing
fenofibrate.”).) When looking through that market lens,
Ethypharm does not and cannot compete with Abbott.
Similar to Barton & Pittinos, Ethypharm, on its own, cannot
directly supply the United States market with the drug in
question. See Barton & Pittinos, 118 F.3d at 180(recognizing that Barton & Pittinos “lacked the required
[regulatory] license to … sell the vaccine”). It did not enter
the United States market and receive the required FDA
approval to market Antara; Reliant alone obtained that
approval. Cf. 21 U.S.C. § 355(a) (requiring pharmaceutical
19
Not only did Ethypharm choose not to initially enter
the United States market with Antara, it passed on a second
opportunity to do so when it declined to exercise its right of
first refusal at the time Reliant transferred its rights in Antara,
complete with the approved NDA.
26
companies to obtain FDA approval before marketing
prescription drugs). In fact, as Ethypharm explained in its
Complaint, that was its entire business plan:
While Ethypharm develops, formulates, and
manufactures its fenofibrate product for sale in
the United States, it does not directly sell and
distribute this product in this country. Instead,
Ethypharm sought a business partner who
would enter into an agreement to: license
Ethypharm‟s underlying patent and intellectual
property rights; obtain U.S. regulatory approval
for the product; and market the product in the
U.S.
(J.A. at 113.) And without a license of its own, Ethypharm
admits that it “would be foreclosed from the United States
market.” (J.A. at 122.) Therefore, just like the pharmacists‟
ability to raise prices of the vaccine in Barton & Pittinos and
the nursing homes‟ inability to procure that vaccine directly
from Barton & Pittinos, Abbott could raise the price of TriCor
and consumers could not turn to Ethypharm for Antara.
Ethypharm argues, and the District Court appeared to
agree, that “Reliant‟s role as the holder of the Antara NDA
makes no difference” with respect to the antitrust injury
inquiry. (Appellant‟s Reply Br. at 17.) We disagree;
Ethypharm‟s inability to participate in the United States
fenofibrate market makes all the difference. Contrary to
Ethypharm‟s contention, Reliant was not a mere conduit in
bringing Antara to market. Reliant was the entity that took
the risk and bore the expense of filing the NDA and gaining
FDA approval. The FDA carefully regulates the
27
pharmaceutical industry and imposes stringent requirements
on entities seeking to sell drugs in the United States. See
generally 21 U.S.C. § 355 (describing requirements for NDA
approvals); id. § 393 (establishing the FDA and providing its
scope). It is that high legal barrier to entry, specific to the
United States pharmaceutical market, that differentiates this
case from others in which a manufacturer has a legal right to
sell a good in the United States but chooses to utilize an
exclusive distributor.
Ethypharm wants to have it both ways: it wants to pass
on to a licensee the expense and risk of qualifying to compete
in the United States pharmaceutical market, but, when that
arrangement fails to achieve success, Ethypharm seeks to
avail itself of the United States laws protecting fair
competition. The rules of antitrust standing do not permit that
tactic. We stress that it is not the general arrangement of
manufacturer and distributor that is problematic; it is the fact
that Ethypharm cannot sell Antara in the United States
because of legal barriers particular to the pharmaceutical
market, barriers that Ethypharm chose not to surmount.
Ethypharm is literally not a lawful competitor in the United
States fenofibrate market, and so it cannot be considered a
competitor for purposes of antitrust injury.20
20
Ethypharm cites a district court case, Chemi SpA v.
GlaxoSmithKline, 356 F. Supp. 2d 495 (E.D. Pa. 2005), in
support of its position that it has antitrust standing. That
decision, however, fails to consider Barton & Pittinos under
the antitrust injury prong of antitrust standing. It also appears
to rest its decision on the “inextricably intertwined” theory of
antitrust injury, which we conclude is lacking in this case, see
infra. In addition, the plaintiff in that case, a foreign drug
manufacturer, filed a Drug Master File with the FDA and “set
28
Ethypharm also argues that even if it is not a
competitor in the United States fenofibrate market, it suffered
antitrust injury because its injury is “inextricably intertwined”
with Abbott‟s conduct such that Ethypharm‟s “injuries are the
means by which the defendants seek to achieve their
anticompetitive ends.” W. Penn Allegheny Health, 627 F.3d
at 102. In Gulfstream III Associates, Inc. v. Gulfstream
Aerospace Corp., we recognized the “inextricably
intertwined” exception to the usual requirement that an
antitrust plaintiff be either a competitor or consumer. 995
F.2d 425, 429 (3d Cir. 1993).21 There, we stated that antitrust
forth other required information for FDA approval” of its
drug. Id. at 497. Therefore, the plaintiff‟s involvement in the
FDA approval process distinguishes ChemiSpA from this
case.
21
The “inextricably intertwined” antitrust injury
originated in Blue Shield of Virginia v. McCready, 457 U.S.
465 (1982). There, the Court recognized that antitrust injury
may be suffered by those other than competitors when the
“injury alleged is so integral an aspect” of the alleged
anticompetitive conduct that “the loss was precisely the type
of loss that the claimed violations ... would be likely to
cause.” Id. at 479 (omission in original) (internal quotation
marks omitted). It went on to conclude that that test had been
met because “the injury [the plaintiff] suffered was
inextricably intertwined with the injury the conspirators
sought to inflict.” Id. at 484. Thus, an “inextricably
intertwined” antitrust injury is limited to plaintiffs “whose
injuries are the essential means by which defendants‟ illegal
conduct brings about its ultimate injury to the marketplace.”
29
injury occurs if “there exists a „significant causal connection‟
such that the harm to the plaintiff can be said to be
„inextricably intertwined‟ with the antitrust conspiracy.” Id.
at 429; see also Carpet Group, 227 F.3d at 77 (concluding
there was antitrust injury because of inextricable
intertwinement). Since that time, however, we have not
extended the “„inextricably intertwined‟ exception beyond
cases in which both plaintiffs and defendants are in the
business of selling goods or services in the same relevant
market,” though they may not directly compete against each
other. Broadcom Corp. v. Qualcomm, Inc., 501 F.3d 297,
320-21 (3d Cir. 2007) (emphasis added). Thus, Ethypharm‟s
argument that its injuries are inextricably intertwined with
Abbott‟s conduct – that is, the “injuries are the means by
which [Abbott] seek[s] to achieve [its] anticompetitive ends,”
W. Penn Allegheny Health, 627 F.3d at 102 – fails for the
same reason its argument that it is a competitor fails:
Ethypharm itself, by its own choice, is not in the United
States fenofibrate market.
Accordingly, we conclude that Ethypharm did not
suffer antitrust injury because it does not and indeed cannot
compete in the United States fenofibrate market, unless and
until it acquires the required FDA approval to do so. As a
result, Ethypharm lacks antitrust standing to sue Abbott.22
IIA Philip E. Areeda, et al., Antitrust Law: An Analysis of
Antitrust Principles and Their Application ¶ 339, at 123 (3d
ed. 2007).
22
Because we conclude that Ethypharm did not suffer
antitrust injury, we do not address any of the other AGC
factors in the antitrust standing analysis. Nor do we reach the
30
IV. Conclusion
For the reasons above, we will vacate the grant of
summary judgment as to Ethypharm‟s federal claims, leave
undisturbed the grant of summary judgment as to
Ethypharm‟s state law claims, and remand the case to the
District Court to dismiss the federal claims for lack of
standing.
issue of whether the District Court erred in its analysis of the
merit of Abbott‟s motion for summary judgment.
31