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Reviving antitrust claims against DuPont Pharmaceuticals Co., a federal appeals court has ruled that consumers who want speedy access to a generic drug have standing to sue the manufacturer of an expensive brand name drug over its alleged illegal thwarting of the generic manufacturer’s efforts to get a cheaper substitute approved for sale. In In Re: Warfarin Sodium Antitrust Litigation, a unanimous three-judge panel found that the lower court judge, U.S. District Judge Sue L. Robinson of the District of Delaware, applied too strict a test for deciding whether an indirect purchaser has standing under the Clayton Act. The suit was brought by consumers who take the drug Coumadin, the DuPont brand name for warfarin sodium, a blood-thinning agent prescribed to treat and prevent blood clots. The drug must be monitored closely because too low a dose can lead to a stroke or heart attack while too high a dose can cause internal bleeding. Although DuPont’s patent on Coumadin expired in 1962, it dominated the oral anti-coagulant market for more than 30 years. Until Barr Laboratories introduced a generic equivalent in the mid-1990s, DuPont had no competition. Consumers alleged that DuPont reacted to Barr’s generic drug application by orchestrating a campaign to disparage generic substitutes generally and particularly Barr’s generic warfarin sodium. The suit accused DuPont of illegal attempts to monopolize, specifically alleging that DuPont attempted to prevent or delay Food and Drug Administration approval of Barr’s compound; and that it disseminated false and misleading information about the drug. But Judge Robinson found that drug consumers are “indirect purchasers” of prescription drugs. DuPont, she said, sells to pharmacies which in turn are paid by insurers and prescription plans that provide the drugs to members. As a result, Robinson said, the claims by actual users of Coumadin were therefore “too attenuated” to confer standing under antitrust laws. But U.S. Circuit Judge Carol Los Mansmann said courts must apply a more relaxed standing test for claims brought under Section 16 of the Clayton Act. Mansmann said the 3rd Circuit first explained in the 1979 decision in Mid-West Paper Products Co. v. Continental Group Inc. how the difference between a Section 4 claim and a Section 16 claim influences the question of standing. Section 4 claims seek trebled damages and therefore in most cases can only be brought by direct purchasers. But Section 16 claims carry no risk of duplicative or “ruinous” recovery and therefore can be brought by indirect purchasers, she said. Nonetheless, a Section 16 plaintiff must still show “threatened loss or injury cognizable in equity,” and prove that the injury was proximately caused by the alleged antitrust conduct. Applying that relaxed test to the Coumadin users, Mansmann found that they met the test. “We find that Coumadin consumers clearly suffer antitrust injury. Counmadin purchasers were the target of DuPont’s antitrust violation,” Mansmann wrote in an opinion joined by U.S. Circuit Judge Morton I. Greenberg and Maryanne Trump Barry. “The class members here were ‘foreseeable and necessary victims’ of DuPont’s efforts to exclude the generic drug from the market. … Regardless of the existence of the various links of middlemen, if there were no ultimate consumers of Coumadin, prices charged for the drug DuPont to distributors, pharmacies, etc., would be irrelevant,” Mansmann wrote. “The excess amount paid by Coumadin users not only is ‘inextricably intertwined’ with the injury DuPont aimed to inflict, the overcharge was the aim of DuPont’s preclusive conduct. It is difficult to imagine a more formidable demonstration of antitrust injury. … The higher prices paid were the raison d’etre of DuPont’s antitrust conduct,” she wrote. Accepting the allegations as true, Mansmann found that “unless enjoined, DuPont’s unlawful conduct will continue unchecked and the class will continue to bear the financial brunt of the antitrust violations.” Attorney Bernard Persky of Goodkind Labaton Rudoff & Sucharow in New York argued the case on behalf of the consumer plaintiffs. He was joined on the brief by Barbara J. Hart and Ngozi Okaro of the Goodkind firm; Pamela S. Tikellis and Robert J. Kriner of the Wilmington, Del., office of Chimicles & Tikellis; Marvin A. Miller, Jennifer Winter Sprengel and Michael C. Dell’Angelo of Miller Faucher Cafferty & Wexler in Philadelphia; James R. Capretz of Capretz & Associates in Newport Beach, Calif; Mel Lifshitz and Mary Hoover of Bernstein Liebhard & Lifshitz in New York; Michael A. Hanzman and Michael A. Criden of Hanzman Criden Chaykin & Ponce in Miami; and Paul Goltz of Pittsburgh. Arguing for DuPont on appeal was attorney George D. Ruttinger of Crowell & Moring in Washington. Joining him on the brief were Jeane A. Thomas of the Crowell firm and Donald J. Wolfe of Potter Anderson & Corroon in Wilmington, Del.

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