Compass Lexecon’s Clients Prevail in Major Antitrust Pay-For-Delay Settlement Case

Compass Lexecon Expert Professor Bobby Willig Testifies Successfully for Defendants; Plaintiffs’ Expert Excluded under Daubert

In In re: Wellbutrin XL Antitrust Litigation, Compass Lexecon’s clients, SmithKline Beecham Corporation d/b/a GlaxoSmithKline and GlaxoSmithKline plc (collectively, “GSK”), prevailed in a major pay-for-delay settlement decision interpreting the United States Supreme Court decision in FTC v. Actavis. In Actavis, the Supreme Court rejected the FTC’s position that pay-for-delay settlements are presumptively illegal and held instead that they should be evaluated under the rule of reason. Judge Mary McLaughlin (E.D.Pa.) was presiding over Wellbutrin during the Actavis appeal and delayed the summary judgment process until after the Supreme Court decision. Judge McLaughlin then proceeded to assess the summary judgment motions based on guidance from Actavis.

In the Wellbutrin XL litigation, direct and indirect purchasers of the drug Wellbutrin XL claimed that defendants GSK entered into anticompetitive patent settlements with generic drug companies, delaying the entry of generic versions of Wellbutrin XL and agreeing not to launch an authorized generic. Plaintiffs submitted expert economic testimony that there was an implicit large payment to the generic entrants that was greater than any avoided litigation costs and that this demonstrated the presence of anticompetitive effects, i.e., pay-for-delay. Plaintiffs also claimed that the agreement not to launch an authorized generic was itself anticompetitive.

Compass Lexecon expert Professor Robert Willig submitted testimony on behalf of GSK evaluating the economics of the antitrust allegations and reviewing and critiquing the claims of Plaintiffs’ economic expert. Professor Willig testified that there should be no presumption that a reverse payment indicates anticompetitive effects or the possibility of an alternative settlement with earlier generic entry. He demonstrated that the claimed implicit reverse payment was significantly overstated and that the claimed litigation costs were significantly understated. Professor Willig analyzed the evidence on the timing of the various regulatory, litigation and business contingencies with and without the challenged settlement agreements and concluded that there was no likely anticompetitive delay to entry, and that taking into account its various interdependent parts, the totality of the settlement was procompetitive.

In September 2015, Judge McLaughlin granted summary judgment for GSK on all claims. The judge reached the same conclusions as Professor Willig, holding that Plaintiffs had not established that the settlement delayed the launch of a generic product and that the settlement viewed as a whole was procompetitive. Judge McLaughlin further held that even if one assumed that there were anticompetitive effects, procompetitive benefits from important elements of the settlement would outweigh them. She emphasized that since there was no basis for concluding an alternative settlement could have been reached without the terms that Plaintiffs objected to, the settlement should be viewed as a whole, and “a reasonable jury could not find that any anticompetitive effects outweigh the procompetitive benefits of the settlement.”

Judge McLaughlin excluded Plaintiffs’ economic expert’s testimony under Daubert because he failed to reliably address the critical issue of when entry would have occurred absent the settlement and did not evaluate possible procompetitive justifications stemming from portions of the settlement that fostered generic entry and to which Plaintiffs did not object. These failures made Plaintiffs’ expert’s “already conclusory analysis fatally incomplete.”

The Compass Lexecon team supporting Professor Willig included Allan Shampine, Bret Dickey, Kirupakaran Ramaiah, Deborah Healy and Alice Kaminski. Compass Lexecon worked closely with outside counsel for GSK, including Edward Rogers, Jason Leckerman and Leslie John at Ballard Spahr LLP.