antitrust claim against Suboxone, including false advertising, survives summary judgment

In re Suboxone (Buprenorphine Hydrochloride and Naloxone) Antitrust Litig., --- F.Supp.3d ----, MDL NO. 2445 13-MD-2445, CIV. A. NO. 16-5073, 2022 WL 3588024 (E.D. Pa. Aug. 22, 2022)

The court here allows an antitrust claim to proceed based in part on allegedly false/misleading statements because they form part of the alleged anticompetitive product-hopping scheme and because the unique characteristics of the drug market make market-based responses to false advertising difficult. (That difficulty is not really unique, but the court is forced to make distinctions because of the unwarranted exclusion of many false advertising claims from antitrust consideration.)

The issue here involves Reckitt Benckiser’s switch of Suboxone, a drug commonly used to combat opioid addiction, from tablet to sublingual film. This made it difficult-to-impossible for generic tablet sellers to succeed in the market because they weren’t AB-rated (therapeutically equivalent) to the remaining branded product.

Reckitt’s scheme had many alleged parts, one of which was safety claims for film over tablets. Unfortunately for Reckitt, based on the findings in Reckitt’s clinical trial data, the FDA concluded that “expanded use of this product [film] will result in significant abuse and diversion that needs to be considered.” FDA noted a “high incidence of drug unaccountability in subjects who completed the trial and those who were discontinued in each of the three clinical sites. This is predictive of the likely occurrence of diversion after the drug is approved and marketed.” Because the FDA found that Reckitt’s clinical study was poorly designed and conducted, it found that it was “not useful for demonstrating any difference in the safety profile or abuse potential of these two formulations [tablet and film].”

Reckitt also received reports that film could be dissolved in water and ingested through the nose, allowing misuse or diversion, but did not study whether users could inject or were injecting it. The employee responsible for collecting and reviewing data on abuse, misuse, and diversion, and pediatric exposures, told several Reckitt executives: “I am not aware of any data to indicate any differences in the abuse/diversion of Suboxone tablets versus Suboxone film.”

Nonetheless, Reckitt’s witness “testified that, despite the information in its possession, Reckitt’s objective was to get 100% of the highest ranking doctors to accept that the film is less abusable than the tablet because it could not be snorted.” At the time it released its marketing statements, Reckitt didn’t have any statistically significant evidence that film reduced the risk of misuse and diversion compared to tablets. There was also conflicting evidence about the risks of pediatric exposure specifically; FDA “specifically rejected any notion that film was safer than tablets with respect to pediatric exposure,” noting among other things that “because the film cannot be spit out (unlike a tablet) it is possible that a child who obtains access to even one dose might be more adversely affected than a child who obtains access to a single tablet.” A senior brand manager for Reckitt said internally that, based on subsequent studies by Reckitt, “[u]nder no circumstances can we make the claim that Suboxone Film is safer or better at reducing pediatric exposures than Suboxone Tablet.” Reckitt, of course, claimed that it had other evidence suporting safety superiority to tablets.

The Third Circuit has used the rule of reason to assess product hopping antitrust claims, and commented that “courts may need to be cognizant of the unique separation between consumers and drug manufacturers in the pharmaceutical market, especially in cases where there is evidence of extreme coercion of physician prescribing decisions or blatant misrepresentation about a generic manufacturer’s version of a drug.”

For purposes of summary judgment argument only, Reckitt conceded that it did everything that plaintiffs alleged and that its conduct was anticompetitive in nature, but that the purchaser classes’ claims still failed. The court disagreed.

Part of the successful theory was that, even though generic tablets have been cheaper than film for years, “Reckitt has retained its share of the market through its disparagement campaign.”

Because the Third Circuit has not presumed that false advertising inflicts de minimis harm as some circuits do, instead considering it as part of the broader picture of an antitrust case, the court evaluated the claims without any such presumption. The court also rejected Reckitt’s argument that actionable statements had to be “clearly or demonstrably false” or “blatant misrepresentations.”

Although “wrong, misleading, or debatable” statements can indicate competition on the merits, it doesn’t always do so: The Third Circuit has clarified that some falsities can destroy competition, including “making false statements about a rival to potential investors and customers.” Indeed, “in some cases, such defamation, which plainly is not competition on the merits, can give rise to antitrust liability, especially when it is combined with other anticompetitive acts.” Although that court referred to “blatant misrepresentation” in its prior discussion of pharma antitrust, “[n]o fair reading of these cases suggests that the Third Circuit was opining that only ‘blatant misrepresentations’ could be anticompetitive.”

A reasonable jury could find that Reckitt’s alleged false “safety story” campaign was plainly not competition on the merits, particuarly given that this wasn’t a stand-alone deception claim but part of conduct constituting an alleged illegal product hop, “an actionable scheme under the Sherman Act.”

Also, the court pointed out that the concerns in the out-of-circuit cases are about difficulties of proof of materiality/harm, but the regulatory context here offered a “unique separation between consumers and drug manufacturers.” “Given this separation, and unlike other industries where consumers can credit or discredit disparagement as they see fit, the ultimate consumers of the drug at issue did not have the opportunity to evaluate the statements and decide whether or not to rely upon them.” [Of course, I don’t think that matters—if the deception was material and harmful, then the theoretical possibility that doctors or ultimate consumers could evaluate the claims didn’t materialize and the market as a whole was harmed.]

Here, too, there was “evidence that Reckitt actively sought to deprive consumers of the ability to actively evaluate safety claims and make the choice between film and tablets.” Reckitt’s own expert “testified that, in the relevant period of 2010, physicians were less mindful of and more reliant on statements made by pharmaceutical companies and their representatives.”  Its own documents showed that many physicians viewed Reckitt as a “trusted advisor” and “relied upon Reckitt’s sales representatives for information and training.” Reckitt campaigned to convince doctors to stop giving patients a choice in the form of Suboxone and warned physicians to distrust patients who preferred tablets because those patients could be misusing or diverting the tablets.

Likewise, while other cases say that false advertising merely provides an opportunity for a competitor to counteradvertise (without ever requiring any empirical testing of that proposition), “the unique characteristics of the pharmaceutical market” made that unworkable. When Reckitt engaged in its campaign, the only relevant products on the market were Suboxone tablets and Suboxone film; there were no generic products and none could be legally advertised. “Reckitt remained the lone voice pitting one of its products against the other and controlling the entire flow of information to physicians, insurers, and the public. Accordingly, unlike in the cases upon which Reckitt relies, the alleged false advertising at issue actually eliminated the forum for competition in the advertising market.”

In addition, the regulatory context always matters. (Citing Trinko in what is perhaps an unusual way?) Given the FDA’s marketing rules, unsubstantiated safety statements (lacking substantial evidence or statistically significant data from head-to-head clinical trials) were deemed false/misleading. And plaintiffs produced evidence that Reckitt lacked the necessary evidence, and that its executives were aware of this when they made the claims. At the time, it hadn’t performed any clinical tests and had “only a subjective belief based on the characteristics of film, including unit dose packaging, dissolution rates, and strong adherence to the sublingual mucosa.” Nor did Reckitt have any data to suggest that film had less pediatric exposure potential. FDA disagreed with the safety claims. This allowed plaintiffs to survive summary judgment.

Reckitt argued that unsubstantiated statements didn’t violate antitrust law and weren’t “false” or “blatantly misleading” because there wasn’t definitive expert evidence either way.

Applying this reasoning in the context of the pharmaceutical market would make little sense. In the real world, pharmaceutical manufacturers must perform adequate studies and provide sufficient data to substantiate marketing statements about its drug. Reckitt’s legal construct would flip that burden and require that an antitrust plaintiff disprove the validity of marketing statements by the manufacturer. In other words, a pharmaceutical manufacturer could, as part of an antitrust scheme, make unsupported claims about its drugs without doing any studies to substantiate those claims but be insulated from potential antitrust exposure because no contrary studies exist.

Plaintiffs had evidence that Reckitt, experienced in pharma, understood the regulatory requirements, including the substantial evidence/substantial clinical evidence standard. “Yet, taking the facts in the light most favorable to Plaintiffs, Reckitt made the safety statements to the pharmaceutical industry disregarding whether they were true, thereby creating the false perception that it actually had statistical support for the claims.” A jury could believe that it wasn’t Reckitt’s technical violation of the FDA regulation that was anticompetitive, “but rather Reckitt’s false representation to the pharmaceutical community that it actually had scientific support for its claims.”