to discontinue product a period until an
alternate source is qualified and approved by the FDA." The attachment
also required Hoechst to supply a DMF referral letter.
On January 17, 1996, Hoechst's sales representative, Gary Moss
("Moss"), advised Dave and Patel that the additional "obligation"
language in the purchase order was unacceptable. Moss further advised
that Invamed's order would be put on hold until some "significant items"
were resolved, including the state of Hoechst's production, the progress
on its DMF and technical materials (which were months away), and the
price of the product. Ultimately, Hoechst returned the revised purchase
order to Invamed with the language regarding the supply obligation
stricken, and shipped the product.
On March 29, 1996, Invamed submitted a purchase order to Hoechst for 8
additional kilograms of clathrate. The purchase order contained no
commitment language. Invamed submitted the purchase order to Hoechst
because ACIC/Brantford had not responded to its earlier request and
because Patel believed ACIC would not supply that amount to Invamed.
Invamed used this Hoechst material for its warfarin sodium
development, and in April began manufacturing warfarin sodium tablets
using Hoechst's clathrate to complete its product development work and
its ANDA. Patel stated that "Hoechst was a suitable alternative to
V. Invamed Files Its Warfarin Sodium ANDA
On June 14, 1996, Invamed submitted its ANDA for warfarin sodium to the
FDA. Invamed listed ACIC as its source for raw material and included the
DMF reference letter ACIC had sent in April 1995. Plaintiffs relied on
the alleged repeated representations by ACIC/Brantford that it would
supply commercial quantities of clathrate to Invamed and the purported
industry practice that it would do so.
On June 28, 1996, Invamed and Apothecon entered into an exclusive
five-year Development and Supply Agreement in connection with the
manufacture and marketing of a number of generic pharmaceuticals,
including warfarin sodium. In that agreement, Invamed contracted to
manufacture warfarin sodium for Apothecon, which Apothecon would then
market to its customers. Invamed received $2.1 million up front and was
to be paid a transfer price for the tablets it made for Apothecon plus a
percentage of the profits.*fn11 The timetable attached to the agreement
targeted June 1997 as the date for FDA approval of Invamed's ANDA for
warfarin sodium, and listed August 1995 as the date the "drug substance
vendor" had been "contracted." As of August 1995, Invamed had executed a
written contract with only Banyan, which did not have the capability of
producing clathrate at the time.
On July 29, 1997, Getrajdman e-mailed a press release to Dave regarding
Barr's launch of warfarin sodium. In his e-mail, Getrajdman indicated
that he would "commence [his] pressuring of the manufacturer again, as
they promised to review the possibilities after launch."
Also on July 29, 1997, after Invamed and Apothecon held a warfarin
meeting, raw material sourcing remained as an item requiring
action from Invamed. A subsequent Apothecon warfarin launch proposal
similarly noted "Raw Materials Still Not Secured" and further listed
"Secure Raw Materials!" as the first of many items on a list entitled
"What We Need To Do."
In late September, Dave and Patel informed Doug Hamilton, Apothecon's
Director of Sourcing ("Hamilton"), that they expected ANDA approval any
day, but that Invamed had no contract in writing with ACIC/Brantford.
Hamilton was also informed that pricing on clathrate was "[approximately]
$3500/kg . . . Invamed even fuzzy here." Invamed also identified its plan
to obtain clathrate: "get approval then place order with ACIC. Take
things from there."
By this time, Apothecon had forecasted 1997-1999 warfarin sodium sales
of between $87 million and $112 million.
VI. Invamed Arranges For Other Clathrate Suppliers After The Submission
of Its ANDA
A. Invamed Requests Additional Clathrate from Hoechst
In July 1996, Invamed provided information about its ANDA filing and
relayed its clathrate needs and timing to Gary Moss of Hoechst. As Moss
reported in a memorandum to his supervisor, Invamed's original plan "was
to submit their ANDA based on" other clathrate and substitute Hoechst's
material "at the appropriate time to the FDA without losing time on the
ANDA/SNDA approval." Moss wrote that Invamed never communicated the exact
need of volume and time when asked on two separate occasions until July.
He also stated that Patel threatened to go to ACIC if Hoechst could not
supply clathrate by November. Hoechst submitted its DMF for clathrate in
B. Invamed Develops A Manufacturing Process For Clathrate
In July 1996, Patel asked Dr. Chandra Kasireddy, one of Invamed's
senior research scientists ("Kasireddy"), to develop a process for
manufacturing clathrate. Patel intended to provide this process to
another supplier that would manufacture the product for Invamed. By
November 1996, Dr. Kasireddy had performed several tests and found it a
"simple process" to prepare clathrate in conformance with Invamed's
specifications. Kasireddy prepared a document that summarized his
C. Invamed Hires A Broker To Locate Manufacturers
Invamed hired Ceres Chemical, a chemicals broker, to find potential
1. Invamed's Negotiations with Pharmeco
In the summer of 1996, Ceres put Invamed in touch with Pharmeco, a
Boston area chemical manufacturer, about manufacturing clathrate for
Invamed using Kasireddy's process. In September 1996, Invamed entered
into a Non-Disclosure Agreement with Ceres and Pharmeco concerning their
warfarin sodium discussions. Pharmeco, however, ultimately declined to
enter into an agreement to manufacture clathrate for Invamed based on
environmental and safety issues relating to the product.
2. Invamed's Negotiations with Chemagis
Ceres also brought Chemagis, an Israel-based manufacturer of raw
materials, to Invamed's attention. In the fall of 1996, Patel and
Yashvant Patel met with Chemagis
to discuss the possibility of Chemagis's
manufacturing clathrate for Invamed and entered into a Non-Disclosure
Agreement with Ceres and Chemagis regarding their warfarin sodium
discussions. Patel provided Chemagis with a flowchart of the process
In or around November 1996, Chemagis offered to enter into an agreement
with Invamed for the supply of clathrate. Chemagis offered to manufacture
clathrate for Invamed if Invamed would pay for certain costs associated
with setting up a separate manufacturing facility, which Chemagis
estimated would take approximately eight months, and bear some of the
expenses involved in obtaining a DMF approval. Invamed rejected this
proposal because it did not want to pay for the up-front costs and because
it was concerned that Chemagis's time-frame to set up the manufacturing
process was too long. Invamed had no further communication with Chemagis
regarding warfarin sodium.
D. Banyan Begins Manufacturing Clathrate
In March 1997, Kasireddy went to India to train Banyan personnel in the
process he had developed for synthesizing clathrate. By the end of May
1997, Kasireddy had produced acceptable pilot-plant scale batches in the
On September 24, 1997, when Invamed knew its ANDA approval was
imminent, Invamed ordered 29.5 kilograms of clathrate from Banyan at
$4,000 per kg. Invamed planned to supplement its ANDA with Banyan's
clathrate. The next day, the idea to present a "hardship case" to the FDA
for expedited approval was raised in a meeting with Apothecon.
The FDA inspected Banyan's plant in connection with the manufacture of
clathrate in September 1998.
E. Invamed Enters A Supply Agreement With Shanghai Shenxing
In July or August 1996, Invamed had requested that ChemWerth, a
pharmaceutical manufacturers' representative and consultant, develop an
FDA-approved source of clathrate for Invamed. ChemWerth advised Invamed
that a Chinese manufacturer known as Shanghai Shenxing (also known as
Shanghai #16) ("Shanghai") was capable of producing clathrate that
complied with USP, and offered Invamed an exclusive supply arrangement.
On December 5, 1996, ChemWerth received its first sample of USP clathrate
On April 8, 1997, Invamed received from ChemWerth samples of Shanghai
clathrate, that were tested and found to be of very good quality.
ChemWerth also sent a written proposal to Invamed for a three-year supply
of clathrate from Shanghai. ChemWerth sent a letter to Invamed confirming
Invamed's verbal commitment to use Shanghai as a source for clathrate on
May 1, 1997. However, later in 1997, Patel told ChemWerth to put its
development of the Shanghai source "on hold" when Banyan began producing
VII. Invamed's ANDA Is Approved And It Submits A Purchase Order To
Brantford For 750 kg of Clathrate
A. Invamed Submits a Purchase Order To Brantford
On September 30, 1997, Invamed received approval from the FDA for its
warfarin sodium ANDA. The next day, October 1, 1997, Invamed submitted a
$1,375,000 purchase order to ACIC Fine Chemicals for 750 kilograms of
clathrate in three shipments of 250 kilograms each, at
a price of $2,500
per kilogram.*fn12 The purchase order requested that the first shipment
be delivered "as soon as possible (rush order)" and that the second and
third shipments be delivered on January 1, 1998 and April 1, 1998,
Invamed's purchase order was accompanied by a cover letter to
Getrajdman in which Invamed informed Getrajdman that it had received FDA
approval to manufacture and distribute warfarin sodium tablets. The letter
requested that ACIC Fine Chemicals, Inc. supply Invamed with clathrate
pursuant to the purchase order enclosed and made reference to an
"agreement" for the supply of clathrate.
No one at Invamed advised Getrajdman in advance of the purchase order.
Prior to submission of the purchase order, Invamed made no inquiries
regarding Brantford's availability or capacity to manufacture clathrate,
its campaign schedule,*fn13 or its price. Invamed also did not keep ACIC
informed of Invamed's anticipated launch date, commercial requirements or
delivery forecasts. Before it submitted its purchase order, Invamed did
not provide ACIC with a projection of its commercial or launch
quantities, and did not discuss with Brantford the price, quantity,
annual requirements, payment terms, delivery schedule, packaging or
labeling requirements, or in any other way determine whether the terms
were acceptable to Brantford.
There were no discussions at any time between Invamed and ACIC
regarding a guarantee by Invamed to purchase clathrate from ACIC or
Brantford. Patel never asked Getrajdman or Calenti about the possibility
of entering a written supply contract, and Invamed never sought or
discussed an exclusive with ACIC or Brantford.
B. Brantford Rejects Invamed's Purchase Order
In early October 1997, James Berhalter, Brantford's new director of
finance and administration ("Berhalter") received the order. Plaintiffs
claim that upon receipt of the letter ACIC/Brantford immediately advised
Barr that Invamed was seeking to purchase clathrate.
On October 16, 1997, Patel sent letters to Calenti and Berhalter
threatening legal action against ACIC Fine Chemicals, Inc. and Brantford
if Invamed did not receive clathrate from ACIC by October 20, 1997.
Berhalter was wary of dealing with Invamed because of Brantford's earlier
problems with Invamed. After conferring with the company's president, Dr.
Murthy, Berhalter decided to reject Invamed's purchase order and sent a
letter to Invamed to that effect on October 20, 1997. ACIC/Brantford
thereafter refused to accept Invamed's orders, and plaintiffs learned for
the first time that ACIC/Brantford would not supply clathrate
to Invamed as a result of its agreement with Barr.
Plaintiffs claim that ACIC/Brantford had the capacity to manufacture
clathrate for plaintiffs and would have filled plaintiffs' order if not
for its agreement with Barr. ACIC/Brantford had planned the production of
1100 kilograms of clathrate in the fall of 1997, even though Barr had
only requested 900 kilograms. In fact, it was unable to produce 1100
kilograms because it did not obtain timely delivery of raw material.
VIII. Invamed Obtains Expedited FDA Approval To Include Banyan And
Apothecon Launches Its Product
Upon learning that they would not obtain clathrate from
ACIC/Brantford, plaintiffs determined that the fastest way to get to
market was to assist Banyan in developing a process for manufacturing
A. Invamed Supplements Its ANDA with Banyan's Clathrate
On May 2, 1998, Banyan submitted its DMF, compiled with Invamed's
assistance, to the FDA. On May 13, 1998, Banyan sent the FDA a DMF
reference letter for Invamed.
Three days later, on May 16, 1998, Invamed submitted a supplement to
its ANDA seeking approval to manufacture warfarin sodium tablets using
Banyan clathrate. Invamed sought expedited approval of this supplement.
Invamed's supplement to its ANDA to add Banyan as a supplier was approved
on October 8, 1998, and Apothecon began marketing warfarin sodium tablets
on October 21, 1998. Plaintiffs claim that its entry caused the price of
generic warfarin sodium to decline substantially.
At the time, Barr had been selling its product for sixteen months.
Plaintiffs claim that, as a result, Barr had the "first mover's"
advantage, and that customers were unwilling to switch to plaintiffs'
product even though its price was lower than Barr's.
B. Invamed Supplements with Shanghai's Clathrate
On October 8, 1997 Invamed submitted a purchase order to ChemWerth for
thirty kilograms of Shanghai's clathrate. Prior to submission of the
purchase order, Patel and Dave discussed price, quantity and delivery date
particulars with ChemWerth representatives. Invamed used the clathrate
obtained from Shanghai to make several trial batches of dosage form
warfarin sodium. This material met Invamed's specifications.
Invamed ordered an additional fourteen kilograms of Shanghai's
clathrate from ChemWerth on March 13, 1998 and an additional sixteen
kilograms on April 13, 1998. ChemWerth submitted a DMF reference letter
for Invamed to the FDA on May 29, 1998. On July 14, 1999, Invamed filed a
supplement to its ANDA to add Shanghai's clathrate.
IX. The Warfarin Sodium market
A. Plaintiffs Recognize That Generic Warfarin Sodium Competes With
Apothecon's marketing, training, and business documents state that (1)
"This product . . . will compete with the innovator product, DuPont's
Coumadino®; (2) the "competition" is "Coumadin®" and "Barr's
warfarin"; (3) the "introduction of Barr's warfarin and [Apothecon's]
warfarin sodium has placed Coumadin® in a defensive position for the
first time"; (4) Apothecon's two "competitors" are DuPont and Barr; (5)
the "competition" for Apothecon's generic warfarin sodium is
"Barr's warfarin and Coumadin®"; (6) Apothecon's generic warfarin
sodium product is "NO DIFFERENT THAN [THE] INNOVATOR PRODUCT!!!"
Sales representative training materials issued by Apothecon contain
competitive analyses of Coumadin® and also specifically addressed
strategies and selling points regarding the substitution of Apothecon's
warfarin sodium product for Coumadin®.
For the following facts, plaintiffs state that "[i]n light of the
material facts discussed [in Plaintiffs' affirmative statement, there
exists a genuine issue to be tried as to whether Coumadin® competes
in the same market as generic warfarin sodium." As discussed above, this
Court will accept the facts below despite this response because the
plaintiffs failed to point to specific material facts in its affirmative
statement to support the existence of a triable issue of material fact.
Apothecon presented its generic product as "a reliable, predictable,
lower-cost bioequivalent alternative to Coumadin®," and highlighted
its AB-rated therapeutic equivalence to the brand and its adoption of
DuPont's content-uniformity standards.
Apothecon and Invamed personnel admit that their warfarin sodium
competes against Coumadin® and Barr's warfarin sodium. Patel agreed
that with respect to warfarin sodium, "the other competitors in the
marketplace are Barr and DuPont."
In setting prices for its warfarin sodium, Apothecon considered and
compared its own prices with that of Coumadin®. For example, in a
memorandum from March 1999, Joseph Grotzinger stated: "Apothecon recently
learned that both of our competitors (brand and generic) have raised
their wholesale list prices. This action has resulted in a competitive
disadvantage to Apothecon . . . . It is recommended that the attached
list prices be established for Apothecon's Warfarin Sodium Tablets."
Apothecon actively attempted to switch customers using Coumadin® to
the Apothecon product. Apothecon had market share programs providing
financial incentives to customers in order to increase the amount of
plaintiffs' product dispensed as a percentage of "all warfarin sodium
In analyzing their potential and actual market share, Apothecon
routinely included plaintiffs' warfarin sodium, Barr's warfarin sodium,
and Coumadin® in one market. Upon the launch of plaintiffs' product,
for example, Apothecon analyzed total warfarin sodium sales and market
share, defining the total market to include both Coumadin® and Barr.
In February 1999, Apothecon measured its share of new patient starts
against both Barr and Coumadin®. In October 1999, Apothecon examined
its share of new and total prescriptions for warfarin sodium —
including Coumadin® and Barr in both categories of the market.
Apothecon's sales of generic warfarin sodium, as well as its market
share, come at the expense of Coumadin®, the branded version of
warfarin sodium. Generic warfarin sodium takes market share from
Coumadin® as a result of the generic's lower price and conversion
incentives offered to encourage switching.
This is the end of one section that plaintiffs dispute because they
claim that there exists a genuine issue to be tried as to whether
Coumadin® competes in the same market as generic warfarin sodium. As
discussed, supra, plaintiffs have failed to prove that such issue of
material fact exists.
B. Relative Growth of Brand And Generic Warfarin Sodium Sales
Total warfarin sodium sales grew from 3.41 billion milligrams in 1998
to 3.53 billion
milligrams in 2000, an increase of 0.13 billion
milligrams. From 1998-2000, annual sales of generic warfarin sodium
increased by approximately 0.57 billion milligrams, while sales of
Coumadin® decreased by approximately 0.45 billion milligrams. The
growth in generic warfarin sodium sales thus exceeded the growth in total
warfarin sodium sales. Consequently, at least 77 percent of the increase
in generic warfarin sodium sales realized between 1998 and 2000 came
directly from former Coumadin® sales.
C. DuPont Recognizes That Coumadin® Competes With Generic Warfarin
Prior to the launch of either the Barr or Apothecon generic warfarin
sodium products, DuPont conducted research and concluded that the
"Availability of a Generic Sodium Warfarin Will Impact Coumadin®
Sales." In addition, DuPont set forth strategies and selling points to be
implemented immediately after generic availability. DuPont responded to
Barr's entry by implementing incentive and rebate programs to encourage
numerous wholesalers and retailers to purchase Coumadin® instead of
Barr's generic warfarin sodium. DuPont considered launching, and could
have launched at the same time as a generic competitor, its own generic
warfarin sodium product. DuPont priced Coumadin® as a generic for
On March 22, 1995, DuPont requested that the USP tighten its content
uniformity specifications for warfarin sodium tablets so that generic
manufacturers would have to utilize the stricter content uniformity
manufacturing standards for warfarin sodium utilized by DuPont. In March
and July 1997, the USP denied DuPont's request. DuPont also petitioned
state legislatures and formulary boards to place restrictions on the
substitutability of NTI drugs such as warfarin sodium.
On September 18, 1996, DuPont filed a Petition For Stay of Action with
the FDA asking that approval of any pending applications for generic
warfarin sodium be stayed until such time as the FDA adopted new, more
restrictive bioequivalence approval standards for generic warfarin
sodium. In its Petition, DuPont also noted that its content uniformity
specifications for warfarin sodium were stricter than those set forth by
the USP and proposed that the FDA adopt DuPont's stricter standards.
Concluding that the standards DuPont proposed "were neither necessary nor
appropriate," on March 25, 1997, the FDA rejected DuPont's request.
On July 28, 1997, the date on which Barr came to market with its
generic warfarin sodium product, DuPont issued a press release warning
that "if warfarin sodium products are interchanged, patients should
receive additional blood tests to ensure the amount of drug in their
blood stream is appropriate for their condition." The press release also
stated that Barr "focuse[d] on producing a `cheaper'" product while
DuPont "focuses on patient safety and education and the future health of
. . . patients." DuPont repeated its claims in nationwide communications
to physicians and pharmacists, to the FDA and to industry regulators.
In an August 26, 1997 letter to DuPont, the FDA called DuPont's
Coumadin® promotional activities "false and misleading."
Specifically, the FDA criticized DuPont's suggestion that generic warfarin
sodium was not therapeutically equivalent to Coumadin®. The FDA
stressed that "[a]ll FDA approved dosage forms of generic drugs
classified as therapeutically equivalent and coded AB can be substituted
for the reference product with the full expectation that the substituted
produce the same clinical effect and safety profile."
D. Barr Competes Against DuPont
Barr sponsored two clinical studies that separately established the
interchangeability of Barr's product for DuPont's Coumadin® and
disseminated the studies' findings to physicians, pharmacists and other
health care providers.*fn14 Barr also disseminated the positive results
of a third clinical study on product interchange (between Barr's product
and Coumadin®) that had been conducted by an independent
Barr extended numerous discounts and incentives to customers in order
to encourage pharmacies to switch Coumadin® sales to generic sales of
warfarin sodium tablets.
In determining its own price for warfarin sodium, Barr considered and
analyzed the price of Coumadin®. Barr even adjusted the price of its
generic warfarin sodium prior to launch in response to a Coumadin®
price increase so that Barr's price could be sustained at 70% of the price
X. Market Share Data
As of March 2001, Barr accounted for close to 80 percent of the generic
warfarin sodium sales.
Its representation in the total sales of generic and branded warfarin
sodium is consistently lower. At the end of 1997, Barr's share was 8%. It
grew to 15% at the end of 1998 and 18% at the end of 1999. At the end of
2000, Barr's share was 24%, dropping to 20% in March 2000. By contrast,
at the end of 2000, Apothecon's share of the total sales of generic and
branded warfarin sodium was 5% and Taro's share was 3%.
This Court has jurisdiction pursuant to 28 U.S.C. § 1337 in that it
involves a federal question under the antitrust laws of the United
States, particularly the Sherman Antitrust Act, 15 U.S.C. § 1 et
seq. and sections 4, 7 and 16 of the Clayton Act, 15 U.S.C. § 15,
18, & 26 and pursuant to this Court's supplemental jurisdiction under
28 U.S.C. § 1367 (a) and Rule 18(a) of the Federal Rules of Civil
Standards for Summary Judgment
Rule 56(e) of the Federal Rules of Civil Procedure provides that a
court shall grant a motion for summary judgment "if the pleadings,
depositions, answers to interrogatories, and admissions on file, together
with affidavits . . . show that there is no genuine issue as to material
fact and that the moving party is entitled to a judgment as a matter of
law." Fed. R. Civ. P. 56(e); Celotex Corp. v. Catrett, 477 U.S. 317
(1986); Silver v. City Univ., 947 F.2d 1021, 1022 (2d Cir. 1991). "The
party seeking summary judgment bears the burden of establishing that no
genuine issue of material fact exists and that the undisputed facts
establish her right to judgment as a matter of law." Rodriguez v. City of
New York, 72 F.3d 1051, 1060-61 (2d Cir. 1995). In determining whether a
genuine issue of material fact exists, a court must resolve all
ambiguities and draw all reasonable inferences against the moving party.
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, S87
(1986); Gibbs-Alfano v. Burton, 281 F.3d 12, 18 (2d Cir. 2002).
Plaintiffs contend that summary judgment is inappropriate in complex
antitrust litigation, relying on Poller v. Columbia Broad. Corp. v. Cox
Broad. Sys., Inc., 368 U.S. 464, 473 (1962) (holding that summary
judgment was often inappropriate in antitrust cases because of the
emphasis on motive, intent, hostile witnesses, and the fact that the
proof is largely in the hands of the alleged conspirators). Following
Matsushita, 475 U.S. at 578, Anderson v. Liberty Lobby, 477 U.S. 242
(1986), and Celotex, 477 U.S. at 323-24, however, the federal courts have
confirmed that summary judgment is a useful tool to "isolate and dispose
of factually unsupported claims" in antitrust cases. Virgin Atlantic
Airways, Ltd. v. British Airways PLC, 257 F.3d 256, 262 (2d Cir. 2001)
(recognizing the difficulty of granting summary relief in antitrust cases
but upholding district court's grant of summary judgment); see also H.L.
Hayden Co. v. Siemens Med. Sys., Inc., 879 F.2d 1005, 1011-12 (2d Cir.
1989) ("Both the Supreme Court and [the Second Circuit] have encouraged
the use of summary judgment in complex cases to avoid unnecessary
trials."). As discussed below, the antitrust claims in this case may be
resolved without regard to issues of intent or motive and without
reliance on facts in the hands of defendants or hostile witnesses.
I. Monopolization And Attempted Monopolization
Plaintiffs' monopolization claims relate both to the warfarin. sodium
product and to the clathrate used to make such products. Counts 1 and 2
(monopolization and attempted monopolization) accuse Barr and
ACIC/Brantford of violating § 2 of the Sherman Act by using their
"monopoly power" in the clathrate market to foreclose competition in the
"market(s) for generic warfarin sodium and/or branded and generic
warfarin sodium . . . ."
The offense of monopolization under § 2 of the Sherman Act has two
elements: "(1) possession of monopoly power in the relevant market and
(2) the willful acquisition or maintenance of that power as distinguished
from growth or development as a consequence of a superior product,
business acumen or historic accident." United States v. Grinnell Corp.,
384 U.S. 563, 570-71 (1966). The offense of attempted monopolization
requires plaintiffs to prove "(1) that the defendant has engaged in
predatory or anti-competitive conduct with (2) a specific intent to
monopolize and (3) a dangerous probability of achieving monopoly power."
Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 456 (1993). In order to
determine whether there is a dangerous probability of monopolization,
courts consider the relevant market and the defendant's ability to lessen
or destroy competition in the market. Id.
A. Warfarin Sodium
1. The Relevant market
The first step in assessing whether a defendant possesses monopoly
power is to define correctly the relevant market in which that power is
allegedly being exercised. Walker Process Equip., Inc. v. Food Mach. &
Chem. Corp., 382 U.S. 172, 177 (1965) ("[W]ithout a definition of that
market, there is no way to measure [a defendant's] ability to lessen or
destroy competition."); Berkey Photo, Inc. v. Eastman Kodak Co.,
603 F.2d 263, 268 (2d Cir. 1979) ("[T]he first step in a court's analysis
must be a definition of the relevant market.") (citing United States v.
E.I. du Pont de Nemours & Co., 251 U.S. 377, 391-93 (1956)).
Plaintiffs' § 2 claims turn on whether the relevant market is
comprised solely of generic warfarin sodium or whether it includes the
branded warfarin sodium (Coumadin®)
The relevant market for purposes of antitrust litigation is the "area
of effective competition" within which the defendant operates. Tampa
Elec. Co. v. Nashville Coal Co., 36S U.S. 320, 327-28 (1961). As the
Court explained in E.I. du Pont Nemours:
The market which one must study to determine when a
producer has monopoly power will vary with the part of
commerce under consideration. The tests are constant.
The market is composed of products that have reasonable
incerchangeability for the purposes for which they are
produced — price, use and qualities considered.
351 U.S. at 404.
Products need not be identical to be part of the same market. Id. at
394 ("[W]here there are market alternatives that buyers may readily use
for their purposes, illegal monopoly does not exist merely because the
product said to be monopolized differs from others."). Two products or
services are reasonably interchangeable where there is sufficient
cross-elasticity of demand. Brown Shoe Co. v. United States, 370 U.S. 294
(1962) ("The outer boundaries of a product market are determined by the
reasonable interchangeability of use or the cross-elasticity of demand
between the product itself and substitutes for it.")
"Cross-elasticity of demand exists if consumers would respond to a
slight increase in the price of one product by switching to another
product." AD/SAT, Div. of Skylight, Inc. v. Associated Press, 181 F.3d 216,
227 (2d Cir. 1999); Ally Gargano/MCA Adver., Ltd. v. Cooke Props., Inc.,
No. 87 Civ. 7311, 1989 WL 126066, at *21 (S.D.N.Y. Oct. 13, 1989).
Within the relevant markets, there may also exist "well-defined
submarkets*fn15 . . . which, in themselves, constitute product markets
for antitrust purposes." Brown Shoe, 370 U.S. at 325. A submarket may be
determined by examining such practical indicia as (1) industry or public
recognition of the submarket as a separate economic entity, (2) the
product's peculiar characteristics and uses, (13) the unique production
facilities, (4) distinct customers, (5) distinct prices, (6) sensitivity
to price changes, and (7) specialized vendors. Id.
Plaintiffs argue that generic warfarin sodium products are a
well-defined submarket within the larger warfarin sodium market. The
issue of generic and branded pharmaceuticals has been discussed by other
courts in antitrust cases.
For instance, the District Court for the Eastern District of Michigan
addressed the issue of competition between branded drugs and their
Cardizem CD and its AB-rated generics are identical in
all material respects. AB-rated generics are freely
and interchangeable with their brand name
counterparts. Industry experts describe them as perfect
substitutes for the brand name drug. Defendants'
hypotheticals (e.g., Seiko v. Rolex watches) are
unavailing as they fail to recognize that the
pharmaceutical market is fundamentally different from the
market for other products. In the pharmaceutical
industry, there is a government-assured complete
interchangeability of drug products. This is why
pharmacies are allowed to substitute the lower-priced
gereric versions of brand name drug products that have
been demonstrated to the FDA to be therapeutically
equivalent. Market behavior, which shows generics
capturing a significant percentage of the branded drug
market soon after they are introduced, likewise supports
the conclusion that the brand and generic drugs are
essentially fungible and interchangeable. Cardizem CD
and its generic bioequivalents are two interchangeable
versions (one less costly than the other) of the same
drug product. Antitrust law requires only that the two
products at issue be close substitutes for each other.
Cardizem CD and its generic bioequivalents meet this
In re Cardizem CD Antitrust Litig., 200 F.R.D. 297, 310-11 (E.D. Mich.
2001). See also Barr Labs. Inc. v. Abbott Labs.,