May 22, 2015
PEOPLE OF THE STATE OF NEW YORK, by and through ERIC T. SCHNEIDERMAN, Attorney General of the State of New York, Plaintiff-Appellee,
ACTAVIS PLC, FOREST LABORATORIES, LLC, Defendants-Appellants
Argued April 13, 2015.
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
Appeal from the United States District Court for the Southern District of New York. No. 14 Civ. 7473 Robert W. Sweet, Judge.
The State of New York brought this antitrust action against Defendant-Appellant Actavis plc and its wholly-owned subsidiary Forest Laboratories, LLC (collectively, " Defendants" ). New York alleges that as Namenda IR, Defendants' twice-daily drug designed to treat moderate-to-severe Alzheimer's disease, neared the end of its patent exclusivity period in July 2015, Defendants introduced a new once-daily version called Namenda XR. The patents on XR ensure exclusivity, and thus prohibit generic versions of XR from entering the market, until 2029. Faced with the prospect of competition from generic IR, Defendants decided to withdraw virtually all Namenda IR from the market in order to force Alzheimer's patients who depend on Namenda IR to switch to XR before generic IR becomes available. Because generic competition depends heavily on state drug substitution laws that allow pharmacists to substitute generic IR for Namenda IR--but not for XR, New York alleges that Defendants' forced-switch scheme would likely impede generic competition for IR. Moreover, the substantial transaction costs of switching from once-daily XR back to twice-daily IR therapy would likely further ensure that Defendants would maintain their effective monopoly in the relevant drug market beyond the time granted by their IR patents.
The United States District Court for the Southern District of New York (Robert W. Sweet, Judge) issued a preliminary injunction barring Defendants from restricting access to Namenda IR prior to generic IR entry. We conclude that the district court did not abuse its discretion by granting New York's motion for a preliminary injunction because New York has demonstrated a substantial likelihood of success on the merits of its claim under the Sherman Act, 15 U.S.C. § 2, and has made a strong showing of irreparable harm to competition and consumers in the absence of a preliminary injunction. Accordingly, we affirm the district court's order issuing a preliminary injunction.
LISA S. BLATT, Arnold & Porter LLP, Washington, D.C. (Sarah M. Harris, Robert A. DeRise, Arnold & Porter, LLP, Washington, D.C.; George T. Conway III, Wachtell, Lipton, Rosen & Katz, New York, N.Y.; J. Mark Gidley, Peter J. Carney, Claire A. DeLelle, White & Case LLP, Washington, D.C.; Jack E. Pace III, Martin M. Toto, White & Case LLP, New York, N.Y., on the brief), for Defendants-Appellants.
ANISHA S. DASGUPTA, (Barbara D. Underwood, Andrew Kent, Eric J. Stock, Elinor R. Hoffmann, on the brief), for Eric T. Schneiderman, Attorney General of the State of New York, New York, N.Y., for Plaintiff-Appellee.
Before: WALKER, RAGGI, and DRONEY, Circuit Judges.
John M. Walker, Jr., Circuit Judge :
The State of New York brought this antitrust action against Defendant-Appellant Actavis plc and its wholly-owned subsidiary Forest Laboratories, LLC (collectively, " Defendants" ). New York alleges that as Namenda IR, Defendants' twice-daily drug designed to treat moderate-to-severe Alzheimer's disease, neared the end of its patent exclusivity period in July 2015, Defendants introduced a new once-daily version called Namenda XR. The patents on XR ensure exclusivity, and thus prohibit generic versions of XR from entering the market, until 2029. Faced with the prospect of competition from generic IR, Defendants decided to withdraw virtually all Namenda IR from the market in order to force Alzheimer's patients who depend on Namenda IR to switch to XR before generic IR becomes available. Because generic competition depends heavily
on state drug substitution laws that allow pharmacists to substitute generic IR for Namenda IR--but not for XR, New York alleges that Defendants' forced-switch scheme would likely impede generic competition for IR. Moreover, the substantial transaction costs of switching from once-daily XR back to twice-daily IR therapy would likely further ensure that Defendants would maintain their effective monopoly in the relevant drug market beyond the time granted by their IR patents.
The United States District Court for the Southern District of New York (Robert W. Sweet, Judge ) issued a preliminary injunction barring Defendants from restricting access to Namenda IR prior to generic IR entry. We conclude that the district court did not abuse its discretion by granting New York's motion for a preliminary injunction because New York has demonstrated a substantial likelihood of success on the merits of its claim under the Sherman Act, 15 U.S.C. § 2, and has made a strong showing of irreparable harm to competition and consumers in the absence of a preliminary injunction. Accordingly, we affirm the district court's order issuing a preliminary injunction.
This case raises a novel question of antitrust law: under what circumstances does conduct by a monopolist to perpetuate patent exclusivity through successive products, commonly known as " product hopping,"  violate the Sherman Act, 15 U.S.C. § § 1 and 2. This question is an issue of first impression in the circuit courts. Determining whether Defendants' actions are unlawfully anticompetitive requires some understanding of the idiosyncratic market characteristics of the complex and highly-regulated pharmaceutical industry, as well as some peculiar characteristics of treatment for Alzheimer's disease. We begin by describing several key features of the pharmaceutical industry.
I. FDA Requirements, the Hatch-Waxman Act, and State Drug Substitution Laws
In compliance with the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § § 301-399f, when a pharmaceutical manufacturer seeks to bring a new drug to market, it must submit a New Drug Application (" NDA" ) for approval by the U.S. Food and Drug Administration (" FDA" ). 21 U.S.C. § 355. An NDA must contain scientific evidence that demonstrates the drug is safe and effective, which inevitably requires " a long, comprehensive, and costly testing process." F.T.C. v. Actavis, Inc., 133 S.Ct. 2223, 2228, 186 L.Ed.2d 343 (2013). NDA-approved drugs are generally referred to as brand-name or brand drugs. An approved brand drug enjoys a period of patent exclusivity in the market at the end of which one or more generic drugs, exhibiting the same characteristics as the brand drug, may enter the market at a lower price to compete with the brand drug.
In 1984, Congress amended the Federal Food, Drug, and Cosmetic Act by enacting the Drug Price Competition and Patent Term Restoration Act (the " Hatch-Waxman Act" or " Hatch-Waxman" ), Pub. L.
No. 98-417, 98 Stat. 1585. Hatch-Waxman was designed to serve the dual purposes of both encouraging generic drug competition in order to lower drug prices and incentivizing brand drug manufacturers to innovate through patent extensions. To incentivize innovation, Hatch-Waxman grants brand manufacturers opportunities to extend their exclusivity period beyond the standard 20-year patent term: it allows a brand manufacturer to seek a patent extension of up to five years to compensate for time that lapsed during the FDA regulatory process, 35 U.S.C. § 156, and an additional six-month period of " pediatric exclusivity" if the manufacturer conducts certain pediatric studies, 21 U.S.C. § 355a. Defendants applied for, and received, both extensions for Namenda IR.
Hatch-Waxman also promotes competition from generic substitute drugs. It permits a manufacturer that seeks to market a generic version of an NDA-approved drug to file what is known as an Abbreviated New Drug Application (" ANDA" ). See 21 U.S.C. § 355(j); see also In re Adderall XR Antitrust Litig., 754 F.3d 128, 130 (2d Cir. 2014). An ANDA allows a generic manufacturer to rely on the studies submitted in connection with the already-approved brand drug's NDA to show that the generic is safe and effective, provided that the ANDA certifies that the generic drug has the same active ingredients as and is " biologically equivalent" or " bioequivalent" to the already-approved drug. 21 U.S.C. § 355(j)(2)(A)(iv); see also Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, 132 S.Ct. 1670, 1676, 182 L.Ed.2d 678 (2012) (citing 21 U.S.C. § § 355(j)(2)(A)(ii), (iv)).
A generic drug is bioequivalent to a brand drug if " the rate and extent of absorption" of the active ingredient is the same as that of the brand drug. 21 U.S.C. § 355(j)(8)(B)(i). In other words, two drugs are bioequivalent if they deliver the same amount of the same active ingredient content into a patient's blood stream over the same amount of time. By enabling generic manufacturers to " piggy-back" on a brand drug's scientific studies, Hatch-Waxman " speeds the introduction of low-cost generic drugs to market, thereby furthering drug competition." Actavis, 133 S.Ct. at 2228 (internal quotation marks, alteration, and citation omitted); see also H.R. Rep. No. 98-857, pt. 2, at 9 (1984) (stating the Hatch-Waxman Act's " policy objective" was to " get safe and effective generic substitutes on the market as quickly as possible after the expiration of the patent" ).
By the time Congress enacted the Hatch-Waxman Act, many states had enacted drug substitution laws to further encourage generic competition. Today, all 50 states and the District of Columbia have drug substitution laws. Although
the specific terms of these laws vary by state, drug substitution laws either permit or require pharmacists to dispense a therapeutically equivalent, lower-cost generic drug in place of a brand drug absent express direction from the prescribing physician that the prescription must be dispensed as written. For example, New York's drug substitution law requires a pharmacist to " substitute a less expensive drug product containing the same active ingredients, dosage form and strength as the drug product prescribed" provided certain conditions are met. N.Y. Educ. Law § 6816-a(1).
All state drug substitution laws prohibit pharmacists from substituting generic drugs that are not therapeutically equivalent to the brand drug, but state laws do not all define therapeutic equivalence in the same way. Thirty states, including New York and the District of Columbia, adopt the FDA's definition of therapeutically equivalent and only allow generic substitution if the FDA designates the generic as " AB-rated" in a publication commonly referred to as the " Orange Book."  N.Y. Education Law § 6816-a(1); N.Y. Public Health Law § 206(1)(o). To receive an AB-rating, a generic must not only be bioequivalent but pharmaceutically equivalent to the brand drug, meaning it has the same active ingredient, dosage form, strength, and route of administration as the brand drug. U.S. Dep't of Health & Human Servs., FDA, Approved Drug Products with Therapeutic Equivalence Evaluations vii-x (35th ed. 2015), available at http://1.usa.gov/1PzbMxF (the " Orange Book" ). The AB-rating requirement is designed to provide guidance regarding which drugs are therapeutically equivalent, but, as has been observed, it also provides an opportunity for brand manufacturers to " game" the system. S.A. 28.
Hatch-Waxman and state substitution laws were enacted, in part, because the pharmaceutical market is not a well-functioning market. In a well-functioning market, a consumer selects and pays for a product after evaluating the price and quality of the product. In the prescription
drug market, however, the party who selects the drug (the doctor) does not fully bear its costs, which creates a price disconnect. Moreover, a patient can only obtain a prescription drug if the doctor writes a prescription for that particular drug. The doctor selects the drug, but the patient, or in most cases a third-party payor such as a public or private health insurer, pays for the drug. As a result, the doctor may not know or even care about the price and generally has no incentive to take the price into account. See American Antitrust Institute Amicus Brief in Support of Appellee (" AAI Br." ) at 6; see also Intellectual Property and Antitrust Professors Amicus Brief in Support of Appellee (" IP and Antitrust Prof. Br." ) at 12. As the Federal Trade Commission has explained:
The basic problem is that the forces of competition do not work well in a market where the consumer who pays does not choose, and the physician who chooses does not pay. Patients have little influence in determining which products they will buy and what prices they must pay for prescription.
Fed. Trade Comm'n Bureau of Consumer Prot., Drug Product Selection 2-3 (1979), available at http://bit.ly/1JqKd4G. (" FTC, Drug Product Selection" ). State substitution laws are designed to correct for this price disconnect by shifting drug selection, between brand drugs and their corresponding generics from doctors, to pharmacists and patients, who have greater financial incentives to make price comparisons. See AAI Br. at 8-9.
II. The Relevant Market
The relevant market, undisputed on appeal, is the memantine-drug market in the United States. Defendants manufacture Namenda, a memantine hydrochloride-based (" memantine" ) drug designed to treat moderate-to-severe Alzheimer's disease. Namenda is currently available in two formulations: a twice-daily immediate-release drug, Namenda IR, and a once-daily extended-release drug, Namenda XR. When Forest introduced Namenda IR tablets
in January 2004, Namenda IR was the first medication approved for individuals suffering from moderate-to-severe Alzheimer's disease. Namenda IR became one of Forest's best-selling drugs--generating approximately $1.5 billion in annual sales in 2012 and 2013. The FDA approved Namenda XR in June 2010, and Forest began marketing XR in 2013. The two drugs are the only memantine therapies in their class--N-Methyl D-Aspartate (" NMDA" ) receptor antagonists--currently on the market.
Namenda IR and Namenda XR have the same active ingredient and the same therapeutic effect. The relevant medical difference between the two is that IR, which is released immediately into the bloodstream, is taken twice a day while XR, which is released gradually, is taken once a day. All other Alzheimer's disease treatments are administered once a day.
The non-medical difference between IR and XR relates to their patent protection. Defendants' patents on Namenda IR prohibit any manufacturer from marketing a generic version of IR until July 11, 2015 (Namenda IR's " exclusivity period" ). The exclusivity period for Namenda XR does not expire until 2029. A brand drug's exclusivity period is significant because when that period ends and generic versions enter the market, the brand drug often loses more than 80 to 90% of the market within six months. This period following the end of patent exclusivity has been referred to in this litigation and throughout the industry as the " patent cliff."
III. Defendants' Introduction of Namenda XR and Withdrawal of Namenda IR
Namenda IR and Namenda XR currently occupy the entire memantine-drug market. However, five generic versions of IR have tentative FDA approval to enter the market on July 11, 2015, and seven others may enter the market as early as October 2015. Because Namenda XR has a different strength and daily dosage regimen--Namenda IR involves two immediate-release tablets of 10mg each and Namenda XR involves one 28mg extended-release capsule--the generic IR versions that are poised to enter the market will be therapeutically equivalent under FDA regulations to Namenda IR, but not to Namenda XR. Therefore, pharmacists are prohibited from substituting generic IR for Namenda XR under most, if not all, state drug substitution laws.
When Defendants brought Namenda XR to market in July 2013 (approximately three years after it was approved), they
adopted so-called " product extension" strategies to convert patients from Namenda IR to Namenda XR and, thus, to avoid the patent cliff. Initially, Defendants sold both Namenda IR and XR but stopped actively marketing IR. During that time, they spent substantial sums of money promoting XR to doctors, caregivers, patients, and pharmacists. They also sold XR at a discounted rate, making it considerably less expensive than Namenda IR tablets, and issued rebates to health plans to ensure that patients did not have to pay higher co-payments for XR than for IR. The parties have referred to Defendants' efforts to transition patients to XR while IR was still on the market as the " soft switch," and we will adopt that term.
In early 2014, Defendants decided on a more direct approach. They were concerned that they would be unable to convert a significant percentage of Alzheimer's patients dependent upon memantine therapy from IR to XR prior to the entry of generic IR. Defendants' internal projections estimated that only 30% of Namenda IR users would voluntarily switch prior to July 2015. On February 14, 2014, Defendants publicly announced that they would discontinue Namenda IR on August 15, 2014, notified the FDA of their plans to discontinue Namenda IR, and published letters on their websites urging caregivers and healthcare providers to " discuss switching to Namenda XR" with their patients. S.A. 51-52. Defendants also sought to convert Namenda IR's largest customer base, Medicare patients, to XR by sending a letter to the Centers for Medicare & Medicaid Services requesting that the agency remove IR from the formulary list, so that Medicare health plans would not cover it. Their planned discontinuance was delayed by a disruption in XR production, and in June 2014, Defendants announced that Namenda IR would be available until the fall of that year.
But before Defendants withdrew IR entirely, intervening events again prompted them to modify their plans. In September 2014, New York State filed a complaint alleging that Defendants' planned withdrawal of Namenda IR violated the antitrust laws. Defendants subsequently entered into an agreement with Foundation Care, a mail-order-only pharmacy, to provide for limited access to Namenda IR if medically required. Under the terms of the agreement, Foundation Care is authorized to dispense Namenda IR tablets only after receiving a form from a doctor stating that it is " medically necessary" for the patient to take Namenda IR. Defendants estimated internally that less than 3% of current Namenda IR users would be able to obtain IR through Foundation Care. S.A. 67. Although the agreement with Foundation Care makes IR available to a limited number of patients, Defendants' actions effectively withdrew Namenda IR from the market. The parties have referred to Defendants' efforts to withdraw Namenda IR from the market as the " hard switch" or " forced switch," terms we also adopt. The hard switch began on February 14, 2014 with the announcement of Defendants' intention to withdraw Namenda IR and was suspended in September 2014 when Defendants agreed to a " standstill" during the litigation proceedings described below. Because a manufacturer does not simply withdraw a drug at once, absent pressing safety concerns, announcing the imminent discontinuation of a drug is tantamount to withdrawal.
IV. Procedural History
In September 2014, New York State filed a complaint in the District Court for the Southern District of New York (Robert W. Sweet, Judge) alleging that Defendants were violating the Sherman Antitrust Act, 15 U.S.C. § § 1 and 2, as well as New York's Donnelly Act, N.Y. Gen. Bus. Law § 340 et seq., and seeking a permanent injunction and damages. New York also sought a preliminary injunction barring Defendants from restricting access to Namenda IR during the course of the litigation.
New York's theory of antitrust liability, in substance, is as follows. As Namenda IR neared the end of its exclusivity period, Defendants introduced Namenda XR and, before generic IR was available, withdrew Namenda IR in order to force patients to switch from IR to XR (for which generic IR will not be substitutable under most states' laws). In doing so, Defendants intended to thwart generic entry into and competition in the memantine-drug market in order to maintain their monopoly in that market.
The district court held a five-day hearing on the preliminary-injunction motion, during which it received testimony from 24 witnesses and reviewed over 1,400 exhibits. After considering that evidence, the district court made several key findings. (1) Withdrawing Namenda IR from the market prior to generic entry forces Alzheimer's patients dependent on memantine therapy to switch to Namenda XR because it is the only available alternative; (2) The generic versions of IR poised to enter the market in July and October of 2015 will not be AB-rated to XR because they have different strengths and dosages; (3) Pharmacists will not be permitted to substitute generic IR for Namenda XR under New York and many other states' substitution laws because generic IR is not therapeutically equivalent to Namenda XR; (4) If Defendants forced Alzheimer's patients to switch to Namenda XR prior to generic entry, those patients would be very unlikely to switch back to twice-daily IR therapy even after less-expensive generic IR becomes available, due to the high transaction costs associated with Alzheimer's patients first switching from one formulation of a drug to a new formulation and then back to the original formulation (" reverse commuting" ); (5) Preventing generic IR from competing under state drug substitution laws would likely thwart generic entry into and competition in the memantine-drug market; and (6) In withdrawing Namenda IR from the market, Defendants' explicit purpose was to impede generic competition and to avoid the patent cliff--which occurs at the end of a drug's exclusivity period when generics gain market share through state substitution laws.
Based on those findings, the district court granted New York's request for a preliminary injunction. The district court concluded that New York raised serious questions regarding the merits of its claims under Sections 1 and 2 of the Sherman Act and the Donnelly Act, demonstrated the potential for irreparable harm, and concluded that the balance of the equities favored an injunction. The injunction states:
1. During the Injunction Term . . . the Defendants shall continue to make Namenda IR (immediate-release) tablets available on the same terms and conditions applicable since July 21, 2013 . . .
2. Defendants shall inform healthcare providers, pharmacists, patients, caregivers, and health plans of this injunction . . . and the continued availability of Namenda IR . . .
3. The Defendants shall not impose a " medical necessity" requirement or form for the filling of prescriptions of Namenda IR during the Injunction Term.
S.A. 137-38. The injunction is effective from the date of issuance, December 15, 2014, until " thirty days after July 11, 2015 (the date when generic memantine will first be available) (the 'Injunction Term')." S.A. 138. Defendants timely appealed the grant of the preliminary injunction, and we granted expedited review.
We review a district court's grant of a preliminary injunction for abuse of discretion. Faiveley Transp. Malmo AB v. Wabtec Corp., 559 F.3d 110, 116 (2d Cir. 2009). A district court has abused its discretion if it based its ruling on an error of law or a clearly erroneous assessment of the evidence, or if its " decision . . . cannot be located within the range of permissible decisions." Id. (internal quotation marks omitted). We review legal conclusions, such as the appropriate standard for relief, de novo. See Somoza v. N.Y.C. Dep't of Educ., 538 F.3d 106, 112 (2d Cir. 2008).
On appeal, Defendants argue that (1) the district court applied the wrong legal standard for a preliminary injunction; (2) product hopping is not anticompetitive or exclusionary under § 2 of the Sherman Act; (3) Defendants' patent rights foreclose antitrust liability; (4) the agreement with Foundation Care does not violate § 1 of the Sherman Act; (5) New York failed to show irreparable harm; and (6) the injunction is vague and overbroad.
I. The Applicable Preliminary Injunction Standard
Defendants argue that the district court erred by applying the ordinary standard for a preliminary injunction, rather than a heightened standard, because the injunction provides New York with " substantially all the relief sought." Defendants' Brief (" Defs. Br." ) at 25. We agree that a heightened standard applies.
Section 16 of the Clayton Act entitles a party to obtain injunctive relief " against threatened loss or damage by a violation of the antitrust laws." California v. Am. Stores Co., 495 U.S. 271, 280, 110 S.Ct. 1853, 109 L.Ed.2d 240 (1990) (quoting 15 U.S.C. § 26). A party seeking a preliminary injunction must ordinarily establish (1) " irreparable harm" ; (2) " either (a) a likelihood of success on the merits, or (b) sufficiently serious questions going to the merits of its claims to make them fair ground for litigation, plus a balance of the hardships tipping decidedly in favor of the moving party" ; and (3) " that a preliminary injunction is in the public interest." Oneida Nation of New York v. Cuomo, 645 F.3d 154, 164 (2d Cir. 2011) (internal quotation marks omitted).
We have held the movant to a heightened standard where: (i) an injunction is " mandatory," or (ii) the injunction " will provide the movant with substantially all the relief sought and that relief cannot be undone even if the defendant prevails at a trial on the merits." Tom Doherty Assocs., Inc. v. Saban Entm't, Inc., 60 F.3d 27, 33-34 (2d Cir. 1995). When either condition is met, the movant must show a " clear" or " substantial" likelihood of success on the merits, Beal v. Stern, 184 F.3d 117, 123 (2d Cir. 1999), and make a " strong showing" of irreparable harm, Doe v. N.Y. Univ., 666 F.2d 761, 773 (2d Cir. 1981), in addition to showing that the preliminary injunction is in the public interest.
The injunction issued by the district court in this case remains in place until 30 days after generics enter the market, and therefore " grant[s] plaintiffs substantially all the relief they ultimately sought, in effect, as if the injunction had
been permanent." Eng v. Smith, 849 F.2d 80, 82 (2d Cir. 1988). The district court found that Defendants' plan is contingent on switching patients to Namenda XR before generic IR enters the market. S.A. 20. The injunction, however, bars Defendants from withdrawing IR, and thus forcing a switch, " until thirty days after July 11, 2015 (the date when generic memantine will first be available)." S.A. 138. Because the injunction prevents Defendants' hard switch from succeeding, the injunction " render[s] a trial on the merits largely or partly meaningless." Tom Doherty Assocs., 60 F.3d at 35. Accordingly, the heightened standard applies.
That conclusion, however, is of little import in this case because New York has satisfied the heightened standard. The district court did not abuse its discretion in granting a preliminary injunction because New York has demonstrated a substantial likelihood of success on the merits of its monopolization and attempted monopolization claims under § 2 of the Sherman Act, see Beal, 184 F.3d at 123, and has made a strong showing that Defendants' conduct would cause irreparable harm to competition in the memantine-drug market and to consumers, Doe, 666 F.2d at 773. The district court's factual findings, which were based, for the most part, on Defendants' own internal documents, cannot be said to be clearly erroneous, and its injunction prohibiting Defendants from withdrawing Namenda IR prior to generic entry was not an abuse of discretion as being outside the range of permissible decisions.
II. Monopolization and Attempted Monopolization Under § 2 of the Sherman Act
Section 2 of the Sherman Act makes it an offense to " monopolize, or attempt to monopolize . . . any part of the trade or commerce among the several States." 15 U.S.C. § 2; see also Geneva Pharms. Tech. Corp. v. Barr Labs., Inc., 386 F.3d 485, 495 (2d Cir. 2004). To establish monopolization in violation of § 2, a plaintiff must prove not only that the defendant possessed monopoly power in the relevant market, but that it willfully acquired or maintained that power " as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident." Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 407, 124 S.Ct. 872, 157 L.Ed.2d 823 (2004) (quoting United States v. Grinnell Corp., 384 U.S. 563, 570-71, 86 S.Ct. 1698, 16 L.Ed.2d 778 (1966)). " To safeguard the incentive to innovate, the possession of monopoly power will not be found unlawful unless it is accompanied by an element of anticompetitive conduct." Id. In order to show attempted monopolization, the plaintiff must prove: " (1) that the defendant has engaged in predatory or anticompetitive 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, 113 S.Ct. 884, 122 L.Ed.2d 247 (1993). Attempted monopolization, unlike monopolization, requires a finding of specific intent. See, e.g., Delaware & Hudson Ry. Co. v. Consol. Rail Corp., 902 F.2d 174, 180 (2d Cir. 1990).
Defendants' patents on Namenda IR indisputably grant them a legal monopoly in the U.S. memantine-drug market until July 11, 2015. The parties do not dispute the district court's factual findings that the
relevant market is the memantine-drug market in the United States and that Namenda IR and XR represent 100% of that market. S.A. 108-10. Consequently, the parties do not dispute that Defendants possess monopoly power. See Geneva Pharms., 386 F.3d at 500 (monopoly power can be " proven directly through evidence of control over prices or the exclusion of competition," or " inferred from a firm's large percentage share of the relevant market" ).
Given that Defendants' monopoly power has been established, this case turns on whether Defendants willfully sought to maintain or attempted to maintain that monopoly in violation of § 2. In United States v. Microsoft Corp., 253 F.3d 34, 58-60, 346 U.S.App.D.C. 330 (D.C. Cir. 2001) (en banc), the D.C. Circuit, sitting en banc, established a helpful framework for determining when a product change violates § 2 based on the rule-of-reason test articulated by the Supreme Court in Standard Oil Co. v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619 (1911), and generally applied to antitrust claims. See also Paycom Billing Servs., Inc. v. Mastercard Int'l, Inc., 467 F.3d 283, 289-90 (2d Cir. 2006) (explaining that courts analyze most antitrust claims under the rule of reason). Under the Microsoft framework, once a plaintiff establishes that a monopolist's conduct is anticompetitive or exclusionary, the monopolist may proffer " nonpretextual" procompetitive justifications for its conduct. 253 F.3d at 58-59. The plaintiff may then either rebut those justifications or demonstrate that the anticompetitive harm outweighs the procompetitive benefit. Id.
a. Anticompetitive and Exclusionary Conduct
" As a general rule, courts are properly very skeptical about claims that competition has been harmed by a dominant firm's product design changes." Microsoft, 253 F.3d at 65; see also Foremost Pro Color, Inc. v. Eastman Kodak Co., 703 F.2d 534, 544-45 (9th Cir. 1983). Product innovation generally benefits consumers and inflicts harm on competitors, so courts look for evidence of " exclusionary or anticompetitive effects" in order to " distinguish 'between conduct that defeats a competitor because of efficiency and consumer satisfaction'" and conduct that impedes competition through means other than competition on the merits. Trans Sport, Inc. v. Starter Sportswear, Inc., 964 F.2d 186, 188-89 (2d Cir. 1992) (quoting U.S. Football League v. Nat'l Football League, 842 F.2d 1335, 1359 (2d Cir. 1988)).
Well-established case law makes clear that product redesign is anticompetitive when it coerces consumers and impedes competition. The leading case in
our circuit for § 2 liability based on product redesign is Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263 (2d Cir. 1979). In that case, Kodak simultaneously introduced its new Kodacolor II film and new Kodak 110 camera, which was designed so that it could only be used with the Kodacolor II film (the " 110 system" ). Id. at 277-78. Kodak, which possessed a lawful monopoly in film but not in cameras, heavily advertised Kodacolor II film as " a remarkable new film," and for 18 months, Kodak made Kodacolor II film only for the 110 camera. Id. at 278. Berkey Photo, Inc. (" Berkey" ), a smaller camera manufacturer, alleged that Kodak unlawfully used its monopoly in film to increase camera sales and monopolize the camera market. Id. We rejected that claim and held that the introduction of the 110 system and advertising of the Kodacolor II film did not violate the Sherman Act because " [Kodak's] success was not based on any form of coercion." Id. at 287. But, of significance to the case before us, we cautioned that " the situation might be completely different if, upon the introduction of the 110 system, Kodak had ceased producing film in the 126 size, thereby compelling camera purchasers to buy a Kodak 110 camera." Id. at 287 n.39.
In this case, Defendants argue that withdrawing a product is not anticompetitive or exclusionary conduct, especially when the new product is superior to the old product. Certainly, neither product
withdrawal nor product improvement alone is anticompetitive. But under Berkey Photo, when a monopolist combines product withdrawal with some other conduct, the overall effect of which is to coerce consumers rather than persuade them on the merits, id. at 287, and to impede competition, id. at 274-75, its actions are anticompetitive under the Sherman Act. Cf. Cont'l Or. Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 699, 82 S.Ct. 1404, 8 L.Ed.2d 777 (1962) (noting that when an antitrust conspiracy involves multiple acts, " [t]he character and effect of [the] conspiracy are not to be judged by dismembering it and viewing its separate parts, but only by looking at it as a whole" (internal quotation marks omitted)). Here, Defendants' hard switch--the combination of introducing Namenda XR into the market and effectively withdrawing Namenda IR--forced Alzheimer's patients who depend on memantine therapy to switch to XR (to which generic IR is not therapeutically equivalent) and would likely impede generic competition by precluding generic substitution through state drug substitution laws.
i. Consumer Coercion
Defendants' hard switch crosses the line from persuasion to coercion and is anticompetitive. As long as Defendants sought to persuade patients and their doctors to switch from Namenda IR to Namenda XR while both were on the market (the soft switch) and with generic IR drugs on the horizon, patients and doctors could evaluate the products and their generics on the merits in furtherance of competitive objectives.
By effectively withdrawing Namenda IR prior to generic entry, Defendants forced patients to switch from Namenda IR to XR--the only other memantine drug on the market. S.A. 49; Tr. 183:22-184:17 (Stitt) (" So the unique thing [about the Namenda IR hard switch] I think is that there's really no place for prescribers to, to go with a drug to treat that condition." ). In fact, the district court found that Defendants devised the hard switch because they projected that only 30% of memantine-therapy patients would voluntarily switch to Namenda XR prior to generic entry. S.A. 56-57. Defendants' hard switch was expected to transition 80 to 100% of Namenda IR patients to XR prior to generic entry, S.A. 81, and thereby impede generic competition.
Defendants argue that courts should not distinguish between hard and soft switches. But this argument ignores one of Berkey Photo 's basic tenets: the market
can determine whether one product is superior to another only " so long as the free choice of consumers is preserved." 603 F.2d at 287. Had Defendants allowed Namenda IR to remain available until generic entry, doctors and Alzheimer's patients could have decided whether the benefits of switching to once-daily Namenda XR would outweigh the benefits of adhering to twice-daily therapy using less-expensive generic IR (or perhaps lower-priced Namenda IR). By removing Namenda IR from the market prior to generic IR entry, Defendants sought to deprive consumers of that choice. In this way, Defendants could avoid competing against lower-cost generics based on the merits of their redesigned drug by forcing Alzheimer's patients to take XR, with the knowledge that transaction costs would make the reverse commute by patients from XR to generic IR highly unlikely.
ii. Impedes Competition
As the district court concluded, Defendants' hard switch would likely have anticompetitive and exclusionary effects on competition in the memantine market, creating a " dangerous probability" that Defendants would maintain their monopoly power after generics enter the market. Spectrum Sports, 506 U.S. at 456. Based on careful consideration of the unique characteristics of the pharmaceutical market, the district court found that " [p]rice competition at the pharmacy, facilitated by state substitution laws, is the principal means by which generics are able to compete in the United States." S.A. 26.
We agree with the district court's analysis. Forcing patients to switch to XR would prevent generic substitution because generic versions of IR are not AB-rated to Namenda XR. And if, as Defendants' own internal predictions estimate, the hard switch successfully converted 80 to 100% of IR patients to XR prior to generic entry, there would be " few to no prescriptions" left for which generics would be eligible to compete. S.A. 82. Because Defendants' forced switch " through something other than competition on the merits has the effect of significantly reducing usage of rivals' products and hence protecting its own . . . monopoly, it is anticompetitive." Microsoft, 253 F.3d at 65.
Defendants and their amici argue that generics can successfully compete by persuading third-party payors and prescription-benefit managers to promote generic IR through the use of formularies, tiered-drug structures, step programs, and prior-authorization requirements. But, as the district court determined, competition through state drug substitution laws is the only cost-efficient means of competing
available to generic manufacturers. S.A. 78. For there to be an antitrust violation, generics need not be barred " from all means of distribution" if they are " bar[red] . . . from the cost-efficient ones." Microsoft, 253 F.3d at 64; see also United States v. Dentsply Int'l, Inc., 399 F.3d 181, 191 (3d Cir. 2005) (" The test is not total foreclosure, but whether the challenged practices bar a substantial number of rivals or severely restrict the market's ambit." ). Moreover, as the district court found, additional expenditures by generics on marketing would be impractical and ineffective because a generic manufacturer promoting a product would have no way to ensure that a pharmacist would substitute its product, rather than one made by one of its generic competitors.
Although in theory, Alzheimer's patients would be free to switch back to IR therapy after generic entry, the district court found that, in practice, such a reverse commute would be a highly unlikely occurrence. As one of Defendants' own executives explained during a January 21, 2014 earnings call: " if we do the hard switch and we convert patients and caregivers to once-a-day therapy versus twice a day, it's very difficult for the generics then to reverse-commute back." S.A. 51. This is because there are high transaction costs associated with reverse commuting. Any patient who wants to switch back to twice-daily IR therapy must first obtain a new prescription from a doctor. But, as the district court found, the nature of Alzheimer's disease makes moderate-to-severe Alzheimer's patients especially vulnerable to changes in routine, and makes doctors and caregivers very reluctant to change a patient's medication if the current treatment is effective. As a result, if Defendants forced patients to switch from twice-daily Namenda IR to once-daily XR, those patients would be very unlikely to switch back to twice-daily generic IR even if generic IR is more cost-effective. Moreover, third-party payors are reluctant to require patients to switch from a drug they are currently taking to a new drug, so health plans would be unlikely to require patients to switch to less-expensive generic IR.
Defendants and their amici argue that the district court's focus on AB-ratings is misplaced because up to 20 states do not impose an AB-rating requirement and thus " may let pharmacists unilaterally substitute generic IR for Namenda XR."
Defs. Br. at 13 (emphasis added). Defendants' argument, however, exaggerates the variance in state substitution laws. Many states that do not explicitly require generic drugs to have the same AB-rating effectively require the same degree of therapeutic equivalence. For example, Defendants cite Iowa Code § 155A.32');">155A.32 as an example of a state law that " do[es] not rely on the Orange Book." Defs. Br. at 13. Section 155A.32');">155A.32(1) permits pharmacists to substitute a generic drug if it has the same " demonstrated bioavailability" as the brand drug, Iowa Code Ann. § 155A.32');">155A.32(1), but Section 155A.3(9) clarifies that a generic is only considered to have the same " demonstrated bioavailability" if it has the same " rate and extent of absorption of a drug or drug ingredient from a specified dosage form," Iowa Code Ann. § 155A.3(9). Because the dosage and absorption rates of generic IR differ from that of XR, the drugs are not bioequivalent under Iowa law. Moreover, because generic IR is manufactured in tablet form and Namenda XR is marketed in capsule form, they do not have the same dosage form. As a result, as in New York and the 29 other states that require an AB-rating, Iowa pharmacists will not be permitted to substitute generic IR for XR.
Defendants argue that their conduct was not anticompetitive because preventing " free riding" is a legitimate business purpose. But what Defendants call " free riding" --generic substitution by pharmacists following the end of Namenda IR's exclusivity period--is authorized by law; is the explicit goal of state substitution laws; and furthers the goals of the Hatch-Waxman Act by promoting drug competition, Actavis, 133 S.Ct. at 2228, and by preventing the " practical extension of [brand drug
manufacturers'] monopoly . . . beyond the expiration of the[ir] patent[s]," H.R. Rep. No. 98-857, pt. 2, at 4 (1984).
Defendants also argue that antitrust law is not a vehicle for enforcing the " spirit" of drug laws. Defs. Br. at 46. But the Supreme Court has made clear that " [a]ntitrust analysis must always be attuned to the particular structure and circumstances of the industry at issue." Trinko, 540 U.S. at 411. Leading antitrust authorities have encouraged courts to acknowledge market defects, such as a price disconnect and the exclusivity of patents, in their antitrust analysis. And in other Hatch-Waxman contexts, this court has recognized that efforts to manipulate aspects of the Hatch-Waxman incentive structure to exclude competition could state an antitrust claim. See, e.g., Arkansas Carpenters Health & Welfare Fund v. Bayer AG, 604 F.3d 98, 106 (2d Cir. 2010) (" [A] plaintiff can have antitrust claims" where a pharmaceutical manufacturer " manipulate[s] the [Hatch-Waxman-conferred] 180-day exclusivity period in a manner that bars subsequent challenges to the patent or precludes the generic manufacturer from marketing non-infringing products unrelated to the patent." ), abrogated on other grounds by Actavis, 133 S.Ct. at 2231. Therefore, we conclude that the district court appropriately considered the unique market characteristics of the pharmaceutical industry in concluding that antitrust law " requires [Defendants] to allow generic competitors a fair opportunity to compete using state substitution laws." S.A. 95-96.
b. Procompetitive Justifications
All of Defendants' procompetitive justifications for withdrawing IR are pretextual. The record is replete with evidence showing that Defendants were, in the words of Defendants' own CEO, " trying to . . . put up barriers or obstacles" to generic competition. J.A. 132; see also S.A. 49 (" We need to transition volume to XR to protect our Namenda revenue from generic penetration in 2015 when we lose IR patent exclusivity." ); J.A. 155 (" [W]hat we're trying to do is make a cliff disappear and rather have a long--a prolonged decline. And we believe that by potentially doing a forced switch, we will hold on to a large share of our base users." ); S.A. 49 (" Our mission is to convert to Namenda XR and lift the franchise . . . . We need to convert as much IR business to Namenda XR as quickly as possible." ). Based largely on Defendants' own documents, New York has rebutted Defendants' procompetitive justifications.
c. Procompetitive Benefits v. Anticompetitive Harms
Because we have determined that Defendants' procompetitive justifications are pretextual, we need not weigh them against the anticompetitive harms. But in any event, New York has shown that whatever procompetitive benefits exist are outweighed by the anticompetitive harms.
Defendants argue that their conduct is procompetitive because " [l]aunching a new product . . . advances competition by adding a better product to the market and by paving the way for further innovation." Defs. Br. at 51. While introducing Namenda XR may be procompetitive, that argument provides no procompetitive justification for withdrawing Namenda IR.
Defendants argue that withdrawing IR was procompetitive because it would maximize their return on their investment in XR. But in deciding to take IR off the market, Defendants were willing to give up profits they would have made selling IR--Forest's best-selling drug. This " willingness to forsake short-term profits to achieve an anticompetitive end" is indicative of anticompetitive behavior. In re Adderall, 754 F.3d at 135 (internal quotation marks omitted). Moreover, Defendants fail to explain why the potential [TEXT REDACTED BY THE COURT] in additional XR sales that they stood to earn--which is less than the approximately $1.5 billion in annual sales they have made from Namenda IR in recent years--makes economic sense in the absence of the benefit derived from eliminating generic competition. See id. at 133 (stating that anticompetitive effects could be shown where defendants' conduct " makes sense only because it eliminates competition" ). As a result, we agree with the district court that:
Defendants' short-term loss of [TEXT REDACTED BY THE COURT] in IR sales, translating to [TEXT REDACTED BY THE COURT] in income, is most rationally construed as an investment in moving the memantine market in [their] favor [through impeding generic competition], yielding [D]efendants [TEXT REDACTED BY THE COURT] in income over the course of the next [TEXT REDACTED BY THE COURT] years.
Finally, Defendants have presented no evidence to support their argument that antitrust scrutiny of the pharmaceutical industry will meaningfully deter innovation. To the contrary, as the American Antitrust Institute amici argue, immunizing product hopping from antitrust scrutiny may deter significant innovation by encouraging manufacturers to focus on switching the market to trivial or minor product reformulations rather than investing in the research and development necessary to develop riskier, but medically significant innovations.
In sum, we conclude that the combination of withdrawing a successful drug from the market and introducing a reformulated version of that drug, which has the dual effect of forcing patients to switch to the new version and impeding generic competition, without a legitimate business justification, violates § 2 of the Sherman Act.
III. Patent Rights as a Defense to Liability
Defendants argue that their patent rights under Namenda IR and Namenda XR shield them from antitrust liability. To be sure, there is tension between the antitrust laws' objective of enhancing competition by preventing unlawful monopolies and patent laws' objective of incentivizing innovation by granting legal patent monopolies. See In re Adderall, 754 F.3d at 133; see also SCM Corp. v. Xerox Corp., 645 F.2d 1195, 1205 (2d Cir. 1981).
But in its recent landmark antitrust case, F.T.C. v. Actavis, Inc., the Supreme Court made clear that " patent and antitrust policies are both relevant in determining the scope of the patent monopoly--and consequently antitrust law immunity--that is conferred by a patent." 133 S.Ct. at 2231 (internal quotation marks omitted); see also United States v. Gypsum Co., 333 U.S. 364, 390-91, 68 S.Ct. 525, 92 L.Ed. 746 (1948) (indicating that courts must " balance the privileges of [the patent holder]
and its licensees under the patent grants with the prohibitions of the Sherman Act against combinations and attempts to monopolize" ).
The Court's decision in Actavis reaffirmed the conclusions of circuit courts that a patent does not confer upon the patent holder an " absolute and unfettered right to use its intellectual property as it wishes," Microsoft, 253 F.3d at 63, and " [i]ntellectual property rights do not confer a privilege to violate the antitrust laws," In re Indep. Serv. Orgs. Antitrust Litig., 203 F.3d 1322, 1325 (Fed. Cir. 2000). See also Allied Orthopedic Appliances Inc. v. Tyco Health Care Grp. LP, 592 F.3d 991, 998 (9th Cir. 2010) (" [C]hanges in product design are not immune from antitrust scrutiny and in certain cases may constitute an unlawful means of maintaining a monopoly under Section 2." ).
Defendants argue that their conduct does not violate antitrust law because they have merely " exercised rights afforded by the Patent Act." Defs. Br. at 34. But patent law gives Defendants a temporary monopoly on individual drugs--not a right to use their patents as part of a scheme to interfere with competition " beyond the limits of the patent monopoly." United States v. Line Material Co., 333 U.S. 287, 308, 68 S.Ct. 550, 92 L.Ed. 701 (1948). Defendants have essentially tried to use their patent rights on Namenda XR to extend the exclusivity period for all of their memantine-therapy drugs. As explained above, it is the combination of Defendants' withdrawal of IR and introduction of XR in the context of generic substitution laws that places their conduct beyond the scope of their patent rights for IR or XR individually.
IV. The Sherman Act § 1 and the Donnelly Act
In light of New York's substantial likelihood of success on the merits of its monopolization and attempted monopolization claims, we need not address the merits of its Sherman Act § 1 or Donnelly Act claims, which are based on the agreement between Defendants and Foundation Care. We do note, however, that an agreement related to a party's violation of § 2 does not trigger liability under § 1 unless the agreement itself unreasonably restrains trade, Geneva Pharms., 386 F.3d at 506, and there is mutual anticompetitive intent, see id. at 507 ( " [L]ack of intent by one party . . . precludes a conspiracy to monopolize." ). Conduct that satisfies the unreasonable restraint prong under § 2 does not necessarily violate § 1 absent evidence that the agreement furthers the anticompetitive conduct. Id. at 506.
V. Irreparable Harm
New York has made a " strong" showing that competition and consumers will suffer irreparable harm in the absence of the injunction. Doe, 666 F.2d at 773. Irreparable harm is " injury that is neither remote nor speculative, but actual and imminent and that cannot be remedied by an award of monetary damages." Forest City Daly Hous., Inc. v. Town of N. Hempstead, 175 F.3d 144, 153 (2d Cir. 1999) (internal quotation marks omitted). To obtain injunctive relief under § 16 of the Clayton Act, that injury must be an injury " of the type the antitrust laws were designed to prevent and that flows from that which makes defendants' acts unlawful." Consol. Gold Fields PLC v. Minorco, S.A., 871 F.2d 252, 257 (internal quotation marks omitted), amended by 890 F.2d 569 (2d Cir. 1989).
As the district court concluded, " [p]ermanent damage to competition in the memantine market can . . . result from Defendants' planned hard switch
strategy."  S.A. 131. If generics cannot compete with Defendants' drugs via state substitution laws, they " cannot compete effectively for sales of a branded drug in the same class, such as Namenda XR, even if the price of the generics is much lower than the brand." S.A. 80-81; see also IP and Antitrust Prof. Br. at 13-14 (explaining that absent substitution at the pharmacy, " the market for generics will collapse" ). Moreover, generics cannot simply move into the market for generic XR. To become substitutable for Namenda XR, generic manufacturers must develop new once-daily Namenda tablets, begin the ANDA-approval process all over again, and await the end of XR's patent exclusivity period in 2029. Because Defendants' conduct does not simply harm a competitor or two, but threatens to " reduce competition in the [memantine-drug] market[,] . . . [it] is precisely the type that the antitrust laws were designed to protect against." Consol. Gold, 871 F.2d at 257-58.
The district court also found that, in addition to harming consumer choice, Defendants' hard switch would cause economic harm to consumers. Based on Defendants' own data, the district court found that consumers would pay almost $300 million more and third-party payors would pay almost $1.4 billion more for memantine therapy if Defendants were permitted to switch patients to Namenda XR before generic IR entry. And HHS reports that Defendants' withdrawal of Namenda IR prior to generic entry would cost Medicare and its beneficiaries a minimum of $6 billion over the next ten years. " Threaten[ed] economic harm to . . . consumers . . . is plainly sufficient to authorize injunctive relief." Am. Stores Co., 495 U.S. at 283.
Defendants argue that the district court erred in finding irreparable harm because any increase in costs to consumers and third-party payors is " compensable and readily quantifiable." Defs. Br. at 26. But compensating the approximately 500,000 Alzheimer's patients who take Namenda IR tablets, and an unknown number of public and private third-party payors, for an ongoing harm would impose " the task of disentangling overlapping damages claims [which] is not lightly to be imposed upon potential antitrust litigants, or upon the judicial system." Blue Shield of Va. v. McCready, 457 U.S. 465, 475 n.11, 102 S.Ct. 2540, 73 L.Ed.2d 149 (1982); see also Salinger v. Colting, 607 F.3d 68, 81 (2d Cir. 2010) (" Harm might be irremediable, or irreparable, for many reasons, including that a loss is difficult to replace . . . ." ).
In addition, many of the victims of Defendants' hard switch, such as patients and health plans, may be prevented from direct recovery for their antitrust losses because of the " indirect purchaser" rule, which bars those who do not directly purchase a product from recovering antitrust damages, thus further supporting New York's claim of irreparable injury. See Illinois Brick Co. v. Illinois, 431 U.S. 720, 745-46, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977).
Additionally, we agree with the district court, and the parties do not dispute, that the preliminary injunction serves the public's interest in a competitive market for memantine drugs. See United States v. Siemens Corp., 621 F.2d 499, 506 (2d Cir. 1980) (finding that the government represents the public's interest in a competitive marketplace in seeking to enjoin a merger under § 7 of the Clayton Act); see also Register.com, Inc. v. Verio, Inc., 356 F.3d 393, 424 (2d Cir. 2004) (" [G]overnment action taken in furtherance of a regulatory or statutory scheme . . . is presumed to be in the public interest" ).
VI. The Preliminary Injunction
Defendants argue that the injunction provision requiring them to make Namenda IR tablets available on the same terms and conditions applicable since July 21, 2013 is vague because the terms and conditions have shifted over the past 17 months. We disagree. The injunction plainly prohibits Defendants from charging more for Namenda IR than it did during the specified timeframe and from restricting access to IR. If Defendants need additional clarification, they can seek it in the district court.
Defendants also argue that the injunction is overbroad because there is no antitrust violation in the 20 states in which drug substitution laws might allow pharmacists to substitute generic IR for Namenda XR. Defendants did not raise this argument before the district court, and therefore have forfeited it. See, e.g., Zalaski v. City of Hartford, 723 F.3d 382, 395 (2d Cir. 2013) (" [P]laintiffs failed to raise the argument in the district court, thereby forfeiting it on appeal." ). In any event, that argument is not persuasive because, as explained above, it exaggerates the extent to which state substitution laws differ. Defendants have not brought to our attention a single state in which drug substitution laws will definitively allow pharmacists to submit generic IR for Namenda XR, and have thus failed to identify any state for which there is no antitrust violation.
For the reasons stated above, we AFFIRM the District Court's order granting New York's motion for a preliminary injunction.