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Concordia Pharmaceuticals, Inc. v. Method Pharmaceuticals, LLC

United States District Court, W.D. Virginia, Charlottesville Division

April 13, 2016

CONCORDIA PHARMACEUTICALS, INC., Plaintiff,
v.
METHOD PHARMACEUTICALS, LLC, et al., Defendants.

MEMORANDUM OPINION

Hon. Glen E. Conrad Chief United States District Judge

In this action under the Lanham Act, the plaintiff, Concordia Pharmaceuticals, Inc. ("Concordia"), and the defendants, Method Pharmaceuticals, Inc. and Matthew Scott Tucker (collectively, "Method"), have moved to exclude certain opinions offered by the opposing side's expert witnesses. The court held a hearing on the motions on March 3, 2016.[1] This memorandum opinion sets forth the court's rulings on the parties' motions.

Background

The facts of this case are outlined in detail in the court's memorandum opinion on the parties' cross-motions for summary judgment. Thus, only a brief summary follows here.

In May of 2014, Concordia acquired the Donnatal® line of products ("Donnatal") from PBM Pharmaceuticals, Inc. ("PBM"). Donnatal is a line of combination phenobarbital and belladonna alkaloid ("PBA") products that is used as adjunctive therapy in the treatment of irritable bowel syndrome ("IBS") and acute enterocolitis. Donnatal is available by prescription in either tablet or elixir form.

Donnatal was first introduced in the 1930s, before drug manufacturers were required to prove that drugs were both safe and effective in order to obtain approval by the Food and Drug Administration ("FDA"). Although Donnatal products have been approved for safety, the FDA has yet to determine their effectiveness.

For over thirty years, Donnatal faced competition from generic PBA products that were pharmaceutically equivalent to Donnatal. Beginning in August of 2011, manufacturers of the generic versions began to take their products off the market. Once the inventories of previously manufactured generic products were eliminated, Donnatal was the only line of PBA products available for prescription.

In 2013, Method began making plans to develop and market a new product that would be pharmaceutically equivalent to Donnatal. The new product was eventually named Me-PB-Hyos. Method reached out to Winder Laboratories, LLC ("Winder"), which had previously developed another product for Method, and expressed an interest in having Winder manufacture its Me-PB-Hyos products. Winder and Method agreed on the price that Winder would charge for supplying the products, and Method issued purchase orders for initial stability tests.

In March of 2014, Method used publicly-available copies of the Donnatal product labels and package inserts as templates to create labels and inserts for the Me-PB-Hyos products. Method then proceeded to list the Me-PB-Hyos products with two pharmaceutical databases, Medi-Span and First Databank, which are used by members of the pharmaceutical industry to determine whether generic substitutes are available for brand name products. Method advised the databases that it intended to start marketing the Me-PB-Hyos products on June 1, 2014. Based on the information provided by Method, which included the product labels and package inserts, the Me-PB-Hyos products were assigned the same Generic Product Identifier ("GPI") as Donnatal. The listings also indicated that the Me-PB-Hyos products would be available at a lower price.

Ultimately, after this litigation ensued, Method halted its plans to market the Me-PB-Hyos products, and the.products were never manufactured by Winder or any other company. In mid-October 2014, Medi-Span removed the listings for the Me-PB-Hyos products. Around the same time, First Databank moved its listings for the Me-PB-Hyos products from active listings to archived listings.

After Method's Me-PB-Hyos products were listed with Medi-Span and First Databank, Donnatal prescriptions and unit sales declined. The parties dispute, however, whether the decline in prescriptions and unit sales was caused by the listings for the Me-PB-Hyos products.

From January of 2012 to June 2014, the prices of Donnatal products increased by over 1, 400%. This included a 100% increase that Concordia implemented after acquiring the rights to Donnatal from PBM. It is undisputed that Concordia's profits and profit margin for Donnatal tablets and elixir increased after Method's Me-PB-Hyos products were listed with the databases. However, Concordia claims that its profits would have been even higher if Method had not listed the Me-PB-Hyos products and, thus, that it experienced lost profits as a result of the listings.

Procedural History

PBM commenced this action against Method on April 29, 2014, asserting claims of false advertising and unfair competition under the Lanham Act and related claims under state law. Following a series of amendments, the case is now being pursued against Method and Tucker, Method's founder and president, by Concordia.

Following the completion of discovery, the parties filed cross-motions for summary judgment. On March 29, 2016, Concordia's motion for summary judgment was denied and Method's motion for summary judgment was granted in part and denied in part. A jury trial on the remaining claims under the Lanham Act is scheduled to begin on April 18, 2016.

The case is now before the court on the parties' motions to exclude opinions proffered by the opposing side's expert witnesses. Method seeks to exclude certain opinions of Dr. Brian Reisetter and Ivan Hofmann. Concordia seeks to exclude certain opinions of Dr. William Fassett and John Wills. Dr. Reisetter and Dr. Fassett are pharmacists who were retained to offer opinions regarding the database listings for Method's Me-PB-Hyos ...


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