Compass Lexecon Client Express Scripts Defeats Motion for Class Certification

Compass Lexecon’s client Express Scripts defeated a motion for certification of putative classes of direct and indirect purchasers of the specialty drug Acthar. The City of Rockford (Plaintiff) claimed that the contractual relationship between Acthar manufacturer Mallinckrodt and Express Scripts’ specialty distributor CSD—which Plaintiff characterized as conspiratorial—allowed Mallinckrodt to charge anticompetitively high prices for Acthar and sought to represent classes of purchasers of Acthar. US District Judge Iain D. Johnston denied certification of the Plaintiff’s proposed classes and excluded the testimony of Plaintiff’s economic expert.

Compass Lexecon President Dr. Mark Israel filed a report in the matter that demonstrated Plaintiff could not show that the pricing conduct of Mallinckrodt—over which Express Scripts had no control—was distinguishable from unilateral monopoly pricing, and that Plaintiff’s expert’s damages model could not isolate effects of the alleged conduct. Dr. Israel further showed that there were numerous individualized issues that needed to be analyzed to determine whether all or nearly all putative class members were injured.

Mirroring Dr. Israel’s opinions, Judge Johnston found that the “yardstick” approach Plaintiff’s expert used in his proposed damages model was unreliable. He further noted that “[i]n response to Dr. Israel’s critique of his failure to ‘control for the many events that affected Acthar’s price,’ [Plaintiff’s expert] simply asserts without demonstrating that ‘to the extent’ any such factors were relevant, his use of the PPI as a yardstick ‘more than compensates’ for anything that may have caused Acthar’s price to grow more rapidly. Again, however, this is merely ipse dixit rather than a reasoned conclusion.”

Dr. Israel was supported by a team that included Thomas A. Stemwedel, Allan Shampine, Alice O'Donnell, Margaret Hlebowitsh, Ryan Dorow, Xiao Yu, and Belen Goicoechea. Express Scripts was successfully represented by Eric Lyttle, Mike Bonanno, Meghan McCaffrey, Keith Forst, and Deven Parmar of Quinn Emanuel Urquhart & Sullivan LLP.