Court Denies Class Certification in Antitrust Case Based on Expert’s Reliance on Unsupported Assumptions in Damages Model

The Northern District of Illinois recently denied certification to several proposed classes of purchasers of a seizure drug called Acthar in City of Rockford v. Mallinckrodt ARD, Inc., No. 3:17-cv-50107, 2024 WL 1363544 (Mar. 29, 2024). Class plaintiffs had alleged that defendant Express Scripts, a drug distributor, conspired with Mallinckrodt, a drug manufacturer, to raise the price of Acthar through an exclusive distribution arrangement. In denying certification to the damages classes, the court determined that plaintiffs had not met Rule 23(b)(3)'s predominance standard because they lacked a reliable economic model showing that damages were "capable of measurement on a classwide basis," as required by Comcast Corp. v. Behrend, 569 U.S. 27, 34 (2013).

Plaintiffs' only classwide evidence on damages was a statistical model of drug prices offered by an academic. The court rejected this evidence as unreliable under Rule 702 due to unsupported assumptions in the expert's model of Acthar prices in the hypothetical world.

The expert assumed that but-for defendant's conduct, Acthar's prices would have moved in a manner similar to the price level of drugs across the pharmaceutical industry as a whole-as measured by the industry's Producer Price Index ("PPI"). Yet the expert provided only "conclusory assertions[s]" to justify this central assumption: that the PPI's drug industry-average prices were a reliable "yardstick" for Acthar's price. Similarly, the court agreed with critiques offered by defendant's expert that plaintiffs' expert had failed to consider other economic factors, such as differences or changes in market shares and structures between Acthar and other drugs, that could have caused prices for Acthar to diverge from industry averages, irrespective of defendant's conduct. The court thus concluded that the expert's model failed to isolate the effect of any allegedly unlawful conduct from other factors that might have affected prices for Acthar.

Because the expert's model was plaintiffs' only class-wide evidence of damages, the court determined that individualized questions of damages would "inevitably overwhelm questions common to the class" in violation of Comcast and the Rule 23 predominance standard. The case is yet another example of courts rigorously reviewing expert testimony at the class certification stage in major antitrust litigation to determine whether the prerequisites of class certification are satisfied.