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`5 of 32 DOCUMENTS
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`CONCORDEA PI-IARMACEUTICALS, ]NC., Plaintiff, V. METHOD
`PHARNIACEUTICALS, LLC, ct al., Defendants.
`
`Civil Action No. 3:1-‘!CVOt}0l6
`
`UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF
`VIRGIN1A, CI-IARLOTTESVILLE DIVISION
`
`2016 US. Dist. LEXIS 50221
`
`April 13, 2016, Decided
`April 13, 2016, Filed
`
`PRIOR HISTORY: Concordia Pimr:ns., Inc. V. ilrfethod
`PImrm.s'., LLC. 2015 US. Dist. LEXIS 151505 (W.D. Vn.,
`Nov. 4, 2015)
`
`listing,
`generic,
`pharmaceutical,
`CORE TERMS:
`prescription, database,
`lost profits, price
`increases,
`pharmacist, elixir, fonnulaiy, expert's testimony, reliable,
`summary judgment, pharmacy, calculation, substitution,
`emcrieiiced,
`admissibility,
`tablet,
`expert
`opinion,
`methodology,
`reliability, deposition,
`reliably, Lanham
`Act, cross-motions,
`rebuttal, brand, expert witnesses,
`false advertising
`
`[*l} For Concordia Pltarmaceuticals inc.,
`COUNSEL:
`Plaintiff: Aaron L. Pereira, LEAD ATTORNEY,
`Buchanan lngersoll & Rooney PC, New York, NY;
`Edward John Allera, LEAD ATTORNEY, PRO HAC
`VICE, Buchanan Ingersoll & Rooney, PC, Wasllington,
`DC; Laura K. Pitts, LEAD ATTORNEY, PRO HAC
`VICE, Buchanan Ingersoll & Rooney PC, Alexandrizl,
`VA; Theodore M. Sullivan, LEAD ATTORNEY, PRO
`HAC VICE, Buchanan lngersoll & Rooney, PC,
`Washington, DC; Holly Beth Lance, Buchanan Ingersoil
`& Rooney PC, Alexandria, VA‘, Scott Lloyd Smith,
`Buchanan lngersol! & Rooney PC, Alexandria, VA.
`
`For Method Pliannaceuticals, LLC, Defendant: David W.
`Tlromas, LEAD ATTORNEY, Miciiie, Hamlett, Lowry,
`
`Rasmussen & Tweet, PLLC, Charlottcsvillc, VA;
`Jennifer Mcvey Thomas, LEAD ATTORNEY, PRO
`HAC VICE, Hyman Phelps & McNamara,
`PC,
`Washington, DC; Karla
`Lynn
`Patmcr,
`LEAD
`ATTORNEY, Hyman Phelps & McNamara,
`PC,
`Washington, DC; Brian J. Donate, Hyman Pheips &
`McNamara, PC, Washington, DC; Edward Kyle McNew,
`Miclaie,
`lvlantlett, Lowiy, Rasmussen & Tweet, PLLC,
`Cllariottcsville, VA; James Philip Eilison, PRO HAC
`VICE, Hyman Pheips & McNamara, PC, Washington,
`DC.
`
`Joshua
`For Winder Laboratories, LLC, Defendant:
`Counts Cumby, LEAD ATTORNEY, Venable LLP,
`Washington, [*2] DC.
`
`For Matthew Scott Tucker, Defendant: Edward Kyle
`McNew, Michie, Hamlett, Lowry, Rasmussen & Tweel,
`PLLC, Chartottesviile, VA.
`
`For Steven Pressman, Defendant: Joshua Counts Cumliy,
`LEAD ATTORNEY, Veuable LLP, Washington, DC;
`Roger Anthony Colaizzi, LEAD ATTORNEY, Venable
`LLP, Washington, DC.
`
`JUDGES: Hon. Glen E. Conrad, Chief United States
`District Judge.
`
`SENJU EXHIBIT 2336
`Lupin V Senj u,
`IPR2015-01097, lPR20l5-01099,
`lPR2(ll5~0lItl{l & IPRZOIS-tll tn-1
`
`

`
`2016 U.S. Dist. LEXIS 5022}, *2
`
`Page 2
`
`OPINION BY: Glen E. Conrad
`
`OPINION
`
`MEM RAND M }’INI N
`
`In this action under the Lanham Act, the plaintiff,
`Concordia Pltarmaceuticais, Irtc. ("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 bearing on the motions
`on March 3, 2016.3 Tltis memorandum opinion sets forth
`the court's rulings on the parties’ motions.
`
`1 During the March 3, 2016 hearing, the court
`also
`heard
`oral
`argument
`on
`the
`parties’
`cross—1not:ions for stunmaiy judgment. On March
`29, 2016, Concordia's motion for
`sunnnary
`judgment was denied. and Metl1od's motion for
`summary judgment was granted in part and
`denied in part. The case is proceeding to trial
`solely on Concorctia's claim under the Lanhain
`Act.
`
`Ba I671‘
`
`In
`
`in detail in
`The facts of this case are outlined [*3]
`court's memorandum opinion on the
`parties‘
`the
`cross-motions for summary judgment. Thus, only a brief
`sununaty foilows here.
`
`In May of 2014, Concordia acquired the Donnatal®
`of
`products
`("Donnatal")
`from
`PBM
`line
`Phartnaceuticals, Inc.
`("PBM"). Donnatal
`is a line of
`combination phenobarbital
`and belladonna
`alkaloid
`("PEA") products that is used as adjunctive therapy in the
`treatment of irritable bowel syndrome ("IBS") and acute
`enterocolitis. Domtatal
`is available by prescription in
`either tablet or elixir fonn.
`
`Donrtatal 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 detennirie their effectiveness.
`
`For over thirty years, Donnatai faced cotnpetition
`from generic PEA 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
`[*4] available for prescription.
`
`in 2013, Method began making plans to develop and
`market a new product that would be phannaceutically
`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 rnanufacture its Me-PBI-Iyos
`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-atraitable
`copies of the Donnatai product labels and package inserts
`as
`tempiates
`to create
`labels and inserts
`for
`the
`Me-PB—Hyos products. Method then proceeded to list the
`Me-PB-Hyos
`products with
`two
`phannaceutical
`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 inctuded the product labels and package insetts,
`the Me-PB-I-lyos [*5] products were assigned the same
`Generic Product Identifier ("GPI") as Donnatal. The
`listings also indicated that
`the Me—PB—Hyos products
`wouid be available at a lower price.
`
`litigation ensued, Method
`this
`Ultimately, after
`halted its plans to market the Me-PB}-lyos products, and
`the products were never niaiutlactured 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 iistings
`for the Me-PB-I-iyos products from active listings to
`archived listings.
`
`Alter Methods 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 b_v the listings for the Me—PB—l-lyos
`products.
`
`

`
`2016 U.S. Dist. LEXIS 50221, *5
`
`Page 3
`
`From January of 2012 to June 2014, the prices of
`Donnatai products
`increased by over
`l,zt00%. This
`included a 100% increase that Concordia iiuplemented
`after acquiring the rights to Donnatal front PBM. It is
`undisputed that Concordia's profits and profit margin for
`Domain} tablets and elixir
`increased after Methods
`
`Me-PB-I-Iyos products were listed with the databases.
`However, Concordia [*6] claims that its profits would
`have been even higher if Method had not
`listed the
`Me-PB-Hyos products and, thus, that it experienced tost
`profits as a result of the listings.
`
`Procedn ral Historv
`
`PBM commenced this action against Method on
`April 29, 2014, asserting claims of false advertising and
`unfair competition under the Lanhain Act and related
`claims
`under
`state
`law.
`Following
`a
`series
`of
`amendments,
`the case is now being pursued against
`Method and Tucker, Methods founder and president, by.
`Concordia.
`
`Following the completion of discovery, the parties
`filed cross—motions for summary judgment. On March 29,
`2016, Co11cordia's motion for sulttntaiy judgment was
`denied and Methods motion for summary judgment was
`granted in part and denied in part. A jury trial on the
`remaining claims under the Lanhatn Act is scheduled to
`begin on April 18, 2016.
`
`The case is now before the court on the parties‘
`motions to exclude opinions proifered by the opposing
`side's expert witnesses. Method seeks to exclude certain
`opinions of Dr. Brian Reisetter and Ivan Hofrnanu.
`Concordia seeks to exclude certain opinions of Dr.
`William Fassett and John Wiils. Dr. Reiselter and Dr.
`
`to offer
`Fassctt are pharmacists who were retained [*7]
`opinions regarding the database listings for Method's
`Me—PB—Hyos products. Hofmann and Wills are certified
`public accountants who were retained to offer opinions
`pertaining to damages.
`
`Stantlarti of Review
`
`The admissibility of expert witness testimony is
`governed by Rule 70.? aftfre Federal Rules of Evidence.
`The rule provides as follows:
`
`A witness who is qualified as an expert
`by knowledge, skill, experience, training,
`or education may testify in the form of an
`
`opinion or otherwise if:
`
`{a} the experts scientific,
`technical,
`or
`other
`specialized knowledge will
`help the trier of fact
`to
`understand the evidence or
`
`to determine a fact in issue;
`
`testimony is
`the
`(13)
`based on sufficient facts or
`data;
`
`(e) the testimony is the
`product
`of
`reliable
`principles
`and methods;
`and
`
`has
`expert
`the
`(E1)
`the
`applied
`reliably
`principies and methods to
`the facts of the case.
`
`Fed. R. Evid. 702.
`
`Under this rule, the district court acts as a gatekeeper
`to ensure that an expert's testimony "is not only relevant,
`but reliable." Danberf v. .Merre1'I Dow P}mrms., Inc., 509
`U.S. 579. 589, 113 S. Ct‘. 2786, 1251.. Ed. 2d 469 (1993).
`"The rule 'requires that the [expert] testimony must be the
`product of reliable principles and methods
`that are
`reliably applied to the facts of the case."' United States v.
`li"i't'so.-r, 484 F.3d 267, 274 (4th Cir. 2007) (quoting Fed.
`R. Evid. 702 advisory co1mnittee's note). In conducting its
`gatctceeping function, the [*8] court's primary goal is "to
`make certain that an expert, whether basing testimony
`upon professional
`studies or personal
`experience,
`employs in the courtroom the same level of intetlectual
`rigor that characterizes the practice of an expert in the
`relevant Iield." Kmnho Tire Co. v. Carmichael, 526 US‘.
`137, 152, 1195 Ct. 1167, 143 L. Ed. M238 (1999). The
`scope of the court's gatekecping inquiry ultimately
`"depend[s} upon the particular expert testimony and facts
`of the case." EEOC V. Freemrm, 778 F.3d 463, 466 (4th
`Cir. 2015) {citing Kzmrho. 526 US. ar150).
`
`The party proffezing the expert testiinony has the
`burden
`of
`establishing
`its
`admissibility
`by
`a
`preponderance of the evidence. Daubert, 509 US. at 593
`
`

`
`2016 U.S. Dist. LEXIS 50221, *8
`
`Page 4
`
`n.I0; see also Cooper v. Smith & Nephew, Inc., 259 F.3d
`194, 199 (4th Cir. 2001). In deciding whether a party has
`sustained its burden,
`the court must
`focus on the
`principles and methodology employed by the expert
`rather than the expert's ultimate conclusions. Dmvberr.
`509 US. at 595. As the Supreme Court has recognized,
`however, "conclusions and methodology are not entirely
`distinct from one another." Genera! Elec. Co.
`tr. Joiner,
`522 US. 136,
`I46, U8 S. Ct. 512, 139 L. Eu‘. 2:? 508
`(1997). Neither Daubert nor Rule 702 requires the court
`"to admit opinion evidence that is connected to existing
`data only by the ipse dixit of the expert." Id. Instead, the
`court "may conclude that there is simply too great an
`analytical gap between the data
`and the opinion
`prof'I"ered,"
`and accordingly choose to exclude
`the
`opinion. id.
`
`that
`Of course, "the court need not determine [*9]
`expert testimony a litigant seeks to offer into evidence is
`irrefutable or
`certainly correct." United States
`v.
`ilrforelarrd, 437 F.3d 424, 431 (4th Cir. 2006). "As with
`alt other admissible evidence, expert testimony is subject
`to being tested by
`‘[v}igorous
`cross-examination,
`presentation of contrary evidence, and careful instruction
`on the burden of proof.‘ id. (quoting Dauberr, 509 US. at
`596). However, because "expert witnesses have the
`potential to be both powerful and quite misleading," the
`court must ensure that any all expert testimony is both
`reievant and reiiabie. Cooper, 259 F.3d at 199 (internal
`citations and quotation marks omitted).
`
`Di scu ssion
`
`I. Dr. Reisetter
`
`Concordia retained Dr. Brian Reisetter
`
`to offer
`
`opinions on the market impact and industry consequences
`of Method‘s
`submissions
`to Mecii-Span and First
`Databank. Dr. Reisetter is a licensed pharmacist with a
`doctorate in phannacy administration, who also works as
`a
`consultant
`for
`the
`pltarmaceuticai
`and medical
`industries. He
`has
`performed
`extensive
`research
`concerning the effects of pharmaceutical database listings
`on the perceptions and behavior of pharmacists and
`doctors. in the instant action Dr. Reisetler has offered the
`opinion that Met.hod's efforts to list
`its Me-PB-Hyos
`products with Medi—Span and First Databank "caused
`{*l0]
`the marketplace to believe that there was an actual
`‘generic’ or pharmaceutical equivalent
`for Domiatal
`appropriate for substitution." and that this "set off a series
`of inevitable downstream events in the marketplace that
`
`for
`adversely affected the number of prescriptions
`Donnatal filled and units soid, despite no such product
`being available." Reisetter Rep. ‘,1 i.
`
`In moving to exclude Dr. Reisetters opinions on the
`market impact and industry consequences of Methods
`submissions to the pharmaceutical databases, Method
`questions the reliabitity and relevance of his opinions.
`Specifically, Method argues that Dr. Reiselter was not
`provided with fuil
`information regarding "availability
`issues" that were experienced with Donnatal products;
`that Dr. Reisetter improperly utilized Prozac as an
`exampie to explain how generic substitution occurs when
`a generic drug is linked to a brand drug in a pharmacy
`software system based on the products’ GPI code; and
`that Dr. Reisetter
`improperly reiied upon surveys
`conducted in other cases in forming his opinions in the
`instant case.
`
`Having considered the parties’ arguments, the court
`concludes that none of the issues identified by Method
`warrants the [*1 1} exciusion of Dr. Reisetters testimony.
`To the extent Method faults Dr. Reisetter
`for not
`
`it
`considering certain discrete "availability issues" that
`identified during discovery, such as emails indicating that
`some pharmacies had incorrect or outdated National Drug
`Code ("NDC") numbers for Donnatal products, there is
`no indication that these issues were raised during Dr.
`Reisettcfs deposition or considered by Metl1od's own
`experts in rendering their opinions. White the availability
`issues identified by Method could arguabiy affect the
`weight accorded to Dr. Reisetter‘s testimony, the court is
`unable to conclude that
`they render his
`testimony
`inadmissible. Instead,
`these issues, and any effect that
`they may have on Dr. Reisetters opinions, can be
`adequately addressed on cross-examination.
`
`The court also declines to preclude Dr, Reisetter
`from using Prozac to illustrate how generic substitution
`conunonly occurs in the pharmaceutical industry. In his
`report, Dr. Reisetter did not suggest
`that Prozac and
`Domain] are similarly situated drugs. Instead, he ntereiy
`used Prozac as an example to explain how generic
`substitution occurs when a generic drug is linked to a
`brand drug in a pharmacy {*l2] software system based
`on the information contained in the pharmaceutical
`database listings. Method correctly points out that Prozac
`and the generic versions of fluoxetine are distinguishable
`from the products at issue in this case on a number of
`grounds. However,
`the court ultimately agrees with
`
`

`
`2016 U.S. Dist. LEXIS 50221, *12
`
`Page 5
`
`Concordia that these distinctions go to the weight of Dr.
`Reisetters testimony regarding generic substitution rather
`than its admissibility.
`
`Finally, the fact that Dr. Rcisetter based his opinions,
`at least in part, on surveys performed in connection with
`other cases or research projects does not justify excluding
`Dr. Reisetter's testimony. While the court may ultimately
`limit the extent to which Dr. Reisetter is permitted to
`reference specific responses to survey questions, the court
`will permit him to offer opinion testimony based on the
`results of the prior surveys. See Fed. R. Evin’. 703 ("If
`experts in the particular field would reasonably rely on
`those kinds of facts or data in forming an opinion on the
`subject, they need not be admissible for the opinion to be
`admitted."). The defendants remain free to cross-exatnine
`Dr. Reisetter about the particular questions posed in his
`prior
`surveys,
`the
`specific
`[*l3]
`populations of
`pharmacists
`surveyed,
`and the conclusions
`that he
`ultimately reached. The defendants are also free to point
`out
`that Dr. Reisetters opinions are not based on
`quantitative
`or
`qualitative
`research
`employed
`to
`determine actual market behavior in response to the
`particular database listings at issue in this case. However,
`the court will not preclude Dr. Reisetter from offering
`opinions infonned by surveys conducted in previous
`cases?
`
`2 Because the prior surveys conducted by Dr.
`Reisetter did not account for the actual allegations
`in this case, Method correctly points out that the
`survey
`results would
`not
`support
`a
`false
`advertising claim based on a theory of implied
`falsity. See PBM Prods, LLC v. Mead Johnson &
`Ca, 639 R3?! 111, 122 (4th Cir. 2011) ("Because
`the surveys failed to account for
`the actual
`allegations in the case, they failed to provide the
`required
`evidence
`of
`[implied]
`falsity“).
`Nonetheless, this does not render Dr. Reisetter‘s
`opinions
`inaclinissible.
`Concordia‘s
`false
`advertising claim does not
`turn on proof of
`implied falsity. Instead, Concordia maintains tlutt
`Method made literally false statements regarding
`its Me-PB-Hyos products. Moreover, as other
`courts have previously recognized, an expert‘s
`"data and testimony need not {*1='l] prove the
`plaintiffs‘ case by themselves; they must merely
`constitute one piece of
`the puzzle that
`the
`plaintiffs endeavor to assemble before the jury."
`City of Tuscaloosa v. Harcros Chems.,Inc., 158
`
`F.3d5-118, 564-65 (1 H11 Cir. 1998).
`
`For these reasons, Methods motion to exclude the
`opinions and testimony ofDr. Reisetter will be denied.
`
`11. Dr. Fassett
`
`Method retained Dr. William Fassett to review the
`reports from Concordia‘s experts, and to offer his own
`opinions regarding market conditions applicable to the
`sale of Donnatal products and the effect of the database
`listings for Metltod's Me—PB-Hyos products. Dr. Fassett
`has been a licensed pharmacist for over 45 years and is a
`professor emeritus of pltarmacotlteraphy at Washington
`State University. His career has involved the traditional
`practice of pharmacy, as well as pharmaceutical sales and
`marketing,
`pharmacy
`nianagement,
`and
`advising
`fomrulary committees with respect
`to drug coverage
`decisions. Dr. Fassett also sits on the editorial board of
`several peer-reviewed publications related to pharmacy
`and the pharrnaceutica]
`industry, and has authored
`peer-reviewed publications relating to drug use review,
`product selection, and computer applications
`in the
`pharmaceutical industry.
`
`Concordia seeks to exclude three opinions [*l5]
`expressed in Dr. l~‘assett’s expert report. The first opinion
`challenged by Concordia pertains to drug price increases.
`In his report, Dr. Fassett opined that price increases are
`not uncommon in the pharmaceutical industry; that the
`ultimate reactions of pharmacists and prescrlbers to price
`increases are generally consistent; and that he would
`expect forntularics to eventually exclude Donnatal. and
`prescriptions for Donnatal
`to ultimately decrease,
`in
`response to increased prices. Dr. Fassett cited the
`prescription pain reliever Vivomo as an example of this
`principle in operation. Vivomo, like Donnatal. currently
`has no generic equivalent. According to Dr. Fassett's
`report, the manufacturer increased the price of Vivomo
`by over 600%, beginning on January 1, 2014. Subsequent
`to the price increases, Vivomo experienced increased
`sales dollars, fewer prescriptions and unit sales, exclusion
`from fonnularies,
`and substitution,
`"all of which,"
`according to Dr. Fassett,
`"would be expected with
`Donnatal." Fassett Rep. ‘ll 91.
`
`The second opinion challenged b_v Concordia is Dr.
`FElSSCl.l.'S opinion that a class review may have affected
`the fonnulary status ofDonnata1. In his report, Dr. Fassett
`explained [* 16]
`that "low-c1aim—vo1unte products like
`Donnatal (with an average of between 7.000 and 12,000
`
`

`
`2016 U.S. Dist. LEXIS 50221, *l6
`
`Page 6
`
`prescriptions per month) may ‘fly below the radar’ for a
`period of time until
`the level of expenditure becomes
`significant enough to warrant analysis, or until
`the
`fonntrlary committee conducts a review of the entire
`therapeutic class." Fassett Rep.
`‘ii 45. During his
`deposition, Dr. Fassett further noted that the entry of new
`drug products into the therapeutic class could trigger a
`class review that potentially affects the fonnulary status
`of any or all drugs within the class.
`
`The mat opinion challenged by Concordia is Dr.
`Fassett's opinion that he "would not expect a significant
`degree of ioyalty to Donnatal among prescribers or
`pharmacists." Fassett Rep. 1] 84. Because generic versions
`of Donnatal were cornrnerciatly available for over 30
`years, Dr. Fassett reasoned that “pharmacists and other
`participants in the market for prescription drugs would
`have stopped thinking of Dormatal as a brand drug and
`instead considered it a generic or rnulti-source product."
`Id. 1] 84.
`
`three of these
`to exclude all
`Concordia seeks
`opinions offered by Dr. Fassett on the ground that they
`are based on mere speculation. [*l7] Having thoroughly
`reviewed Dr. Fassett's report and the applicable portions
`of his deposition, the court is unpersauded. It is clear
`from the record that Dr. Fassett's opinions are derived
`from his decades of experience as a pharmacist, during
`which he dispensed Donnatal and its generic competitors;
`his
`extensive
`experience working with forruulary
`cornrnittees; and his
`specialized knowledge of how
`formulary committees make coverage determinations.
`
`The {act that the opinions at issue are based. in large
`measure, on Dr. Fassetfls personal experience does not
`preclude him from offering the opinions. "[Tjl1e test of
`Rule 702 expressly contemplates that an expert may be
`qualified on the basis of experience." I-l7t'lson, 48-! F.3d at
`274 (quoting Fen’. R. Evid. 702 advisory committee's
`note). When an expert
`relies primarily on his own
`experience to render an expert opinion,
`the court must
`require the witness to "explain how [his] experience leads
`to the conclusion reached, why {his} experience is a
`sufficient basis for the opinion, and how [his] experience
`is reliably applied to the facts." Id.
`
`there is substantial
`record,
`Based on the current
`reason to believe that Dr. Fassett will be able to establish
`a sufficient basis for each of the opinions challenged
`[*l8] by Concordia. Any perceived weaknesses in the
`evidentiary support for Dr. Fassett’s opinions can be
`
`cross-examination.
`on
`addressed
`appropriately
`Accordingly, Concordizrs motion to exclude Dr. Fassetfs
`opinions will be denied.
`
`III. Hofmann
`
`to analyze and
`Concordia retained Ivan I-lefntanrt
`quantify the Financial damages Concordia experienced as
`a result of the pltarmaceutical database listings
`for
`Method's Me-PBi«Iyos products. i-iofmann concluded that
`Dormatal prescriptions and sales would have been higher
`"but for" the listings. Hefmann Rep. 1] 79. He calculated
`lost profit damages based on lost Donnatal prescriptions
`and lost unit
`sales of Donnatal products. Hofmann
`ultimately opined that Concordia experienced "no less
`than $29.4 million" in lost profits from June 2014 to June
`2015 "due
`to the listing of Me—PB-Hyos"
`in the
`phanuaceuticat databases. Hefrnann Rep. 1] 81.
`
`After carefully considering Hofmann's report and the
`portions of his deposition testimony provided by the
`parties,
`the court concludes that Hofmanu's opinion
`regarding the amount of lost profit damages incurred by
`Concordia must be excluded. Specifically, the court finds
`that Concordia has failed to establish that Hofruarufs lost
`[*19] profit calculations were "the product of reliable
`principles and methods" that were "reliably applied" to
`the particular facts of this case.
`l-Viisori, 484 F.3d at 274.
`The methodology employed by Hofmann in reaching his
`conclusions [ruled to take into account numerous market
`factors that could have affected Donnatal sales and
`prescriptions, and was based on selectively chosen data
`and unsupported assumptions.
`
`For instance- I-iofruann conciuded that the listings for
`Method‘s Me-PB-Hyos products, which were never
`manufactured or sold, were the sole cause of
`the
`reduction in Donnatal prescriptions and sales from June
`2014 to June 2015, and that the significant increases in
`the prices of Donnatal products played no role in the
`decline.
`In deterrnining that Donnatal prescription
`volume is "geueraliy unaffected by price increases,"
`Hofmamr purportedly considered whether "historical
`price
`increases"
`resutted
`in
`decreased Donnatal
`prescriptions. Hofinann Rep. ml 48-55. However, he
`limited his analysis to two price increases in 2012, which
`were implentented at a time when existing inventories of
`competing generic products were being eliminated from
`the market. Hofmann completely disregarded a price
`increase that was implemented [*20]
`in December of
`2013, which was followed by a reduction in prescription
`
`

`
`2016 U.S. Dist. LEXIS 50221, *20
`
`Page 7
`
`volume and unit sales. The timing of this particular price
`increase is particularly relevant, since it occurred after
`generic PBA products had been removed from the
`market, but before Method's products were listed with the
`pharmaceutical
`databases. Nonetheless,
`it was not
`addressed in Hoflinan's analysis of historical price
`increases. Concordia has failed to prove that the selective
`analysis employed by Hofrnann in evaluating the effect of
`increased prices was predicated on a scientifically sound
`or reliable methodology.
`
`in calculating lost profits, Hofmann
`Additionally,
`failed to consider numerous other marlret factors that
`could have contributed to the decline in Donnatal sales
`and prescriptions. For instance, in 2013 and 2014, after
`the price of Donnatal was significantly increased and
`generic versions were no longer available, Doruratal was
`removed from certain health plan forntularies. These
`fornuilary changes were not addressed in Hol'1nann‘s
`report. Nor was the impact of newer drugs available for
`the treatment of IBS, which, unlike Donnatal, have been
`approved for effectiveness by the FDA. Likewise,
`Hofmann did not
`[*2l]
`consider whether sates of
`Donnatal were aiiected by marketing initiatives or
`pricing strategies utilized by competitors in the IBS
`market.
`Instead,
`aside from discussing select price
`increases, Hot‘inann's report is devoid of any discussion
`of other factors that could have contributed to the lost
`profits that Concordia allegedly experienced during the
`time period at issue.
`
`The court is convinced that this rnetlrodological [law
`also renders l-lot°mann's lost profit calculations unreliable.
`See. e. g., _ri»rfvGal/ons LLC v. US’. Bancorp, 52} F. .»lpp'x
`297, 307 (Jib Cir. 2013) (holding that the district court
`abused its discretion in allowing testimony by a damages
`expert
`that did not
`rest on "the requisite ‘reliable
`foundation‘ that was required for such testirnony," and
`emphasizing that
`the
`expert's projections
`"ignored
`business realities and relied on sheer speculation");
`Pltamrc-tier.-‘cs, Inc. 1’. fl\’E)TflS Plrarmsz, Inc, 182 F. App’):
`267, 271 {Jr}: Cir. 2006) (affinning the district court's
`decision to exclude expert testimony on lost sales, where
`the expert assumed that only the defendant's actions
`caused the plaintiffs losses and failed to consider other
`factors that would have caused lost sales); Mr'croSrr-ategv
`Inc. v. }3rr.s'r'r1ess' Objects, S.A., 429 17.311 1344, 1355 (Fed
`Cir. 2005) (emphasizing that district courts have "the
`responsibility to exclude an expert opinion that overlooks
`factors that render the testimony unreliable andfor [*22}
`
`speculative"). Even if these other market factors "may not
`have made a difference in the ultimate outcome of his
`analysis," Hofmann's failure to consider them, or to offer
`an explanation for his failure, creates "enough of a doubt
`as to the overall reliability of [his} opinions as to render
`them inadmissible." Smithers v. C&G Custom rlfodttle
`Hauling, 172F. Supp. 2d 765, 77] £1). Va. 2000).
`
`The reliability of Hoftnann‘s lost profits calculations
`is further undermined by the fact that they were based on
`assumptions unsupported by the record. For instance,
`I-lol'nrann assumed that the database listings for Methods
`products had the same effect on the sales of Donnatal
`tablets and elixir. However, this assumption is contrary to
`the very evidence on which Hofmann relied. In his report,
`Hofnrann cited extensively to a declaration executed by
`Aaron Hullett, a sales director For Concordia, in which
`Hullett noted that unit sales of Donnatal tablets decreased
`dramatically
`alter Me-PB-Hyos was
`listed with
`Medi-Span and First Databank. While Hullett went on to
`note that Dormatal is also available as an elixir, he did not
`attempt
`to attribute the decline in elixir sales to the
`presence
`of Me—PB—Hyos
`in
`the
`phannaceutical
`databases.
`instead, Hullett
`acknowledged that
`"the
`majority [*23] of [elixir] sales are to hospitals, which
`generally do not rely on drug databases for purchasing in
`the same manner as pharmacists." Hullett Dec. ll, 201-*1
`Decl.1] 9 (emphasis added).
`
`Even though Hullett expressly recognized that the
`database listings for Me-PB~Hyos would have had a
`lesser impact on the sales of Dormatal elixir, Hofiuann
`nonetheless included 100% of the decline in sales of
`sixteen ounce bottles of Donnatal elixir in his damages
`calculation. See Hofmann Rep. 31-32 (attributing 17,190
`lost unit sales of elixir to Method). The court agrees with
`Method that Hofmann's
`failure to account
`for
`the
`distinction recognized by Hullett further undermines the
`reliability of Hofrnann's lost profit calculations, as does
`his failure to address the fact
`that sales of Donnatal
`tablets and elixir followed the same trajectory during the
`period of alleged harm. See Tyger Corrsrr. Co.
`v.
`Pensacola Cortstr. Ca, 29 F.3d 137, 1-12 {-11}? Cir. 1994)
`(emphasizing that "[a]n expo-rt's opinion as to damages
`must be causally related to the alleged harm" and "should
`be excluded when it is based on assumptions which are
`speculative and are not supported by the record").
`
`the
`For these and other reasons cited by Method,
`court will exclude Hoi'u1a1ur‘s opinion that Concordia
`
`

`
`2016 U.S. Dist. LEXIS 50221, *23
`
`Page 8
`
`than $29.4 million" in lost profits
`suffered "no less {*24]
`from June 2014 through June 2015 “due to the listing of
`Me-PB-Hyos" in the pharmaceutical databases. Hofrnann
`Rep. ‘.l 81. To the extent Concordia argues that Method's
`criticisms of Hot"nrann‘s report go more to the weight of
`his expert
`testimony than its admissibility,
`the court
`disagrees. Concordia has simply not met its burden of
`showing that
`l-lofnrarufs lost profits calculations rest
`upon a suflicient factual basis and a reliabie application
`of established principles and methods. Accordingly, his
`opinion as to the total amount of lost profit damages
`incurred by Concordia must be excluded under Rule 702,
`Daubert, and its progeny?’
`
`As the court noted in ruling on the parties’
`3
`cross—motions for summary judgment, the court's
`decision to limit the opinions offered by Hofmann
`does not necessarily preclude him from testifying
`altogether. His specialized knowledge could still
`assist the jury in other ways, and Concordia may
`present objective data and elicit other factual
`testimony from Hofrnann to support its claim for
`damages.
`
`IV. Wills
`
`Method retained John Wills as a rebuttal damages
`
`expert. Wilts did not attempt to offer his own opinion
`regarding tlte amount of damages [*25}
`suffered by
`Concordia. Instead, he evaluated Hofrnanrfs report and
`ultimately opined that the lost profit damages compiled
`by Mr. Hoftnann "are speculative and inconsistent with
`
`the facts in this case." Wills Rep. 2.
`
`In light of the court's decision to exclude I-1ofmann's
`opinion on the amount of lost profit damages incurred by
`Concordia, it appears that Wills’ rebuttal opinions are no
`longer relevant and that his attendance at trial may be
`unnecessary. Accordingly, the motion to exclude Wills‘
`rebuttal opinions will be dismissed without prejudice.
`Should Method ultimately elect to call Wills as a witness
`and elicit expert opinions from him, the court will revisit
`the admi