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`Argentum Pharmaceuticals LLC, v. Cipla, Ltd.
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`John C. Staines, Jr.
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`Page 1
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` U.S. PATENT AND TRADEMARK OFFICE
` PATENT TRIAL AND APPEAL BOARD
` Washington, D.C.
`
`-----------------------------x
`ARGENTUM PHARMACEUTICALS, :
` :
` Petitioner, :
` :
` vs. : IPR2017-00807
` :
`CIPLA LTD, :
` :
` Patent Owner. :
`-----------------------------x
`
` Washington, D.C.
` Wednesday, April 4, 2018
`EXAMINATION of:
` JOHN C. STAINES, JR.,
`the witness, was called for examination by counsel
`for the Patent Owner, pursuant to notice,
`commencing at 8:50 a.m., at the law offices of
`Foley & Lardner LLP, 3000 K Street, NW,
`Washington, D.C. 20007, before Dawn A. Jaques,
`CSR, CLR, and Notary Public in and for the
`District of Columbia.
`
`______________________________________________
` DIGITAL EVIDENCE GROUP
` 1730 M Street, NW, Suite 812
` Washington, D.C. 20036
` (202) 232-0646
`
`www.DigitalEvidenceGroup.com
`
`Digital Evidence Group C'rt 2018
`
`202-232-0646
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`1
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`CIP2180
`Argentum Pharmaceuticals v. Cipla Ltd.
`IPR2017-00807
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`
`
`4/4/2018
`
`Argentum Pharmaceuticals LLC, v. Cipla, Ltd.
`
`John C. Staines, Jr.
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`Page 2
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`APPEARANCES:
`On behalf of the Patent Owner:
` DENNIES VARUGHESE, ESQ.
` ADAM C. LaROCK, ESQ.
` Sterne, Kessler, Goldstein & Fox
` 1100 New York Avenue, NW, Suite 600
` Washington, D.C. 20005
` PHONE: (202) 772-8805 (Mr. Varughese)
` (202) 772-8794 (Mr. LaRock)
` FAX: (202) 371-2540
` EMAIL: dvarughe@sternekessler.com
` alarock@skgf.com
`
`On behalf of the Petitioner:
` ANDREW R. CHESLOCK, ESQ.
` Foley & Lardner LLP
` Washington Harbor
` 3000 K Street, NW, Suite 600
` Washington, D.C. 20007-5109
` PHONE: (202) 945-6009
` FAX: (202) 672-5399
` EMAIL: acheslock@foley.com
`
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`John C. Staines, Jr.
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`Page 3
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` I-N-D-E-X
`WITNESS: PAGE:
`JOHN C. STAINES, JR.
` Cross-Examination by Mr. Varughese 5
` Redirect Examination by Mr. Cheslock 91
` Phone call to PTAB ............... 96
` Resume Redirect Examination
` by Mr. Cheslock ........... 118
`
` Recross Examination by Mr. LaRock 121
`
` Further Redirect Examination
` by Mr. Cheslock ............... 166
`
` E-X-H-I-B-I-T-S
`EXHIBIT NUMBER: PAGE:
`Exhibit 1171 Errata sheet to declaration
` of John C. Staines ....... 118
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`Argentum Pharmaceuticals LLC, v. Cipla, Ltd.
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`John C. Staines, Jr.
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` INDEX (Continued)
`
`Page 4
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` PREVIOUSLY MARKED EXHIBITS REFERRED TO:
` EXHIBIT NUMBER: PAGE:
`
` CIP2053 .... 37
` CIP2064 .... 34
` CIP2074 .... 33
` CIP2079 .... 40
` CIP2080 .... 42
` CIP2149 .... 33
`
` 1085 ....... 64
` 1136 ....... 152
` 1137 ....... 152
` 1140 ....... 14
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` P R O C E E D I N G S
`Whereupon,
` JOHN C. STAINES, JR.,
` was called as a witness, after having been
` first duly sworn by the Notary Public, was
` examined and testified as follows:
`CROSS EXAMINATION BY COUNSEL FOR THE PATENT OWNER
` BY MR. VARUGHESE:
` Q Good morning, Mr. Staines.
` How are you?
` A Good. Good morning.
` Q Is it okay if I refer to you as
`Mr. Staines?
` A That's fine, yeah.
` Q So I know you just stated your full
`name for the record. Do you understand that
`you're here today because you submitted a
`declaration in an inter partes review proceeding?
` A Yes.
` Q Okay. And you submitted a declaration
`on behalf of Petitioner, Argentum?
` A Yes.
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` Q And you understand that you're under
`oath and you're answering questions under oath,
`correct?
` A I understand that.
` Q Any reason, ailment or medications,
`anything that would preclude you from testifying
`truthfully and accurately today to the best of
`your ability?
` A No.
` Q Okay. How many times have you been
`deposed before?
` A Twice.
` Q Okay. Do you remember in what type of
`proceeding?
` A Yes. One was a review like this, and
`the other one was an antitrust damages case.
` Q Okay. That review, when you say "like
`this," it was another inter partes review?
` A Yes.
` Q Involving a patent?
` A Yes.
` Q Now, did you testify in that
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`proceeding on behalf of the Petitioner or the
`Patent Owner?
` A So I didn't testify per se, but I
`submitted an affidavit and did testify at
`deposition, and that was -- I was retained by the
`Petitioner.
` Q Okay, great. If I were to ask you
`approximately how many times you've submitted
`either a declaration like the one in this
`proceeding or an expert report in a district court
`case involving a pharmaceutical drug,
`approximately how many times would that have been?
` A It's probably indicated on my CV
`that's attached. As I recall, there's probably
`been -- probably been four to five.
` Q Okay. And in those cases, do you
`recall if you submitted your declaration or
`reports on behalf of the patent challenger or the
`Patent Owner?
` A Okay, so those -- let me go back to
`make sure not all those cases were necessarily
`patent cases.
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` The ones that were, I can think of
`two of them where I was retained by the challenger
`to the patent.
` Q So two of them?
` A Right.
` Q So does the drug name Trilipix®, does
`that sound familiar?
` A Yes, it does.
` Q Do you recall submitting a declaration
`or expert report in that case?
` A No.
` Q How about Yaz?
` A Do I recall submitting?
` Q Yeah.
` A No.
` Q Xyzal®, X-Y-Z-A-L?
` A And the question is do I recall
`submitting an expert report? No.
` Q Prevacid®?
` A And so the same question, no.
` Q So did you do any work in conjunction
`with those drugs for those cases?
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` MR. CHESLOCK: Object to form.
` THE WITNESS: And so I work -- I was
`retained to study those and research them, and in
`that sense, do work on it.
` BY MR. VARUGHESE:
` Q But for all four of those drugs I just
`mentioned, you don't recall submitting any type of
`expert report or declaration?
` A That's correct.
` Q And you offered no deposition
`testimony in connection with those drugs?
` A That's correct.
` Q When were you retained by Argentum for
`this case?
` MR. CHESLOCK: Object to the extent
`that it calls for any privileged information, but
`you can acknowledge when you were retained for
`this matter by Argentum.
` THE WITNESS: Sure. It was mid to
`late January.
` BY MR. VARUGHESE:
` Q 2018?
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` A Yes, yes.
` Q And who contacted you?
` MR. CHESLOCK: Same objection. It's
`fine to acknowledge who initially contacted you
`for the engagement.
` THE WITNESS: Okay. So contacted me
`initially, or to say you're engaged?
` BY MR. VARUGHESE:
` Q Both.
` A So initially, I'm not sure. Somebody
`from Argentum called me.
` And to say that I was retained, I
`don't recall. Somebody from Foley Lardner.
` Q And who drafted your declaration?
` A I drafted my declaration.
` Q Okay. And you have personnel --
`you're an employee of Navigant? Strike that.
` You're from Navigant Consulting; is
`that correct?
` A From the sense of I'm employed by
`Navigant.
` Q You're employed by Navigant?
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` A That's correct.
` Q I was just clarifying. I wasn't sure
`if you were like a shareholder or a partner or
`anything like that. I called you an employee.
` Did you have personnel at Navigant
`that assisted you in drafting your declaration?
` A I had personnel that assisted me in
`certain aspects of preparing it, but not actually
`drafting it. I drafted it all.
` Q Okay. And in this proceeding, you
`understand that the '620 patent is the patent at
`issue?
` A Yes.
` Q Have you reviewed that patent?
` A I've reviewed parts of it.
` Q What parts?
` A I've reviewed the claims. And other
`than that, I've skimmed through it, and I can't
`recall what specific parts.
` Q Now, are you aware that the
`'620 patent was the subject of a district court
`trial that took place in December 2016?
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` MR. CHESLOCK: Object to form.
` THE WITNESS: Vaguely. I saw some --
`in the documents that are in the record of the
`case, I saw some declarations that were from
`another case, and so I assume that's what you're
`talking about.
` BY MR. VARUGHESE:
` Q So as part of your analysis for this
`case -- and I'm just trying to make sure I
`understand your response to the previous question.
` So as part of your analysis for this
`case, you said you saw some declarations that were
`from another case?
` A Yes.
` Q Do you know what declarations?
` A No.
` Q Were they concerning commercial
`success?
` A I don't recall reviewing any dealing
`with commercial success. I saw that there were
`declarations there; I didn't review them.
` Q Did you review any part of the trial
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`transcripts from that case?
` A No.
` Q Do you recall reviewing any other
`materials that was part of that district court
`case from 2016?
` A No, except to the extent they were
`referenced in this case and got -- I want to say
`exhibit numbers in this case.
` Q Yeah.
` A Some of those had exhibit numbers or
`deposition numbers from other cases, and so those
`I may have reviewed, but only because it was part
`of this case.
` Q Now, earlier you said that you had
`reviewed portions of the '620 patent as part of
`your analysis.
` A I reviewed it. I mean, part of the
`analysis? You know, I reviewed it as a layman to
`kind of get a general understanding of what it
`covered.
` Q You said you reviewed the claims,
`correct?
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` A In that sense, yes.
` Q How did your review of the claims, if
`at all, affect or inform your analysis for
`purposes of your declaration?
` MR. CHESLOCK: Object to form.
` THE WITNESS: I need something more --
`I mean, I don't know. You know, in a specific
`sense, it may have. I can't recall generally how
`it may -- did or did not inform it.
` BY MR. VARUGHESE:
` Q I'm going to hand you, Mr. Staines,
`what's been previously marked as Exhibit 1140.
` Do you recognize this document?
` A Yes.
` Q And you agree this is a copy of the
`declaration of John C. Staines, Jr., in support of
`Petitioner's Reply to Patent Owner's Response?
` A Yes, this is the text and the -- kind
`of my table and graph exhibits to that.
` Q So this is the declaration that you
`submitted in this IPR, correct?
` A Yes. I mean, to the -- I'll just
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`caveat. To the extent that the CV isn't in here
`and stuff, but this is the text and tables that
`accompany that declaration.
` Q And exhibits?
` A And, yeah, exhibits.
` Q Okay. Let's turn to paragraph 121 of
`your declaration.
` A Yes, I see that.
` Q Now, in this paragraph you state that
`Meda offered rebates of more than 50 percent to
`insurers to ease reimbursement restrictions and
`reduce patient copayment requirements, right?
` A Yes, that's in the first sentence
`there.
` Q Now, did you compare Dymista®'s
`rebates to other rebates in the industry?
` A In some sense, yes.
` In the sense that, first of all, I
`cite a document that discusses rebates for other
`drugs, brand drugs, in the industry. And then,
`secondly, I had quite a bit of experience on my
`own just, you know, looking at drugs and knowing
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`the extent of rebates.
` So those two things combined, in that
`sense, I concluded that the rebates were
`comparatively high.
` Q Do you talk about any of that in
`paragraph 121?
` A Let's see. I'm not sure if I do.
` The exhibit numbers, it's always hard
`to say what exhibit is cited there, but if I have
`it in this particular paragraph, I've cited it
`elsewhere, the Fortune document.
` Q And anywhere in your declaration,
`whether in paragraph 121 or elsewhere, do you
`compare this rebate to rebates for other branded
`drugs?
` MR. CHESLOCK: Object to form.
` THE WITNESS: Could you repeat that
`again?
` BY MR. VARUGHESE:
` Q So anywhere in your declaration,
`whether in paragraph 121 or elsewhere, do you
`compare Dymista®'s rebate to rebates for other
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`branded medicines?
` MR. CHESLOCK: Object to form.
` THE WITNESS: So by compare -- so in a
`couple ways. Elsewhere in the report -- and I
`can't tell you offhand where -- I've indicated
`that the rebates are higher than normal, and I
`cite in support of that a particular document as
`an example to show that it's high.
` I also at the beginning of the report
`indicate that my conclusions are also based on my
`experience working in the field as a consultant,
`and the cases that I've worked on are cited in the
`résumé. So as a general thing up front, I've also
`indicated that.
` BY MR. VARUGHESE:
` Q But can you point me to anywhere in
`your declaration where you discuss that?
` A It's in here. I can't. We could take
`time to do it, but I'd have to -- I'd have to look
`in here, find that citation.
` Q That's fair enough. I certainly don't
`want to waste your time or mine, but you're
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`confident you think it's in the report?
` A Absolutely. There's a Fortune
`document that talks about all the different
`rebates for a number of different drugs.
` Q Did you examine or investigate what
`extent of Dymista®'s sales were attributable to
`the rebate program?
` A What do you mean by "attributable"?
`That were generated by? That the quantities were
`generated by the rebates?
` Q That's one interpretation, sure.
` A Okay. No, I don't have a precise
`estimate of what proportion was other than it was
`a primary driver.
` Q Did you undertake any analysis or
`discussion in your declaration about what portion
`of Dymista®'s sales were due to the rebate program
`versus the patented features?
` MR. CHESLOCK: Object to form.
` THE WITNESS: What I've addressed is
`the primary drivers, and that the patented
`features, for reasons discussed in a particular
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`Page 19
`section of the report, were likely not significant
`drivers; and that the rebates, combined with the
`copayments, combined with the high share of voice
`in marketing, that those were primary drivers.
` I haven't attempted, and I don't think
`I could, attribute, you know, quantitatively what
`proportion of the sales were due to the particular
`factors.
` BY MR. VARUGHESE:
` Q Do you think any of the sales could
`have been due to the patented features?
` MR. CHESLOCK: Object to form.
` THE WITNESS: And due to -- could you
`maybe define that a little more? Well, I'll ask
`you if you could define what you mean by "due to."
` BY MR. VARUGHESE:
` Q You don't understand what I mean when
`I say do you think any of the sales could have
`been due to the patent features?
` A I think that's ambiguous.
` Q What part of it?
` A The whole thing.
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` Q I mean, I want to clarify the question
`so you understand, so I want to know what part you
`don't --
` A Yeah, I just want to know what you
`mean by "due to."
` Q Have you ever heard of the phrase "due
`to"?
` A I have, but in a lot of contexts.
` Q Do you have an understanding of what
`"due to" means?
` A In a given context. I need a context
`though.
` Q Just pick a context and give me your
`understanding and we'll see if it matches mine.
` A So could it be due to the patented
`features? So, for instance, do you mean any of
`the patented features?
` Q Sure, yeah.
` A Any one of them, or all of them?
` Q Let's start with any one of them, and
`then maybe, depending on your answer, we can do
`them all.
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` A Yeah, I think it's possible that some
`of the sales may have been due to that in some
`sense, directly or indirectly.
` Q Earlier in one of your responses you
`used the phrase "primary driver." What is that?
` A That the sales, incremental sales,
`were made because of that factor, and that that
`was the primary factor, more important than other
`factors, to generate those sales.
` Q Let's turn to paragraph 123 of your
`declaration.
` A I'm there.
` Q In this paragraph, you discuss how
`Meda offered a copayment card to reduce patient's
`co-payment obligations, correct?
` A Yes.
` Q Did you look to see whether
`competitors were offering similar copayment card
`programs?
` A No, I didn't look to see if
`competitors were.
` Q Do you think that would have been
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`relevant to understanding Dymista®'s copayment
`card program?
` A No.
` Q Why not?
` A I didn't see why it would.
` Q And in your declaration, do you
`discuss what extent the Dymista® sales were
`attributable to the copayment card program?
` A Again, I don't, and I don't think can,
`estimate the precise percentage, or even general
`percentage, other than to say it was a primary
`driver for reasons that I've discussed at length
`in this long report.
` Q Did you investigate or have any
`analysis that talks about impact of Dymista®'s
`copayment rebate program on consumers?
` A I'm sorry, could you repeat that
`again?
` Q Sure. Did you investigate or conduct
`any analysis in your declaration that assesses the
`impact that Dymista®'s copayment rebate program
`had on consumers or patients?
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` A So in this sense, that I gave economic
`reasons and cited economic articles and other
`industry articles indicating that copayment was
`important, a critical factor in deciding or
`determining sales quantity; that rebates were
`important in determining insurance coverage, which
`in turn was very important in determining
`quantity.
` And then indicating that, in
`Dymista®'s case, the copayments brought the
`effective price down to patients to something
`close to a generic drug, and that where the
`rebates were accepted by insurers to give
`favorable reimbursement status -- low copayments,
`no prior authorization, a lot of those kind of
`things -- that they were able to get those because
`of the high rebates that were offered.
` So that was my analysis.
` Q Would you agree that this sort of
`copayment rebate program is standard in the
`pharmaceutical industry?
` A In recent years, it's become more
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`prevalent. It's a very controversial practice
`because it does -- or has been accused of trying
`to get around the insurers' efforts to discourage
`use of drugs that are not significant improvement
`over other drugs.
` There's that, and then actually it's
`been subject to a lot of, I think antitrust suits
`or suits that try to -- you know, that indicate
`that it's somehow illegal or anticompetitive or
`something, but it has become more prevalent.
` Now, the extent to which it reduces
`the copayment, that varies, but reducing the
`copayment to something close to generic, I don't
`think that that is common.
` Q Now, is it your position that a rebate
`program like this precludes a finding of
`commercial success?
` MR. CHESLOCK: Object to form.
` THE WITNESS: So what do you mean
`"like this"? This specific --
` BY MR. VARUGHESE:
` Q I'm sorry, let me be more accurate.
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` Is it your position that rebate
`programs, such as the one that Dymista® has,
`precludes a finding of commercial success?
` MR. CHESLOCK: Object to form.
` THE WITNESS: I can't say that. I
`mean, I think this is -- you have to kind of look
`at it in the context of the whole thing.
` You know, this in conjunction with the
`copayment program; that, in my opinion, the drug
`is not all that innovative; and it's questionable
`how much -- that there's not much that is likely
`coming from the features of the patent.
` All those things together would
`indicate that, yeah, this rebate program is a
`significant driver in sales. But in other cases,
`I can't say that categorically.
` BY MR. VARUGHESE:
` Q When you say that it's your opinion
`that you don't think this drug is innovative,
`what's your basis for that?
` A I have a section in here, it starts I
`think at paragraph 109, "Dymista® Has Minimal
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`Incremental Benefit Over Concurrent Use of
`Individual Antihistamine and Corticosteroid
`Products," and in there I discuss the comparisons
`that are made between Dymista® and using
`antihistamine and corticosteroids separately or
`concurrently, and that the evidence that it's
`superior is not strong, I'll put it that way. I
`use more articulate words in here.
` Q That's fine. You're plenty
`articulate.
` When you say the evidence, are you
`talking about clinical evidence?
` A That's one of the things.
` Q What else?
` A Let's see. So one of the -- I'll
`probably go through here. What's difficult is
`that, with the exhibit numbers, I don't remember
`what the documents are, so I'll try to remember
`the particular documents that I'm thinking of.
` There was a global something study
`that discussed that there was limited evidence of
`Dymista® being better than concurrent use of the
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`antihistamine and corticosteroids in the
`particular of Astepro®, Astelin, and Flonase®
`separately.
` There was a document, I think it was
`like a physician focus group study, that talked
`about the physicians, ENTs and allergists, that
`were surveyed indicated they didn't find that a
`combination drug provided that much benefit over
`another drug -- over the concurrent use.
` Let's see. Let me now look in the
`report and see what else I have on that.
` Oh, so the other thing is that as a
`life cycle management strategy, to get -- to
`generate sales of a follow-on product does not
`require significant incremental benefits, so -- so
`I'll stop with that.
` What else? I think that I relied on a
`declaration by Dr. Schleimer.
` Q "Schleimer"?
` A "Schleimer," thank you, who also
`indicated that the -- his opinion -- gave the
`opinion that the Dymista® was not -- didn't
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`provide benefits over concurrent use of these
`products.
` And there might be a couple other
`things I'm forgetting.
` Q Okay. Going back to paragraph 123 and
`your opinions concerning the rebate program, as
`part of your analysis or work in this case, did
`you conduct any patient surveys to assess the
`impact of the rebate program on patients?
` A I didn't -- no, I didn't conduct any
`surveys. I didn't think I needed to.
` Q Any type of study or investigation
`into how the rebate program affected patients'
`purchasing decisions?
` A No. I'm sorry, could you repeat that
`again?
` Q Sure. Did you conduct any type of
`study or investigation into how the rebate program
`might have affected patients' purchasing
`decisions?
` A Well, so now those aren't surveys.
`Study or investigation, I've done that, and I
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`think I mentioned that before, where I looked at
`economic articles and, you know, economic
`reasoning on why these things are important, so
`that's -- I consider that study and investigation,
`so yes.
` Q That was specific to Dymista®, any of
`those materials?
` A No, not specific, no. No, that's not
`necessary in my opinion.
` Q Now, in your declaration you discuss
`the impact that Meda salesforce had on Dymista®
`sales, correct?
` A Yes. I mean, a little more specific
`than that, but yes.
` Q Generally, you discuss the salesforce?
` A Yes.
` Q But do you recall in your declaration
`you delineating or attributing a portion of
`Dymista®'s sales to its salesforce?
` A I indicated and came to the opinion
`that it was a primary contributor to Dymista®
`sales.
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` Q Let's say that that salesforce was cut
`in half. What impact do you think that would have
`on Dymista® sales?
` MR. CHESLOCK: Object to form.
` THE WITNESS: I think it would reduce
`their sales.
` BY MR. VARUGHESE:
` Q Do you know to what extent it might?
` A No.
` Q Do you think if Dymista® was a bad
`product, the salesforce would -- strike that.
` Do you think that if Dymista® was a
`bad product, it would still have the same sales?
` A I need to know what a bad product is.
`Bad product that kills people? Bad product
`that --
` Q That's pretty morbid.
` A Sorry. You know, I mean, what do you
`mean by a bad product?
` Q Undesirable, something that patients
`don't like.
` A I think it depends. You know,
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