Case 2:20-cv-04602-MSG Document 85 Filed 07/22/21 Page 1 of 26
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF PENNSYLVANIA
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`HUMANA, INC.,
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`Plaintiff,
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`INDIVIOR INC. f/k/a RECKITT
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`BENCKISER PHARMACEUTICALS,
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`INC., et al.,
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`Defendants.
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`CENTENE CORPORATION, et al.
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`Plaintiffs,
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`INDIVIOR INC. f/k/a RECKITT
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`BENCKISER PHARMACEUTICALS,
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`INC., et al.
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`____________________________________:
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`Goldberg, J.
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`CIVIL ACTION
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`NO. 20-4602
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`CIVIL ACTION
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`NO. 20-5014
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` July 22, 2021
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`MEMORANDUM OPINION
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`In yet another chapter of the ongoing litigation relating to the marketing and distribution of
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`the addiction treatment drug Suboxone®, Plaintiffs,1 both healthcare providers, have filed lawsuits
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`against Defendants Indivior Inc. f/k/a/ Reckitt Benckiser Pharmaceuticals, Inc. (“Indivior”) and
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`1
`One suit was brought by Humana, Inc. (“Humana”), and the other was brought by The
`Centene Company, WellCare Health Plans, Inc., New York Quality Healthcare Corporation d/b/a
`Fidelis Care, and Health Net LLC (the “Centene Plaintiffs”). I refer to all of these entities
`collectively as “Plaintiffs.”
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`Case 2:20-cv-04602-MSG Document 85 Filed 07/22/21 Page 2 of 26
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`several related entities.2 The two Complaints set forth multiple claims under the Racketeering
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`Influenced and Corrupt Organizations Act (“RICO”), state law common law fraud, state law
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`antitrust laws, state unfair and deceptive trade practices laws, state insurance laws, and for unjust
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`enrichment.
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`Defendants have moved to dismiss these Complaints. For the following reasons, I will grant
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`these Motions and dismiss both Complaints against all Defendants.
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`I.
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`FACTS IN THE COMPLAINTS
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`The following facts are taken from Plaintiffs’ Complaints.3
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`Suboxone® is a drug approved for use by recovering opioid addicts to avoid or reduce
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`withdrawal symptoms while they undergo treatment for opioid-use disorder. Indivior—known at
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`the time as Reckitt Benckiser Pharmaceuticals, Inc.—introduced Suboxone in tablet form in 2002
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`under an “orphan drug” designation by the Food and Drug Administration (“FDA”). Suboxone
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`tablets soon reached annual United States sales of over $1 billion. (Compl., Civ. A. No. 20-4602
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`(“Humana Compl.), ¶ 1.)
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`In 2009, Indivior was facing the expiration of its regulatory exclusivity for Suboxone tablets
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`and the impending entry of generic versions of Suboxone tablets. According to the Complaints,
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`2
`Aside from Indivior, Plaintiffs have sued Indivior Solutions, Inc. f/k/a Reckitt Benckiser
`Pharmaceuticals Solutions, Inc. (“Indivior Solutions”), Reckitt Benckiser Group plc (“RBG”),
`Reckitt Benckiser Healthcare (UK) Ltd. (“Reckitt UK”), and Aquestive Therapeutics, Inc. f/k/a
`MonoSol Rx, LLC (“Aquestive”). I refer to all of these entities collectively as “Defendants.”
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` 3
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`In deciding a motion under Federal Rule of Civil Procedure 12(b)(6), the court must accept
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`all factual allegations in the complaint as true, construe the complaint in the light most favorable to
`the plaintiff, and determine whether, under any reasonable reading, the plaintiff may be entitled to
`relief. Atiyeh v. Nat’l Fire Ins. Co. of Hartford, 742 F. Supp. 2d 591, 596 (E.D. Pa. 2010).
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`The two Complaints before me here are substantially identical. As such, when discussing
`the relevant facts pled, I will cite only to the Humana Complaint in Civil Action No. 20-4602. To
`the extent there is a critical difference between the two Complaints, I will identify that distinction
`and cite to both Complaints.
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`2
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`Case 2:20-cv-04602-MSG Document 85 Filed 07/22/21 Page 3 of 26
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`Indivior undertook a “complex, sophisticated scheme” to “introduce a fraudulent new product in
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`order to keep its Suboxone drug prices artificially high and unlawfully impede generic
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`manufacturers from competing effectively.” (Id. ¶ 2.) The Complaints address the alleged impact
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`of Defendants’ actions on Plaintiffs.
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`A. The Parties
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`Humana and the Centene Plaintiffs are providers of healthcare related services and insure
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`risk for prescription drug costs for more than eight million members in all fifty states, the District
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`of Columbia, and Puerto Rico. (Id. ¶ 11; Compl., Civ. A. No. 20-5014 (“Centene Compl.”), ¶¶ 11–
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`14.)
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`Defendant Indivior is a wholly-owned subsidiary of Indivior plc and is engaged in the
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`development, manufacture, and sale of Suboxone throughout the United States. Until December
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`12, 2014, Indivior was a wholly-owned subsidiary of RBG and was known as Reckitt Benckiser
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`Pharmaceuticals. On December 23, 2014, Indivior plc acquired Indivior when Indivior plc was
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`demerged from RBG. (Humana Compl. ¶ 12.)
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`Defendant Indivior Solutions employed the marketing and sales personnel for the Indivior
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`group of companies. Defendant Indivior plc is a British corporation that, according to Plaintiffs,
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`owned, controlled, managed, and operated Indivior. Defendant RBG is also a British corporation
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`that manufactures and markets numerous consumer products and, according to the Complaints, was
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`responsible for the initiation of the conduct at issue in this case. The Complaints allege that, in all
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`relevant respects, Indivior plc is the successor to RBG and has continued RBG’s conduct. (Id. ¶¶
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`13, 14, 15, 17.)
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`Reckitt UK is a British company that purportedly established the parameters for the timing
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`of the launch and the formulation of Suboxone film and, according to the Complaints, was intricately
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`involved with the alleged anticompetitive scheme. (Id. ¶ 16.)
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`Defendant Aquestive is a New Jersey-based corporation, which, during the relevant time
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`period, was known as MonoSol. According to Plaintiffs, Aquestive was integral to the alleged anti-
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`competitive and racketeering scheme through its development of the Suboxone film. (Id. ¶¶ 19–
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`20.)
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`B.
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`The Regulatory Structure for Approval and Substitution of Generic Drugs
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`The Hatch-Waxman Act provides regulatory exclusivity for new pharmaceuticals while
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`providing a pathway for entry of low-priced generic drugs. A company seeking to market a new
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`pharmaceutical product must file a New Drug Application (“NDA”) with the FDA demonstrating
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`the safety and efficacy of the new product. These NDA-based products are referred to as “brand-
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`name” or “branded” drugs, and they are entitled to regulatory exclusivity for a limited period of
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`time. When regulatory exclusivity is about to expire, a generic drug company may submit an
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`Abbreviated New Drug Application (“ANDA”) demonstrating that the generic version is essentially
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`the same as a branded version. (Id. ¶ 25.)
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`A seven-year regulatory exclusivity period for an NDA approved drug can also be obtained
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`by applying for orphan drug exclusivity with the FDA under 21 C.F.R. § 316, either (a) on the basis
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`that a product is intended to treat a disease or condition that has a United States prevalence of less
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`than 200,000 persons, or (b) where the sponsor can show that there is no reasonable expectation that
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`the costs of developing and making the drug available will be recovered from United States sales,
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`despite the fact that the disease or condition treated has a United States prevalence of more than
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`200,000 persons. (Id. ¶ 26.)
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`Generic drugs can be substituted at the pharmacy to fill a prescription for a branded drug.
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`Both the federal government, through the Hatch-Waxman Act, and all fifty states provide drug
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`substitution laws that encourage and facilitate this type of substitution. Thus, when a pharmacist
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`fills a prescription for a branded drug, the laws allow or require that a less expensive generic version
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`be dispensed, unless a physician or patient directs otherwise. Such state substitution laws were
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`enacted, in part, to correct a “disconnect” between payment obligations and product selections, i.e.,
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`the doctor who selects the drug does not pay for it and, therefore, has no incentive to consider price.
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`Due to these substitution laws, less-expensive generic drugs typically capture over 80% of a branded
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`drug’s sales within six months. In turn, the lower cost generic drugs save consumers billions of
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`dollars a year. (Id. ¶¶ 27–30.)
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`C.
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`The Suboxone Hard Switch Scheme
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`Again, the following facts describing the alleged scheme are taken from Plaintiffs’
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`Complaints.
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`Indivior obtained FDA approval for Suboxone tablets in 2002. Subsequently, Indivior
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`applied for and received orphan drug exclusivity for Suboxone based on Indivior’s claims that it
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`was the first buprenorphine drug approved for the treatment of opioid addiction and Indivior would
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`not recover the costs of developing the tablets. Nonetheless, during its seven-year period of
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`exclusivity, Indivior earned over one billion dollars from marketing and selling Suboxone tablets in
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`the United States. (Id. ¶¶ 33–34.)
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`As Indivior’s seven-year exclusivity was set to expire on October 8, 2009, it became aware
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`that multiple generic manufacturers were seeking FDA approval to market generic versions of
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`Suboxone, which would significantly deplete Indivior’s Suboxone sales. Accordingly, Indivior
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`began to devise a strategy to develop a new dosage form of Suboxone and submit another NDA on
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`this new form. (Id. ¶¶ 36–38.)
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`In connection with this strategy, Indivior discovered Aquestive, whose sole offering as a
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`business is its development of a drug delivery formulation known as sublingual film or
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`“PharmFilm.” Aquestive’s business model encourages companies to use its dosage form to extend
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`a drug’s exclusivity on the market. In December 2006, Indivior and Aquestive executed an initial
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`contract that initiated a joint venture to create and manufacture Suboxone film using Aquestive’s
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`PharmFilm technology. Aquestive negotiated with Indivior to receive royalty payments on sales of
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`Suboxone film. (Id. ¶¶ 39–40.)
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`Between December 2006 and March 2007, Indivior and others discussed additional ways to
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`delay FDA approval of generic versions of Suboxone tablets by raising false safety concerns about
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`Indivior’s own Suboxone tablets, and then discontinuing tablets under the pretext of those safety
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`concerns. Thereafter, in July 2007—more than two years before its orphan drug exclusivity
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`expired—Indivior announced to the FDA that it planned to seek approval to market a sublingual
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`film version of Suboxone. On October 20, 2008, Indivior submitted a new NDA to the FDA for its
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`Suboxone sublingual film. (Id. ¶¶ 42–44.)
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`While awaiting FDA approval of Suboxone film, Indivior devised marketing plans for the
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`drug, which included, in large, part, driving formulary support for Suboxone film through payors
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`such as Plaintiffs. On June 9, 2009, Indivior’s Medical Director told fellow Indivior medical
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`personnel, “We need to develop a story about childhood exposures to set the stage for switching
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`patients to” Suboxone film. This safety story became central to the Suboxone film. Subsequently,
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`on October 5, 2009, Indivior sent a letter to the FDA asking whether the FDA agreed that Suboxone
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`film’s packaging would protect against diversion (e.g., illegal selling, sharing, and smuggling of
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`Suboxone) and accidental child exposure (i.e., children taking Suboxone by accident). The FDA
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`did not respond until March 29, 2010, at which time it rejected Indivior’s claim that Suboxone film’s
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`packaging would protect against diversion and accidental child exposure. (Id. ¶¶ 45–48, 51.)
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`In the meantime, on November 24, 2009, Indivior resubmitted its NDA for Suboxone film
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`to the FDA, including a revised Risk Evaluation Management Strategy (“REMS”) to address safety
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`concerns related to the film product. Aquestive remained active in the NDA-approval process. On
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`August 30, 2010, the FDA approved Indivior’s application to market the film formulation. (Id. ¶¶
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`49, 55.)
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`Thereafter, Indivior’s Chief Executive Officer told its parent group, RBG, that “We will be
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`making the most of every minute between now and generic approval to convert our tablet business
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`to film,” including a “Full Blitz campaign for salesforce through Thanksgiving.” For the “Full Blitz”
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`campaign, Indivior’s salespeople planned to raise “diversion and misuse and pediatric safety” in
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`sales presentations to physicians, even though there were no scientific studies to establish that
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`Suboxone film was safer with regard to diversion, misuse, or pediatric safety. In fact, according to
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`the Complaints, in many respects the film formulation had numerous drawbacks compared to the
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`tablets. (Id. ¶¶ 55, 58.)
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`Plaintiffs allege that Indivior and Aquestive then focused its marketing campaign on the idea
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`of selling Suboxone film in single-serving, or “unit-dose” packaging, and asserting that this packing
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`made the product safer than tablets to prevent pediatric exposure. Indivior’s CEO encouraged
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`marketing personnel to convert patients from tablets to film using this story. Indivior Solutions
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`employed the marketing and sales personnel or the Indivior group of companies and, on September
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`6, 2010, an Indivior Solutions national sales supervisor emailed approximately fifty Indivior
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`salespeople, encouraging them to tell physicians that Suboxone film was “safer because of the
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`packaging.” Thereafter, and throughout the relevant time period, Indivior Solutions’ sales
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`representatives continued to make “false and fraudulent statements in order to induce and, in some
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`cases, coerce, physicians, pharmacists, and other health care providers to prescribe and dispense
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`Suboxone film and recommend the prescribing and dispensing of Suboxone film.” According to
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`Plaintiffs, however, Indivior’s “child safety” rationale was a complete fabrication and designed
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`solely to impair generic competition and maintain its monopolistic profits. Indeed, Plaintiffs allege
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`that “[i]f Indivior really believed that unit-dose packaging was necessary to protect children from
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`accidental exposure to Suboxone, Indivior would have sold its Suboxone tablets in unit dose
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`packages.” Notably, until FDA approval of generic Suboxone tablets was imminent, Indivior never
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`told or suggested to the FDA that tablets in multi-unit bottles presented an undue safety concern for
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`children. (Id. ¶¶ 63, 54, 55, 71–73, 75, 77, 80.)
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`According to the Complaints, the fraudulent marketing blitz would not work fast enough for
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`Indivior to convert the patient population before generic drugs came onto the market. As such,
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`starting in or about 2010, Indivior significantly raised the price of Suboxone tablets, but not the price
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`of Suboxone film, thus creating an “artificial price difference to push patients to switch from the
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`tablets to the film.” In addition, on September 14, 2012, Indivior began a public relations strategy
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`to discontinue the Suboxone tablet, using a perception of discontinuation as a means for “blunting
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`generic/competitive entry.” Indivior then sent a “Notice of Discontinuance” of the Suboxone tablet
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`to the FDA, on September 18, 2012, stating the reason was “increasing concerns regarding pediatric
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`exposure to” the Suboxone tablet. One week later, Indivior issued a press release advising the public
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`and doctors that Indivior intended to withdraw the tablets from the market within the next six months
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`“due to increasing concerns with pediatric exposure.” (Id. ¶¶ 84–86, 88–89.)
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`D.
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`The Shared REMS Program and Indivior Citizen Petition
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`Plaintiffs also allege that, in order to give itself more time to switch the market from
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`Suboxone tablets to film, Indivior used additional anticompetitive tactics to delay the FDA’s
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`approval of competitors’ ANDAs for generic Suboxone tablets. (Id. ¶ 93.)
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`The first tactic involved the Single Shared REMS (“SSRS”) Program. On January 6, 2012,
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`the FDA advised Indivior and the generic manufacturers that the generic Suboxone tablets would
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`be subject to an SSRS program and that all ANDA filers would need to contact Indivior to
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`collaborate on the creation and implementation of an SSRS program that addressed pediatric
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`exposures. The FDA mandated compliance by May 6, 2012. Instead of coordinating its efforts and
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`resources with ANDA applicants, however, Indivior unilaterally retained the services of the
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`Research Abuse, Diversion and Addiction-Related Surveillance System and Venebio Group, LLC
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`to prepare a study on the risk of pediatric exposure to Suboxone tablets, but not Suboxone film.
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`Plaintiffs allege that Indivior’s goal in doing so was to ensure blocking, or at least delaying, ANDA
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`applications. In addition, during the SSRS process, Indivior engaged in other delay tactics, flat
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`refusals to participate, and pretextual conditions on participation. (Id. ¶¶ 94, 97, 98.)
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`On May 6, 2012, ANDA filers jointly requested a meeting with the FDA to discuss the delays
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`created by Indivior. The FDA scheduled a meeting on June 18, 2012 and invited all ANDA filers
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`and Indivior. At that time, the FDA asked the ANDA filers and Indivior to develop a new SSRS
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`based upon the requirements set forth in the REMS Notification Letter without using any of
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`Indivior’s existing information. Indivior agreed to cooperate but failed to actually do so. (Id. ¶¶
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`101–02.)
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`According to Plaintiffs, Indivior then engaged in a second delay tactic—the filing of a sham
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`citizen petition with the FDA. On September 25, 2012, with FDA approval of generic Suboxone
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`tablets imminent, Indivior announced its intent to permanently withdraw Suboxone tablets from the
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`market for purported public safety reasons and, at the same time, filed a citizen petition with the
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`FDA. The petition asked the FDA to withhold approval of general Suboxone tablet ANDAs unless:
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`(1) the ANDA contained a targeted pediatric exposure education program; and (2) the ANDA
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`product had child-resistant unit-dose packaging. It also asked that the FDA refrain from approving
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`any generic Suboxone tablet ANDA until it determined whether Indivior discontinued the Suboxone
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`brand tablet for safety reasons. Indivior’s allegations were contrary to previous statements it had
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`made to the FDA regarding the safety of its tablet packaging. As a result of the citizen petition, the
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`FDA delayed approval of the generic Suboxone tablet ANDAs for five months while it investigated
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`the allegations. On February 22, 2012. The FDA denied the petition as baseless, finding that the
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`data did not support any of Indivior’s allegations. (Id. ¶¶ 104, 106, 107, 108, 110, 112.)
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`The FDA alerted the Federal Trade Commission (“FTC”) to Indivior’s conduct, and the FTC
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`subsequently sued Indivior for its product hopping and abuse of the citizen petition process, alleging
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`that in “September 2012, Indivior submitted a citizen petition requesting that the FDA reject any
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`generic Suboxone tablet applications or subject them to additional requirements because it knew
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`doing so could delay approval of generics while the FDA reviewed it. The petition misrepresented
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`a study that Indivior had commissioned and falsely claimed that there was evidence that the
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`packaging of Suboxone Film reduced the risk of pediatric exposures.” (Id. ¶ 117.)
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`On the same day that the FDA rejected Indivior’s citizen petition, it granted the generic
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`pharmaceutical companies’ ANDA applications. The damage caused by the delay, however, was
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`already done. By the time generic manufacturers began selling generic Suboxone tablets in late
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`February 2013, the prescription base for Suboxone tablets had already been destroyed and
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`approximately 85% of Suboxone prescriptions were already being written for the film version of
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`Suboxone. (Id. ¶¶ 115, 117.)
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`Defendants also filed patent litigation against generic film competitors. Once Defendants
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`had been defeated in the first patent litigation, they filed new patent applications and then pursued
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`successive patent litigation against generic competitors. (Id. ¶ 120.)
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`F.
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`Procedural History
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`On September 18, 2020, Plaintiffs filed Complaints against Defendants alleging that, as a
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`result of Defendants’ conduct, Plaintiffs (a) reimbursed prescriptions for Suboxone that otherwise
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`would not have been made and/or (b) paid the higher prices that resulted from the illegal conduct.
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`(Id. ¶ 192.)
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`Both Complaints set forth the following causes of action: (a) violations of the Racketeer
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`Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962(c) against the Indivior
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`Defendants; (b) conspiracy to violate the RICO Act, 18 U.S.C. § 1962(d) against all Defendants; (c)
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`fraud under state law against all Defendants; (d) monopolization and monopolistic scheme under
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`various state laws against all Defendants except Reckitt UK; (e) attempted monopolization under
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`state law against all Defendants except Reckitt UK; (f) unfair and deceptive trade practices under
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`various state laws against all Defendants; (g) insurance fraud under state law against all Defendants;
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`and (h) unjust enrichment against all Defendants.
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`On January 15, 2021, four Motions to Dismiss, under Federal Rules of Civil Procedure
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`12(b)(1) and 12(b)(6), were filed by (1) Indivior and Indivior Solutions; (2) Indivior plc; (3) RBG
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`Group and Reckitt UK; and (4) Aquestive.
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`II.
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`STANDARDS OF REVIEW
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`A. Rule 12(b)(1) Standard
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`Federal Rule of Civil Procedure 12(b)(1) permits a party to bring a motion to dismiss for
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`lack of subject matter jurisdiction. See Fed. R. Civ. P. 12(b)(1). The burden of establishing federal
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`jurisdiction rests with the party asserting its existence. DaimlerChrysler Corp. v. Cuno, 547 U.S.
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`332, 342 n.3 (2006). A district court must first determine “whether a Rule 12(b)(1) motion presents
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`a ‘facial’ attack or a ‘factual’ attack on the claim at issue, because that distinction determines how
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`the pleading must be reviewed.” Constitution Party of Pennsylvania v. Aichele, 757 F.3d 347, 357
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`(3d Cir. 2014).
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`A facial attack, as the adjective indicates, is an argument that considers a claim on its face
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`and asserts that it is insufficient to invoke the subject matter jurisdiction of the court. Id. at 358.
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`When evaluating a facial attack, like the one before me, courts apply the same standard of review
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`used when “considering a motion to dismiss under Rule 12(b)(6), i.e., construing the alleged facts
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`in favor of the nonmoving party.” Aichele, 757 F.3d at 358.
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`B. Rule 12(b)(6) Standard
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`Under Federal Rule of Civil Procedure 12(b)(6), a defendant bears the burden of
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`demonstrating that the plaintiff has not stated a claim upon which relief can be granted. Fed. R. Civ.
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`P. 12(b)(6); see also Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). The United States
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`Supreme Court has recognized that “a plaintiff’s obligation to provide the ‘grounds’ of his
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`‘entitle[ment] to relief’ requires more than labels and conclusions.” Bell Atl. Corp. v. Twombly,
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`550 U.S. 544, 555 (2007) (quotations omitted). “[T]hreadbare recitals of the elements of a cause of
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`action, supported by mere conclusory statements, do not suffice” and only a complaint that states a
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`plausible claim for relief survives a motion to dismiss. Ashcroft v. Iqbal, 556 U.S. 662, 678–79
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`(2009). “A claim has facial plausibility when the plaintiff pleads factual content that allows the
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`court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.
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`at 678. A complaint does not show an entitlement to relief when the well-pleaded facts do not permit
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`the court to infer more than the mere possibility of misconduct. Id. at 679.
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`The Court of Appeals has detailed a three-step process to determine whether a complaint
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`meets the pleadings standard. Bistrian v. Levi, 696 F.3d 352 (3d Cir. 2014). First, the court outlines
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`the elements a plaintiff must plead to state a claim for relief. Id. at 365. Next, the court must “peel
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`away those allegations that are no more than conclusions and thus not entitled to the assumption of
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`truth.” Id. Finally, the court “look[s] for well-pled factual allegations, assume[s] their veracity, and
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`then ‘determine[s] whether they plausibly give rise to an entitlement to relief.’” Id. (quoting Iqbal,
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`556 U.S. at 679). The last step is “‘a context-specific task that requires the reviewing court to draw
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`on its judicial experience and common sense.’” Id. (quoting Iqbal, 556 U.S. at 679).
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`
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`Notably, claims of fraud are subject to a heightened pleading standard. Federal Rule of Civil
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`Procedure 9(b) provides: “[i]n alleging fraud or mistake, a party must state with particularity the
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`circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a
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`person’s mind may be alleged generally.” Fed. R. Civ. P. 9(b). This heightened pleading standard
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`requires “plaintiffs to plead with particularity the ‘circumstances’ of the alleged fraud in order to
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`place the defendants on notice of the precise misconduct with which they are charged, and to
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`safeguard defendants against spurious charges of immoral and fraudulent behavior.” Seville Indus.
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`Mach. Corp. v. Southmost Mach. Corp., 742 F.2d 786, 791 (3d Cir. 1984). Stated differently, “Rule
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`9(b) requires, at a minimum, that plaintiffs support their allegations of . . . fraud with all of the
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`essential background that would accompany the first paragraph of any newspaper story[,] that is,
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`the who, what, when, where and how of the events at issue.” In re Rockefeller Ctr. Props., Inc. Sec.
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`Litig., 311 F.3d 198, 217 (3d Cir. 2002) (citation and internal quotation marks omitted).
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`III. MOTION TO DISMISS BY DEFENDANTS INDIVIOR AND INDIVIOR
`SOLUTIONS
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`
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`A. RICO Claims
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`The RICO statute, 18 U.S.C. § 1962(c) makes it “unlawful for any person employed by or
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`associated with any enterprise . . . to conduct or participate, directly or indirectly, in the conduct of
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`such enterprise’s affairs through a pattern of racketeering activity.” Id. To plead a RICO claim
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`under § 1962(c), “the plaintiff must allege (1) conduct (2) of an enterprise (3) through a pattern (4)
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`of racketeering activity.” In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 362 (3d Cir. 2010)
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`(quoting Lum v. Bank of Am., 361 F.3d 217, 223 (3d Cir. 2004)). An “enterprise” includes “any
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`individual, partnership, corporation, association, or other legal entity, and any union or group of
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`individuals associated in fact although not a legal entity.” Id. at 362–63 (quoting 18 U.S.C. §
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`1961(4)). A “pattern of racketeering activity” requires at least two predicate acts of racketeering
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`Case 2:20-cv-04602-MSG Document 85 Filed 07/22/21 Page 14 of 26
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`within a ten-year period. Id. at 363. The predicate acts can include federal mail fraud or federal
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`wire fraud. Id.
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`The RICO statute, 18 U.S.C. § 1962(d), also makes it unlawful for any person to conspire to
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`violate the RICO statute. The essential elements of a § 1962(d) conspiracy include: (1) knowledge
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`of the corrupt enterprise’s activities and (2) agreement to facilitate those activities. Salinas v. U.S.,
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`522 U.S. 52, 66 (1997). There is no requirement of an overt act and, thus, “a defendant may be held
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`liable for conspiracy to violation section 1962(c) if he knowingly agrees to facilitate a scheme which
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`includes the operation or management of a RICO enterprise.” Smith v. Berg, 247 F.3d 532, 538 (3d
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`Cir. 2001).
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`Indivior and Indivior Solutions (the “Indivior Defendants”) seek to dismiss both the
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`substantive RICO claim and the RICO conspiracy claim, contending that Plaintiffs lack statutory
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`standing because Plaintiffs did not purchase Suboxone tablets or film directly from any Defendant.
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`According to the Indivior Defendants, Plaintiffs are “end payors” or “indirect purchasers” in the
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`distribution chain who pay for drugs purchased by a pharmacy, wholesaler, or their insured. Citing
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`the “indirect purchaser” rule set forth by the United States Supreme Court in Illinois Brick Co. v.
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`Illinois, the Indivior Defendants assert that Plaintiffs are barred from bringing RICO claims.
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`The United States Supreme Court originally developed the indirect purchaser rule in the
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`antitrust context, holding that Clayton Act plaintiffs could not demonstrate injury by providing
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`evidence of only indirect purchases. Illinois Brick Co. v. Illinois, 431 U.S. 720, 737 (1977).
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`Underscoring this principle was the notion that allowing indirect purchasers to recover would
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`“transform treble-damages actions into massive multiparty litigations involving many levels of
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`distribution and including large classes of ultimate consumers remote from the defendant.” Id. This
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`“indirect purchaser rule” was intended to prevent defendants from being exposed to the “multiple
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`liability” that would occur if both indirect and direct purchasers in the distribution chain could assert
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`claims arising out of a single overcharge. See McCarthy v. Recordex Serv., Inc., 80 F.3d 842, 851
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`(3d Cir. 1996).
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`Following Illinois Brick, the United States Court of Appeals for the Third Circuit, in
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`McCarthy v. Recordex Serv., Inc., supra, addressed the question of indirect purchaser standing to
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`bring RICO claims. In McCarthy, a group of indirect purchaser plaintiffs brought antitrust and
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`RICO claims against the defendant sellers. Id. at 844. Recognizing that “all of the policy concerns
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`expressed in Illinois Brick were implicated” in that case, the Third Circuit held that the “indirect
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`purchaser” rule of Illinois Brick applied “equally to allegations of RICO violations” and, as such,
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`indirect purchasers lack standing to pursue claims under RICO. Id. at 851, 855. Because the
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`plaintiffs in McCarthy could not establish that they were direct purchasers in direct privity with the
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`defendants, the Court found that the plaintiffs had no standing to assert any of their RICO claims.4
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`Id. at 855.
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`McCarthy’s bar on indirect purchaser standing in the RICO context has been cited with
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`approval within the Third Circuit on multiple recent occasions. See Hu v. BMW of N. Am. LLC,
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`No. 18-cv-4363, 2021 WL 1138123, at *2 (D.N.J. Mar. 24, 2021) (“Though McCarthy was decided
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`twenty-five years ago, courts in this district continue to apply it to dismiss RICO claims.”) (citing
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`cases); Minnesota by Ellison v. Sanofi-Aventis U.S. LLC, No. 18-14999, 2020 WL 2394155, at *8–
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`9 (D.N.J. Mar. 31, 2020) (“Only the purchaser immediately downstream from the alleged [RICO
`
`
`4
`Both the Sixth and the Seventh Circuits have adopted the same stance on RICO standing and
`determined that the “indirect purchaser” rule bars end payors or indirect purchasers from pursuing
`RICO claims. See Trollinger v. Tyson Foods, Inc., 370 F.3d 602, 616 (6th Cir. 2004) (holding that
`plaintiffs who suffer derivative or “passed on” injuries lack standing to pursue RICO claims)’ Carter
`v. Berger, 777 F.2d 1173, 1177 (7th Cir. 1985) (holding that, under Illinois Brick, an end payor or
`indirect purchaser does not have standing to pursue RICO claims); see also In re Takata Airbag
`Prods. Lib. Litig., 15-md-2599, 2021 WL 908552, at *12 (S.D. Fl. Mar. 9, 2021) (recognizing that
`three Courts of Appeals have hel