Tenth Circuit Embraces Sound Economics of Antitrust Law in Opinion Affirming District Court’s Grant of Summary Judgment to Defendant-Appellee Mylan in Sanofi’s EpiPen Monopolization Case

MCLEAN, VIRGINIA – AUGUST 2, 2022 – In a landmark opinion dated July 29, 2022, the U.S. Court of Appeals for the Tenth Circuit applied sound principles of the economics of antitrust law to affirm the district court’s grant of summary judgment to defendant and appellee Mylan, Inc. and defendant-counterclaimant and appellee Mylan Specialty, LP (collectively “Mylan”). The case, In re EpiPen (Epinephrine Injection, USP) Marketing, Sales Practices and Antitrust Litigation, No. 21-3005, 2022 WL 3009140, was on appeal from the U.S. District Court for the District of Kansas, No. 2:17-MD-02785-DDC-TJJ, 507 F. Supp. 3d 1289 (D. Kan. Dec. 17, 2020), over which Judge Daniel D. Crabtree had presided. Senior Judge Bobby R. Baldock authored the opinion for the Tenth Circuit.

The Tenth Circuit’s opinion embraced key principles of the sound economic analysis of law advocated in the brief amicus curiae written by J. Gregory Sidak and submitted to the Court on behalf of Mylan. Jeffrey A. Lamken of MoloLamken LLP served as counsel of record on the brief. The Tenth Circuit’s opinion cited the seminal scholarship of Judge Richard Posner and William Landes (including their groundbreaking 1981 Harvard Law Review article, “Market Power in Antitrust Cases”), Judge Robert H. Bork, Judge Frank H. Easterbrook, William Nordhaus, Paul Samuelson, George Stigler, and Joseph Schumpeter.

Sanofi-Aventis U.S., LLC (“Sanofi”) had accused Mylan of monopolizing the market for epinephrine auto injectors (EAIs), like Mylan’s EpiPen and Sanofi’s Auvi-Q. Quoting Judge Learned Hand’s enduring remark in United States v. Aluminum Co. of America, 148 F.2d 416, 430 (2d Cir. 1945) (“Alcoa”), the Tenth Circuit observed: “[I]n the epinephrine auto-injector market[,] instead of competing on the formulary, Mylan and Sanofi competed for the formulary. Mylan’s legitimate competition for the formulary must not now expose it to liability. ‘The successful competitor, having been urged to compete, must not be turned upon when he wins.’ Without any evidence of harm to competition—as opposed to harm from competition—Sanofi cannot present this case to a jury.”

The Tenth Circuit thus repudiated the expert economic testimony of Professor Fiona Scott Morton of the Yale School of Management and the Charles River Associates consultancy of behalf of Sanofi, which the district court had excluded in part on Daubert grounds. “Ultimately, the primary concern of Scott Morton’s [effective entrant burden] ‘test’ would be the protection not of consumer welfare, but of competitors,” wrote Mr. Sidak in his amicus brief. Consistent with Mr. Sidak’s brief emphasizing that “U.S. antitrust law promotes ‘“the protection of competition, not competitors,”’” the Tenth Circuit “reject[ed] th[e] invitation” to “either supplant or supplement [its] consumer welfare with a consumer choice framework.” Citing Judge Bork’s writings, the Court observed that “[i]ntroducing a consumer choice framework, even as a supplement to the consumer welfare standard, may inappropriately re-entangle the courts in what Judge Bork called the ‘antitrust paradox.’”

In reaching its conclusion, the Tenth Circuit expressly invoked “Joseph Schumpeter’s views on entrepreneurship and innovation underlying” the Supreme Court’s antitrust jurisprudence on monopolization, “Schumpeter’s hypothesis that imperfect competition is the ‘wellspring of innovation and technological change,’” and the D.C. Circuit’s observation in 2001 in United States v. Microsoft, citing Schumpeter’s treatise “Capitalism, Socialism and Democracy,” that, “‘[i]n technologically dynamic markets, . . . entrenchment may be temporary, because innovation may alter the field altogether.’”

Quoting Judge Posner’s opinion in Products Liability Insurance Agency, Inc. v. Crum & Forster Insurance Companies, 682 F.2d 660, 663 (1982), which Mr. Sidak’s brief had quoted and emphasized, the Tenth Circuit observed: “‘Now there is a sense in which eliminating even a single competitor reduces competition. But it is not the sense that is relevant in deciding whether the antitrust laws have been violated.’” Quoting Judge Posner’s quotation of Shakespeare’s Hamlet in University Life Insurance Co. of America v. Unimarc Ltd., 699 F.2d 846, 853 (7^th Cir. 1983), which Mr. Sidak’s brief also had quoted and emphasized, the Tenth Circuit observed: “‘That “there’s a special providence in the fall of a sparrow” . . . is not the contemporary philosophy of antitrust.’”

Founded in 1999 by J. Gregory Sidak, Criterion Economics, Inc. provides expert economic testimony and consulting in legal proceedings throughout the world. Additional information appears at https://www.criterioneconomics.com/.