United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
D. Leinenweber, Judge
the Court are Motions to Dismiss filed by Defendant Novartis
Pharmaceuticals Corporation (“Novartis”) [ECF No.
16] and Defendant Health Care Service Corporation d/b/a Blue
Cross Blue Shield of Illinois (“BCBSIL”) [ECF No.
15]. For the reasons to follow, the Court dismisses
Plaintiffs' claims against Novartis with prejudice under
Rule 12(b)(1) or, alternatively, under Rule 12(b)(6). Absent
those federal question claims, the Court declines to hear
Plaintiffs' state law claims against BCBSIL or rule on
the latter's Motion. Instead, the Court remands the
balance of the case to Kane County Circuit Court.
Tarek and Soona Farag (referred to collectively as
“Plaintiffs” and individually as
“Tarek” or “Soona”) have
employer-sponsored health insurance coverage through
Defendant BCBSIL. (ECF No. 1 at Ex. 1 (“Compl.”)
¶ 1.) Tarek has high blood pressure, and his doctors
have tried many medications to treat his condition.
(Id. ¶ 4.) All have caused side effects with
the exception of the brand-name drug Diovan, manufactured by
Defendant Novartis, which Tarek's doctors “settled
on and prescribed for him long before January 2011.”
(Ibid.) For a brief period “[a]round the
beginning of 2013, ” Tarek tried taking the generic
form of Diovan (valsartan), but it “caused him serious
side effects.” (Id. ¶ 5.) Unsurprisingly,
valsartan had a cheaper copay than Diovan, for which Tarek
paid $30.00 until around June 2013 (when BCBSIL increased the
copay for Diovan to $50.00). Plaintiffs allege that the
overall price of a one-month supply of Diovan was about $207
during 2013, $270 during 2014, $310 during 2015, and about
“$400 during 2017.” (Id. ¶ 25.)
April 11, 2015, Tarek's doctor prescribed him twice his
usual dose of Diovan. (Compl. ¶ 7.) At some point
thereafter, Tarek took medication for numbness in his hands,
which caused his blood pressure and heart rate to collapse,
leading his doctor to advise that Tarek stop taking Diovan
and only add it back into his medication regimen as he
recovered. (Id. ¶ 8.) On September 19, 2015,
Tarek sought to refill his Diovan prescription and expected
to pay his usual $50 copay. However, BCBSIL refused to cover
it on the same terms it had previously and instead requested
“preauthorization” from Tarek's doctor.
(Id. ¶ 9.) Tarek's doctor completed the
required forms, but BCBSIL denied coverage because Tarek had
not taken Diovan “for more than 90 days.”
(Id. ¶ 10.) As a result, BCBSIL required that
Tarek pay $173.11 instead of $50.00. (Id. ¶
11.) Despite placing several calls to BCBSIL, Tarek was
unable to get the company to remedy the situation.
(Id. ¶¶ 12-13, 15-17.) On these calls,
BCBSIL agents typically justified the denial of coverage on
the grounds that Diovan is considered “a Step Therapy
medication, ” requires preauthorization, is dispensed
in prescriptions that are valid only for one year, must be
taken “for the past 90 days to qualify for the copay of
$50, ” and must be precipitated by an attempt to take
the generic. (Id. ¶ 27.) Tarek continued taking
Diovan and paying the higher rate “with accumulated
difference of about $700.” (Id. ¶ 14.)
pro se, Plaintiffs filed suit against BCBSIL on May
19, 2016 in Kane County Circuit Court. On May 24, 2016, Tarek
“was in a very stressful situation due to the ongoing
court case and the denial of his proper coverage, which
caused his blood pressure to go high and fluctuate in a
dangerous way that caused him symptoms of a stroke.”
(Compl. ¶ 19.) He was rushed to the hospital and,
roughly $16, 000 later, restored to good health.
(Ibid.) The Kane County court dismissed the claims
in Plaintiffs' original complaint without prejudice, and
Plaintiffs then filed an Amended Complaint against BCBSIL on
October 5, 2016. BCSBIL moved to dismiss the Amended
Complaint, and the court obliged - dismissing two claims with
prejudice and two claims without prejudice. On March 1, 2017,
Plaintiffs amended again, this time adding Novartis as a
defendant. This is the operative Complaint.
basis of federal question jurisdiction over patent and
antitrust claims that Plaintiffs brought against Novartis,
Defendants removed the Complaint to this Court on April 4,
2017. (ECF No. 1 ¶¶ 3-6.) Both Defendants now move
to dismiss all counts.
considering a motion to dismiss a complaint, the Court
accepts the facts stated in the complaint as true and draws
reasonable inferences in favor of the plaintiff. Newell
Operating Co. v. Int'l Union of United Auto., Aerospace,
and Agr. Implement Workers of Am., 532 F.3d 583, 587
(7th Cir. 2008). A document filed pro se is to be
liberally construed, and a pro se complaint, however
inartfully pleaded, must be held to less stringent standards
than formal pleadings drafted by lawyers. Erickson v.
Pardus, 551 U.S. 89, 94 (2007).
the Federal Rules of Civil Procedure do not require a
complaint to include “detailed factual allegations, a
plaintiff's obligation to provide the grounds of his
entitlement to relief requires more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007) (internal citations
omitted). To survive a Rule 12(b)(6) motion, “the
complaint must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its
face.” Independent Trust Corp. v. Stewart Info.
Servs. Corp., 665 F.3d 930, 934 (7th Cir. 2012)
(internal quotation marks omitted). The plausibility
standard, while not akin to a probability requirement,
“asks for more than a sheer possibility that a
defendant has acted unlawfully.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (citation omitted).
Where a complaint pleads facts that are merely consistent
with liability, it “stops short of the line between
possibility and plausibility.” Id. (internal
quotation marks omitted).
is an essential component of Article III's
case-or-controversy requirement. Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560 (1992). Rule 12(b)(1) allows
a party to raise by motion a federal court's lack of
subject-matter jurisdiction, including a lack of standing.
See, Ret. Police Ass'n v. City of Chicago, 76
F.3d 856, 862 (7th Cir. 1996). The plaintiff then bears the
burden of establishing jurisdiction with competent proof of
jurisdictional facts. Scanlan v. Eisenberg, 669 F.3d
838, 841-42 (7th Cir. 2012).
Novartis, Plaintiffs seek a judgment for at least $18, 000,
compensatory damages, punitive damages, costs and
attorneys' fees. They do not seek injunctive relief.
According to Plaintiffs, the inventors listed on
Novartis' U.S. Patent No. 6, 294, 197 (“the
'197 patent”), which covers a tablet form of
valsartan “mixed with additives by compression, ”
are not the same inventors that Novartis lauded for inventing
Diovan, meaning that Novartis committed fraud on the United
States Patent and Trademark Office (“the PTO”) by
listing the wrong inventors on the face of the '197
patent. (Compl. ¶ 30.) Plaintiffs further allege that,
because the “generic drug for Diovan” caused
Tarek “serious side effects” whereas Diovan did
not, Novartis defrauded the PTO by seeking protection for a
patent that (it knew) flunked the enablement requirement of
35 U.S.C. § 112(a). (Id. ¶¶ 5, 31.)
Plaintiffs claim that - ostensibly through these actions and
by emerging from the 1996 merger of “two giants
Ciba-Geigy and Sandoz” - Novartis has wrongfully
“kept others away from manufacturing or selling Diovan
or its generic Valsartan” and “unlawfully
monopolize[d] the market for Diovan, ” allowing it to
charge higher prices for Diovan than generic drug
manufacturers charge for valsartan. (Id.
¶¶ 30, 33.)
citing any provision of law authorizing their claims,
Plaintiffs bring three counts against Novartis:
“fraudulently claiming that Novartis' team is the
inventors of Diovan, ” “fraudulently claiming
that it has patent protection for Diovan and monopolizing it,
” and “violating the antitrust laws and abusing
of [sic] monopoly power.” (Compl. ¶¶
30-32.) The Court finds these counts best characterized as a
Walker Process claim based on fraudulent procurement
of the '197 patent and its subsequent unlawful
monopolization under Section 2 of the Sherman Act, 15 U.S.C.
§ 2, plus a claim under Section 7 of the Clayton Act, 15
U.S.C. § 18, challenging the merger that spawned
Novartis as “obvious[ly] . . . against the antitrust
laws.” (Compl. ¶ 33.) (To the extent Plaintiffs
might be seeking relief under the Illinois Antitrust Act, 740
Ill. Comp. Stat. 10/3, it is preempted inasmuch as it relates
to the Walker Process claim. Because there is
“simply no theory for proving a Walker Process
antitrust violation in this case that would not require a
showing of misconduct before the PTO, ” “federal
patent law preempts any state antitrust cause of action
premised on [such] conduct before the PTO.” In re
Ciprofloxacin Hydrochloride Antitrust Litig., 363
F.Supp.2d 514, 543 (E.D.N.Y. 2005); see also,
Semiconductor Energy Lab. Co., Ltd. v. Samsung Elec. Co.,
Ltd., 204 F.3d 1368, 1382 (Fed. Cir. 2000) (finding
preemption where “the wrong alleged and for which state
tort damages [were] sought [was] no more than bad faith
misconduct before the PTO”); accord, In re K-Dur
Antitrust Litig., No. 01-1652, 2007 WL 5297755, at
*24-25 (D.N.J. Mar. 2, 2007).)
moves to dismiss Plaintiffs' counts against it both on
Rule 12(b)(1) subject-matter jurisdiction and Rule 12(b)(6)
plausibility grounds. Novartis maintains that the Court does
not have jurisdiction to grant Plaintiffs their requested
relief because neither Plaintiff has standing to challenge
the validity or enforceability of the '197 patent - or
any patent Novartis holds on Diovan. In the same vein,
Novartis asserts that Plaintiffs lack antitrust standing and
that their complaint fails to allege a plausible
monopolization violation under federal or state antitrust
law. Finally, Novartis contends that Plaintiffs' claim
for damages is time-barred.
Declaratory Judgment of Invalidity or
III of the Constitution requires an actual “case”
or “controversy” between litigating parties
before a court may adjudicate a dispute. A party may bring an
action under the Declaratory Judgment Act only if an
“actual controversy” exists, “which is the
same as an Article III case or controversy.” Arris
Group, Inc. v. British Telecomms. PLC, 639 F.3d 1368,
1373 (Fed. Cir. 2011) (citations omitted). The party seeking
a declaratory judgment must show an Article III case or
controversy at the time it filed for declaratory relief.
Id. at 1373 (citing King Pharm., Inc. v. Eon
Labs., Inc., 616 F.3d 1267, 1282 (Fed. Cir. 2010)). When
the underlying merits of the declaratory judgment action
involve issues of conduct before the PTO, Federal Circuit law
controls whether an actual controversy exists. 3M Co. v.
Norton Co., 929 F.2d 670, 672 (Fed. Cir. 1991).
Court must ask whether “the facts alleged, under all
the circumstances, show that there is a substantial
controversy, between parties having adverse legal interests,
of sufficient immediacy and reality to warrant the issuance
of a declaratory judgment.” MedImmune, Inc. v.
Genentech, Inc., 549 U.S. 118, 132 n.11 (2007). A proper
dispute must “admit of specific relief through a decree
of a conclusive character, as distinguished from an opinion
advising what the law would be upon a hypothetical state of
facts.” Id. at 127 (internal quotation marks
omitted). “A mere adverse economic interest is
insufficient to create declaratory judgment
jurisdiction.” Arris, 639 F.3d at 1374-75
(emphasis in original).
interest in having the '197 patent declared invalid or
unenforceable is adverse to Novartis' interest only in a
pure economic sense, and is thus far too attenuated to
support jurisdiction under the Declaratory Judgment Act. At
best, securing such a judgment would merely inhibit Novartis
from excluding competitors, thus leading indirectly to a
decrease in the price of Diovan for Tarek. Indeed, Federal
Circuit law suggests that purchasers of goods covered by a
patent who do not compete with the patentee and otherwise
face no threat of an action for infringement “cannot
challenge [the] patent's validity or enforceability
through a declaratory judgment action.” Ritz Camera
& Image, LLC v. SanDisk Corp., 700 F.3d 503, 506
(Fed. Cir. 2012).
Court therefore dismisses Plaintiffs' claims to the
extent they can be construed as a plea for a declaratory
judgment that the '197 patent is invalid or unenforceable
as a result of fraud on the PTO.
Walker Process ...