BACKGROUND

19 The Jacksonville Police Officers and Fire Fighters Health Insurance Trust (“Trust”), 20 alleges Defendants violated the Sherman Act, 15 U.S.C. section 1 (the “Sherman Act Claim”), 21 California’s Cartwright Act, Business and Professions Code sections 16700, et seq. (the 22 “Cartwright Act Claim”), and California’s Unfair Competition Law, Business and Professions 23 Code sections 17200, et seq. (the “UCL Claim”). The Trust also asserts a claim for equitable 24 monetary relief (“Count IV”) and asserts 27 “sister state” anti-trust claims (“Count V” or the 25 “Sister State Claims”) “[t]o the extent the Cartwright Act is found not to apply to the claims of 26 27 1 Class members located outside of the state of California[.]”.2 (First Amended Class Action 2 Complaint (“FACC”) ¶ 158.) 3 This litigation presents the tension that may arise “between the lawful restraint on trade of 4 the patent monopoly and the illegal restraint prohibited broadly by the Sherman Act.” United 5 States v. Line Material Co., 333 U.S. 287, 310 (1948). In brief, the Trust’s theory is that 6 Defendants settled patent litigation through a “reverse payment settlement,” i.e. a settlement where 7 “a party with no claim for damages … walks away with money simply so it will stay away from 8 the patentee’s market.” FTC v. Activis, Inc., 570 U.S. 136, 152 (2013) (“Activis”). In Activis, the 9 Supreme Court rejected the proposition that reverse payment settlements were immune from 10 antitrust scrutiny and held “large and unjustified” reverse payments “can bring with [them] the risk 11 of significant anticompetitive effects” subject to a rule of reason analysis. Id. at 159; see also In 12 Re Cipro Cases I & II, 16 Cal. 4th 116, 130 (2015) (holding that reverse payment settlements can 13 violate the Cartwright Act). 14 The Court summarized the considerations that led to its holding as follows: 15 [O]ne who makes such a payment may be unable to explain and to justify it; such a firm or individual may well possess market power 16 derived from the patent; a court, by examining the size of the payment, may well be able to assess its likely anticompetitive effects 17 along with its potential justifications without litigating the validity of the patent; and parties may well find ways to settle patent 18 disputes without the use of reverse payments. 19 Activis, 570 U.S. at 158; see also id. at 154-58 (discussing these considerations in detail). If, 20 however, a patent holder “does not have the power to charge supracompetitive prices, ‘it is 21 unlikely to pay large sums to induce others to stay out of its market.’” United Food & Com. 22 Workers v. Teikoku Pharma USA, 74 F. Supp. 3d 1052, 1065 (N.D. Cal. 2014) (“United Food”) 23 (quoting Activis, 570 U.S. at 157). 24 // 25 // 26

27 2 “‘Sister state’ is a term courts have coined to describe class actions raising multiple similar 1 A. The Drug Price Competition and Patent Term Restoration Act of 1984 (“Hatch- Waxman Act”) and Food and Drug Administration (“FDA”) Approval of New Drugs. 2 3 “[M]ost, if not all, reverse payment settlement agreements arise in the context 4 pharmaceutical drug regulation, and specifically in the context of suits brought” pursuant to the 5 provisions of the Hatch-Waxman Act. Activis, 570 U.S. at 141. When a drug manufacturer wants 6 to market a new drug, it must submit a New Drug Application (“NDA”) to the FDA and then 7 “undergo a long, comprehensive, and costly testing process[.]” Id. If a manufacturer wants to 8 market a generic version of an FDA approved new drug, it can file an Abbreviated New Drug 9 Application (“ANDA”) and “piggy-back” on the brand-name manufacturer’s NDA by “show[ing] 10 that the generic drug has the same active ingredients as, and is biologically equivalent to, the 11 brand-name drug.” Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, 566 U.S. 399, 405 (2012) 12 (citing 21 U.S.C. §§ 355(j)(2)(A)(ii), (iv)). “‘[T]his process is designed to speed the introduction 13 of low-cost generic drugs to market,” furthering competition. Id. 14 The Hatch-Waxman Act created procedures to resolve patent disputes between a brand- 15 name drug manufacturer and a manufacturer seeking to market a generic version of a drug. When 16 a brand-name manufacturer files an NDA, it must list the number of and expiration date of any 17 relevant patents. Activis, 570 U.S. at 143; see also 21 U.S.C. § 355(b)(1). In turn, when a generic 18 manufacturer files its ANDA, it must include assurances that its generic drug will not infringe the 19 brand-name manufacturer’s patents. Activis, 570 U.S. at 143. One way to do that is by filing what 20 is known as a “paragraph IV certification,” which certifies that a relevant patent “is invalid or will 21 not be infringed by the manufacture, use, or sale” of the new generic. 21 U.S.C. § 22 355(j)(2)(A)(vii)(IV). 23 Filing a paragraph IV certification “automatically counts as patent infringement” and 24 triggers deadlines for the brand-name manufacturer to file suit. Activis, 570 U.S. at 143. If the 25 patent holder files a timely lawsuit, the FDA “must withhold approving the generic” for 26 approximately 30 months while the parties litigate the matter. That gives a patent holder an 27 incentive to initiate litigation when a generic manufacturer files a paragraph IV certification. 1 Activis, 570 U.S. at 143 (citing 21 U.S.C. § 355(j)(5)(B)(iv)). The Hatch-Waxman Act also 2 incentivizes generic manufacturers to file paragraph IV certifications because it provides the first 3 ANDA applicant to use that route 4 a period of 180 days of exclusivity (from the first commercial marketing of its drug). … During that period of exclusivity no other 5 generic drug can compete with the brand-name drug. If the first-to- file generic manufacturer can overcome any patent obstacle and 6 bring the generic to market, this 180-day period of exclusivity can prove valuable, possibly worth several hundred million dollars. 7 8 Id. at 143-44; see also In re Cipro, 16 Cal. 4th at 135 (“This legal regime means that, regardless of 9 the likely degree of validity of a patent, the brand and first-filing generic have an incentive to 10 effectively establish a cartel through a reverse payment settlement.”). 11 B. Factual Background of this Dispute. 12 Gilead manufactures a number of drugs to treat the human immunodeficiency virus 13 (“HIV”), which include tenofovir disproxil fumarate (“TDF”), emtricitabine3 and/or efavirenz as 14 ingredients. These drugs are “typically prescribed in combination with each other or with other 15 drugs.” (FACC ¶¶ 1, 18-19.) Gilead markets these drugs under the following brand-names: 16  Viread, a tablet containing 300 mg of TDF 17  Emtriva, a tablet containing 200 mg of emtricitabine 18  Truvada, a tablet containing 200 mg of emtricitabine and 300 mg of TDF, and 19  Atripla, a tablet containing 600 mg of efavirenz, 200 mg of emtricitabine and 300 20 mg of TDF.4 21 (FACC ¶ 19.) 22 In 2012, the FDA approved Truvada for pre-exposure prophylaxis (“PrEP”) as a means to 23 3 “Gilad did not invent emtricitabine. It was patented by researchers at Emory University, 24 who assigned the patents to Gilead.” (FACC ¶ 19.b.) Emtricitabine, in turn, “is one of two enantiomers of a compound whose name is abbreviated as ß-FTC, specifically the enantiomer 25 called “(-)-ß-FTC[;]” the other enantiomer is called “(+)-ß=FTC. An enantiomer is a term used to describe a situation where a “compound’s 3-dimensional structure is not superimposable on a 26 compound that is its mirror image[.]” (Id. ¶¶ 24, 26.)

27 4 Atripla was formulated by a joint venture between Bristol-Meyers Squibb (“Bristol- 1 reduce the risk of HIV infection in high risk adults. In 2016 the FDA approved a modified dosage 2 of Truvada to be used in pediatric patients. At the time the Trust filed the FACC, Truvada was the 3 only drug approved for PrEP in the United States. Truvada, which is relatively inexpensive to 4 make, has been very profitable for Gilead: in 2018, for example, sales from Truvada totaled $2.6 5 billion.5 Atripla also has been extremely profitable for Gilead. In 2018, its sales in the United 6 States totaled $967 million. (Id. ¶¶ 20-24.) 7 Gilead held rights in a patent claiming the compound ß-FTC (U.S. Patent No. 5,814,639 8 (“’639 Patent”)) and in a patent claiming the use of ß-FTC to treat HIV (U.S. Patent No. 5,210,085 9 (“’085 Patent”)). These patents expired in 2010 and 2015, respectively. (Id. ¶ 27.) Gilead also 10 holds patent rights in emtricitabine (i.e. (-)-ß-FTC) (U.S. Patent 6,703,396 (the “’396 Patent”)) and 11 in the use of emtricitabine to treat HIV (U.S. Patent No. 6,642,245 (the “’245 Patent”)). The ’396 12 Patent expired on March 21, 2021, subject to a pediatric exclusivity period that expired on 13 September 9, 2021. The ’245 Patent expired on November 4, 2020, subject to a pediatric 14 exclusivity period that expired on May 4, 2021. (Id. ¶ 28.) 15 Gilead also holds patent rights claiming the combination of TDF and emtricitabine in a 16 single dosage, which it markets as Truvada, and has patent rights claiming the combination of 17 TDF, emtricitabine, and efavirenz in a single dosage that forms Atripla. (Id. ¶ 29.) The Trust 18 alleges that Gilead’s rights in these patents have been challenged in the United States for decades 19 by companies seeking to manufacture generic versions of the drugs. (Id. ¶ 30.) “While the patents 20 suffer from glaring weaknesses, no case has ever been fully litigated” in the United States. (Id. ¶¶ 21 29-30.) The Trust claims this is because Gilead has settled these cases through reverse payment 22 settlements. 23 1. Gilead Litigation Against Teva. 24 As one example, the Trust describes litigation between Gilead and Teva Pharmaceuticals 25 USA, Inc., and Teva Pharmaceutical Industries Ltd. (collectively “Teva”). In 2008, Teva filed an 26

27 5 The Trust has spent $15,000 on Truvada for its members since the beginning of 2020. 1 ANDA for approval to manufacture and sell a generic version of Truvada, which included 2 paragraph IV certifications relating to the patents covering efavirenz, emtricitabine, and TDF. In 3 2009, Teva filed ANDAs for approval to manufacture and sell generic versions of Atripla and 4 Viread, which also contained paragraph IV certifications for the patents covering efavirenz, 5 emtricitabine, and TDF. Merck and Bristol-Meyers filed suit regarding the efavirenz patents 6 (“Teva efavirenz litigation”), and the parties settled that case before trial on terms that have not 7 been disclosed. According to the Trust, Teva did not make any drugs containing efavirenz before 8 the last of the patents at issue expired in 2018. (Id., ¶¶ 31-33.) 9 Gilead filed suit regarding the TDF patents (“Teva TDF litigation”), and that case also 10 ended with a confidential settlement. However, Teva announced that it would launch an exclusive 11 generic version of Viread on December 15, 2017, which was shortly before the last of the relevant 12 patents and exclusivity periods expired on January 25, 2018. The Trust alleges that six-week 13 period of exclusivity was worth approximately $106 million to Teva and alleges it would not have 14 been rational for Gilead to provide Teva with such a valuable benefit unless it believed Teva could 15 have prevailed in the Teva TDF suit. (Id. ¶¶ 32, 34.) 16 Finally, Teva filed suit on the emtricitabine patents (“Teva emtricitabine litigation”), which 17 would have proceeded as a bench trial. However the parties settled shortly before presenting 18 closing arguments in February 2014.6 (Id. ¶¶ 32, 35, 43.) The primary issue in that case was 19 whether the ’396 and ’245 Patents covering emtricitabine were invalid for obviousness or for 20 anticipation in light of the ’639 and ’085 Patents. (Id. ¶¶ 36-37.) The Trust alleges that Teva’s 21 anticipation theory “gave [it] a clear path to a verdict in its favor.” (Id. ¶ 38.) The Trust also 22 alleges that the record in that case suggested the judge was not persuaded by many of Gilead’s 23 arguments on why the ’396 and ’245 Patents were valid. (Id. ¶¶ 39-42.) The case was dismissed 24 on April 30, 2014. (Id. ¶ 43.) 25 According to the Trust, the settlement in the Teva emtricitabine litigation provided that 26 Teva would stay out of the Truvada market. In return, Gilead would grant it an exclusive license 27 1 to market a generic version of Truvada, starting on September 30, 2020, with a right to accelerate 2 if any other company entered the market (“most-favored entry (MFE)” or “most-favored entry 3 plus (MFEP)” clauses). (Id. ¶ 44.)7 4 2. Gilead Litigation Against Cipla. 5 In 2007, Cipla Ltd. submitted an ANDA seeking approval to market a generic version of 6 Viread, which did not contain a paragraph IV certification. Instead, Cipla Ltd. certified that it 7 would wait to market a generic version until the patents expired. The FDA tentatively approved 8 that ANDA in 2009. In 2009, Cipla, Ltd., through Cipla USA, submitted ANDAs to market 9 generic versions of Emtriva, Truvada, and Atripla, which also did not include paragraph IV 10 certifications and certified that Cipla Ltd. would wait until relevant patents expired. The FDA 11 approved those ANDAs in March 2011, February 2014, and February 2012. (Id. ¶ 45.) 12 On July 18, 2012, Cipla notified Gilead that it amended: (1) its ANDA relating to Emtriva 13 to include paragraph IV certifications regarding the ’245 and ’395 Patents, i.e. the emtricitabine 14 patents at issue in the Teva emtricitabine litigation. On July 30, 2012, Cipla notified Gilead it 15 amended its ANDA for Viread to include paragraph IV certifications for four patents claiming 16 TDF. Gilead filed a lawsuit asserting infringement of the emtricitabine patents (the “Cipla 17 emtricitabine litigation”) and filed a separate lawsuit asserting infringement of the TDF patents 18 (the “Cipla TDF litigation,”) which were assigned to the same judge as the Teva emtricitabine 19 litigation (collectively, the “Cipla Litigation”). (Id. ¶ 46.) The parties settled the Cipla Litigation 20 in July 2014. With the exception of a license agreement, the parties did not disclose the terms the 21 settlement. (Id. ¶ 47.) 22 The Court will address additional facts as necessary in its analysis. 23 // 24 7 “An agreement with an MFE clause arises when the brand manufacturer and” the first 25 generic manufacturer to file an ANDA “settle the patent litigation, with the generic manufacturer agreeing to delay entering the market until a specified date.” Staley v. Gilead Scis., Inc., 446 F. 26 Supp. 3d 578, 590 (N.D. Cal. 2020). An MFE clause generally “provides that if any other generic manufacturer (a ‘second-filer’) succeeds in entering the market before that date, the first-filer may 27 enter the market at the same time.” Id. An MFEP clause “provides that the brand manufacturer 1 ANALYSIS 2 A. Legal Standard on Motion to Dismiss. 3 Defendants move to dismiss for failure to state a claim pursuant to Federal Rule of Civil 4 Procedure 12(b)(6). In general, the Court’s “inquiry is limited to the allegations in the complaint, 5 which are accepted as true and construed in the light most favorable to the plaintiff.” Lazy Y 6 Ranch Ltd. v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008). Even under the liberal pleading 7 standard of Federal Rule of Civil Procedure 8(a)(2), “a plaintiff’s obligation to provide the 8 ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a 9 formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 10 550 U.S. 544, 555 (2007) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). 11 Pursuant to Twombly, a plaintiff must not merely allege conduct that is conceivable but 12 must instead allege “enough facts to state a claim to relief that is plausible on its face.” Id. at 570. 13 “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to 14 draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. 15 Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). If the allegations are 16 insufficient to state a claim, a court should grant leave to amend, unless amendment would be 17 futile. See, e.g., Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990); Cook, Perkiss & 18 Liehe, Inc. v. N. Cal. Collection Serv., Inc., 911 F.2d 242, 246-47 (9th Cir. 1990). If a plaintiff has 19 previously amended a complaint, a court has “broad” discretion to deny leave to amend. Allen v. 20 City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990) (quoting Ascon Props., Inc. v. Mobil Oil 21 Co., 866 F.2d 1149, 1160 (9th Cir. 1989). 22 B. The Court Grants, in part, the Requests for Judicial Notice and Denies the Trust’s Request to File a Sur-Reply. 23 24 Each party filed requests for judicial notice, which include some argument that goes 25 beyond what is necessary to show a particular document can be judicially noticed. The Court has 26 not considered that argument. Defendants request judicial notice of documents from various FDA 27 databases. (Dkt. No. 50, “Def. RJN”; Dkt. Nos. 50-1 to 50-4, Declaration of Peter Giunta 1 which Defendants rely, could have and should have been submitted with Defendants’ motion. The 2 Court agrees, but because the Trust does not dispute the authenticity of the documents, which are 3 publicly available, it grants Defendants’ request but denies the Trust’s motion to file the proposed 4 sur-reply. The Court will take judicial notice of the existence of the documents and of the fact that 5 statements were made about the dates on which Cipla began to market these drugs. See, e.g., Lee 6 v. City of Los Angeles, 250 F.3d 668, 688-90 (9th Cir. 2001). 7 After briefing on the motions closed, the Trust filed a request for judicial notice. (Dkt. No. 8 55, “Trust RJN”.) The Trust asks the Court to take judicial notice of a document from the FDA’s 9 National Drug Code Directory Database that shows Cipla’s “start marketing date” for the generic 10 version of Atripla was March 30, 2021. (Id., Ex. 1.) Defendants do not object. Accordingly, the 11 Court grants that request and takes judicial notice of the existence of the document and the fact 12 that statements are contained therein about the start date. Lee, 250 F.3d at 688-90. 13 C. The Court Concludes the Trust States a Claim. 14 In order to state a claim based on an alleged reverse payment settlement, the Trust must be 15 able to allege facts that suggest any “payment” in the Cipla litigation flowed from Gilead to Cipla, 16 i.e. that it is a reverse payment. The Trust also must include “information that is “sufficient to 17 estimate the value of the” reverse payment settlement, “at least to the extent of determining 18 whether it is large and unjustified.” In re Loestrin 24 FE Antitrust Litig., 814 F.3d 538, 552 (1st 19 Cir. 2016) (“In re Loestrin”) (internal quotations and citation omitted); United Food, 74 F. Supp. 20 3d at 1065 (to warrant scrutiny under Activis, plaintiff must allege a payment, that is reverse, large, 21 and unexplained).8 22 // 23 24

25 8 Under the Cartwright Act, a plaintiff must show “(1) the settlement includes a limit on the settling generic challenger’s entry into the market; (2) the settlement includes cash or equivalent 26 financial consideration flowing from the brand to the generic manufacture; and the consideration exceeds (3) the value of goods and services other than delay in market entry provided by the 27 generic challenger to the brand, as well as (4) the brand’s expected remaining litigation costs 1 1. Reverse Payment. 2 Defendants argue Plaintiffs merely speculate that the Cipla litigation was settled by a 3 reverse payment.9 Although the Trust uses language that would be considered speculative in other 4 contexts, the Court concludes that is not fatal to its claim. “A plaintiff can meet [the] pleading 5 standard without describing in perfect detail the world without the reverse payment, calculating 6 reliably the payment’s exact size, or preempting every possible explanation for it.” FTC v. Abbvie 7 Inc., 976 F.3d 327, 356 (3rd Cir. 2020); see also In re Epipen (Epinephrine Injection, USP) Mktg., 8 Sales Practices and Antitrust Litig., 336 F. Supp. 3d 1257, 1302-05 (D. Kan. 2018) (although 9 plaintiffs were unable to plead the exact terms of settlements, court found the allegations were 10 sufficient to allege each settlement was anticompetitive). 11 In Activis, the FTC alleged the settlement provided that the generic manufacturers would 12 not bring their products to market until 65 months before the brand-name manufacturer’s patent 13 expired and would promote the brand-name product in the interim. In exchange, the brand-name 14 manufacturer paid each of the generic manufacturers “millions of dollars.” 570 U.S. at 145. The 15 defendants claimed the payments were for services to be rendered to the patent holder, but the 16 FTC alleged the “true point of the payments was to compensate the generic manufacturers for 17 agreeing not to compete” against the patent holder’s brand-name drug. Id. The Supreme Court 18 did not expressly address pleading standards, but it found the FTC’s allegations were sufficient to 19 permit the case to proceed to a rule-of-reason analysis. 20 Similarly, the Third Circuit concluded the plaintiffs sufficiently alleged a reverse payment 21 where a settlement provided that the defendant would end its challenge to the patent in exchange 22 for an early entry into the market. In return, the patent holder gave up its right to manufacturer an 23

24 9 Defendants state that the settlement has been submitted to the FTC in accordance with 25 requirements of the Hatch-Waxman Act and notes the FTC has not raised any objections. The Court has considered that fact but finds it does not undermine the plausibility of the Trust’s 26 allegations. See, e.g., In re Lipitor Antitrust Litig., 868 F.3d 231, 263 (3rd Cir. 2017) (stating “it is erroneous to conclude that the FTC’s inaction equates to a determination that the settlement 27 agreement does not run afoul of the Sherman Act” and finding plaintiffs sufficiently alleged a reverse payment settlement). 1 “authorized generic” (“no AG agreement”) that would otherwise compete with the generic drug 2 during the Hatch-Waxman Act’s 180-day exclusivity period. King Drug Co. of Florence, Inc. v. 3 Smithkline Beecham Corp., 791 F.3d 388, 397 (3rd Cir. 2015). The court reasoned that such an 4 agreement would be valuable to a first-filer because it would benefit from the exclusivity period 5 provided by the Hatch-Waxman Act and would not face competition from the patent holder.10 Id. 6 at 404, 407. That conclusion was bolstered by public records, which showed the generic sales of 7 the drug in one year totaled $671 million. Id. at 404; see also In re Lipitor, 868 F.3d at 253-58 8 (finding allegations about settlement involving patentee’s release of claims in a lawsuit that had a 9 high chance of success and was worth “hundreds of millions of dollars” in exchange for delay in 10 release of generic were sufficient to show reverse payment); United Food, 74 F. Supp. 3d at 1070 11 (concluding no-AG agreement qualified as reverse payment). 12 The Trust also relies on Staley, where the court concluded the plaintiffs included sufficient 13 facts to allege Gilead’s settlement with Teva, in the Teva litigation described above, was a reverse 14 payment settlement. 446 F. Supp. 3d at 610-12. In Staley, the plaintiffs alleged the MFE and 15 MFEP clauses in the settlement were anticompetitive because they delayed the first-filer’s entry 16 into the market and “reduc[ed] a second-filer’s incentive to try and enter the market before the 17 first-filer.” Id. at 590 (citing complaint). The defendants argued that there was no cash-payment 18 involved and that the agreements were not anti-competitive. Id. at 610-12. The court rejected 19 both arguments. 20 The court interpreted Activis to allow challenges to settlements even in the absence of a 21 reverse payment “if there were other circumstances that posed potential anti-competitive concern” 22 and determined the plaintiffs alleged such circumstances. Id. at 611 (citing Activis, 570 U.S. at 23 158). For example, it cited to the fact that Teva’s entry date into the market was close to the date 24 Gilead’s patents would expire, from which it could be inferred that Teva gave up its right to 25

26 10 The first-filer’s exclusivity period applies only to other generic manufacturers. Under the Hatch-Waxman Act, the brand-name manufacturer is permitted to market and sell an authorized 27 generic, which allows “the brand-name drug manufacturer to recover some of the sales and profits 1 challenge the patents and obtain earlier entry into the market “in return for a significant benefit, -- 2 even if that benefit did not come at Gilead’s expense.” Id. at 612. The court also concluded the 3 MFEP provision raised a “yellow flag” because Teva had already forfeited its first-to-file 4 exclusivity period. Thus, the provision worked to resurrect “ANDA exclusivity or at least some 5 kind of exclusivity where it no longer applied,” which could deter second filers. Id. & n.28. 6 Because the terms of the settlement are not part of the record, the Trust and the Court 7 necessarily must rely on allegations about the Defendants’ conduct to determine whether the 8 existence of a reverse payment is plausible. The Trust posits the payment could consist of: (1) a 9 license to market a generic version of Atripla before Gilead’s patents on that drug expire; (2) a 10 license to manufacture drugs for hepatitis C; and/or (3) the right to supply Teva with the active 11 pharmaceutical ingredients (APIs) for Truvada and Atripla. (FACC ¶¶ 1, 50, 57.) 12 Although the Trust relied on an allegation that Cipla received approval to market 13 emtricitabine in 2018 but had not done so, the record now includes information showing Cipla 14 stated it began to sell emtricitabine on August 30, 2020. Defendants argue that Cipla “obtained 15 [the Hatch-Waxman Act] 180-day period of exclusivity … in its settlement with Gilead.” (Reply 16 at 4:2-3; Def. RJN, Giunta Decl., ¶ 4, Ex. B.) Those facts could signal the type of early entry 17 settlement that would not warrant antitrust scrutiny. See Activis, 570 U.S. at 158. The Trust also 18 alleges that Gilead had an incentive to avoid competition from co-packaged versions of Truvada 19 until 2021 and, if the emtricitabine patents were found to be invalid, Cipla could have begun to 20 market a co-packaged version of emtricitabine and TDF as early as 2018. (FACC ¶¶ 88-93.) 21 Those allegations show that Gilead may have had an incentive to settle, but they also rest on 22 assumptions and speculations about whether the FDA would have approved co-packaged drugs, 23 rather than allegations that the FDA had approved co-packaged versions. 24 However, the Trust also alleges that Gilead has a history of filing paragraph IV litigation 25 relating to Emtriva, Truvada, and Atripla and of settling those cases before trial. The Trust also 26 alleges that the “sheer number of companies that submitted Paragraph IV certifications” for those 27 drugs implies that generic manufacturers saw Gilead’s patents as weak. (Id. ¶¶ 58-86.) That is a 1 no facts to explain why Gilead patents were weak, concluding it was plausible to infer “that there 2 were problems with the patents” based on multiple challenges by generics). In addition, despite its 3 history of litigation, Gilead did not sue Cipla when Cipla amended its ANDAs on Atripla to 4 include paragraph IV certifications. However, it did file suit against at least one other generic 5 manufacturer who filed a paragraph IV certification on Atripla but who had not settled litigation 6 relating to Gilead’s HIV medications. (Id. ¶¶ 57.c, 57.e.) The Trust also alleges that as part of the 7 Teva emtricitabine litigation, Gilead gave Teva a period of exclusivity to market Atripla and 8 includes facts about why it would be irrational for Cipla to stay out of the Atripla market absent 9 significant compensation from Gilead, even if one takes into account the potential competition 10 from Teva. (Id. ¶ 57.d; see also id. ¶ 48 & Trust RJN, Ex. 1 (alleging Cipla received approval to 11 market generic Atripla in June 2019 but did not do so until March 30, 2021).) 12 Defendants argue there is nothing unusual about the parties attempting to reach a global 13 settlement involving multiple patents and multiple drugs and that it is equally plausible that the 14 Cipla settlement was a routine early entry settlement. The Court is not persuaded. The Trust also 15 alleges that the patents that would have been at issue in litigation over Atripla were not the same 16 patents at issue in the Cipla Litigation and are not due to expire until 2026. Because the Court 17 must construe the facts and all reasonable inferences in the Trust’s favor, the Court concludes 18 these allegations are sufficient to show that even if emtricitabine is taken out of the equation, it is 19 plausible the Cipla settlement involves a reverse payment settlement. See, e.g., See, e.g., Abbvie, 20 976 F.3d at 345, 357-58 (finding plaintiff stated claim where it alleged that, on the day the parties 21 settled infringement regarding one drug, defendants announced a deal relating to a separate drug, 22 which protected “billions of dollars” in revenue for the patent holder); In re Lipitor, 868 F.3d at 23 256-57 (finding allegations regarding release relating to separate drug in exchange for delaying 24 entry into Lipitor market sufficient to state a claim, despite defendants’ arguments that global 25 settlement was involved). 26 In addition, approximately two-months after Gilead and Cipla settled the Cipla Litigation, 27 Gilead publicly announced that it was licensing seven generic manufacturers, including Cipla, to 1 indicated that one of the drugs “could potentially be worth US$300-US$500m, and offer a $100- 2 $185m formulation and active pharmaceutical ingredient (API) opportunity” and that Cipla was 3 likely to earn the API rights to the drug. (FACC ¶ 57.g.) In light of that timing and the Trust’s 4 allegations that many other companies had the capability to manufacture the APIs, the Court 5 concludes it is reasonable to infer that Cipla obtained those rights as part of the settlement with 6 Gilead. Cf. In re Niaspan Antitrust Litig., 42 F. Supp. 3d 735, 752-53 (E.D. Pa. 2014) (concluding 7 plaintiffs sufficiently alleged existence of reverse payment where allegations included facts that 8 defendants “cloaked reverse payments behind two spurious contracts”). 9 The Court concludes the Trust sufficiently alleges the existence of a reverse payment. 10 2. Large and Unjustified. 11 The Court now turns to whether the allegations are sufficient to plausibly allege the 12 payment was large and unjustified. The Supreme Court did not clearly define either term in 13 Activis. A settlement may be justified where a payment “reflects traditional settlement 14 considerations, such as avoided litigation costs or fair value for services” Activis, 570 U.S. at 156. 15 In United Food, the plaintiffs alleged that a $266 million payment had “no rational connection to, 16 and far exceed[ed], any approximation of the costs of continuing the patent litigation.” 74 F. 17 Supp. 3d at 1072. The plaintiffs also alleged that the presence of an authorized generic would 18 have caused the price of the generic to drop from 90% of the brand name’s price to 52% of that 19 price. Id. at 1069. The court concluded that the status of the underlying patent litigation, one case 20 had settled and one case had proceeded past the pleadings phase, made plaintiffs’ allegations 21 plausible. Id. at 1072. 22 The Third Circuit reached a similar conclusion in In re Lipitor, based on allegations that 23 the patent holder released claims worth hundreds of millions of dollars. The generic manufacturer 24 released its drug “at risk” and was subsequently preliminarily enjoined from distributing the 25 generic. As part of the settlement, the generic agreed to delay its entry into the market for the 26 brand-name drug and paid the patent holder $1 million. The plaintiffs alleged that the value of the 27 release was well in excess of any litigation costs. 868 F.3d at 253-56. In In re Epipen, the 1 alleged that the parties had completed trial, so that it was likely the parties “would incur marginal 2 litigation expenses going forward, as compared to the expenses already incurred at settlement.” 3 336 F. Supp. 3d at 1303. The court found those allegations, among others, plausibly suggested 4 that the “consideration provided as part of the … settlement constituted a substantial reverse 5 payment.” Id. 6 Here, the parties reached a settlement shortly before the Cipla cases were set to go to trial, 7 when weaknesses in Gilead’s patents allegedly were exposed by the Teva litigation and when 8 future litigation costs had diminished. The Trust also alleges that when the parties settled the 9 Cipla emtricitabine suit, Gilead’s most recent 10-K showed it had $27.4 million sales in Emtriva. 10 Although the FDA had approved other ANDAs for generic Emtriva, Cipla was the first-to-file. 11 (FACC ¶¶ 53-54, 57.d.) According to the Trust, if Cipla had prevailed at trial, the exclusivity 12 period “would have been worth millions” to Cipla. See Activis, 570 U.S. at 144. The Trust also 13 alleges that the value of the API manufacturing rights for the hepatitis C drugs was approximately 14 $185 million and provides estimates of the value to Cipla of a co-packaged drug even in a 15 competitive market. (See, e.g., FACC ¶¶ 55-56, 57.g.) 16 The Court concludes that the Trust alleges facts that plausibly suggests the payment was 17 large and unjustified. Accordingly, the Court DENIES Defendants’ motion to dismiss the 18 Sherman Act claim. 19 D. Standing to Assert California and Sister State Claims. 20 Defendants move to dismiss all of the claims asserted under California law (the Cartwright 21 Act claim, the UCL claim, and Count IV), as well as most of the Sister State claims contained in 22 Count V on the basis on the basis that the Trust lacks standing to assert these claims because it 23 fails to allege a purchase in California or allege that it suffered an injury in California. The Trust 24 concedes it fails to allege sufficient conduct occurring in California to support the claims against 25 Cipla under the Cartwright Act and the UCL. Accordingly, the Court GRANTS Cipla’s motion to 26 dismiss those claims. 27 Standing is not dispensed “in gross”, Lewis v. Casey, 518 U.S. 343, 358 n.6 (1996), and the 1 Inc., 137 S. Ct 1645, 1650 (2017). With respect to the Sister State claims, this Court has 2 previously joined courts within the Ninth Circuit that have held that a plaintiff in a putative class 3 action lacks standing to assert claims under the laws of states other than those where the plaintiff 4 resides or was injured. See, e.g., Jones, 400 F. Supp. 3d at 910-11 (citing cases).11 The Trust 5 acknowledges the Court’s holding in Jones. It urges the Court to revisit that decision and to 6 follow Staley by addressing the issue at the class certification stage. See Staley, 446 F. Supp. 3d at 7 622 (citing Melendres v. Arpaio, 784 F.3d 1254 (9th Cir. 2015)). 8 The Court finds no basis to revisit its prior analysis of this issue. The Trust is a resident of 9 Florida. It fails to include any allegations about where it purchased Truvada for its members, but 10 based on the allegations that its principal place of business is located in Jacksonville, Florida the 11 Court concludes it is reasonable to infer the purchases were made in Florida. For the reasons set 12 forth in Jones, which are incorporated herein, the Court concludes the Trust lacks standing to 13 pursue the Sister State claims in Count V, with the exception of the claim under Florida law. 14 Jones, 400 F. Supp. 3d at 408-11.12 This ruling is without prejudice to the Trust filing an amended 15 complaint that includes additional class representatives. 16 CONCLUSION 17 For the foregoing reasons, the Court GRANTS, IN PART, AND DENIES, IN PART, 18 Defendants motion. The Trust shall either file an amended complaint or statement that it does not 19 intend to amend by no later than September 9, 2022. The Court tolls Defendants’ time to respond 20 until the Trust has amended or filed a notice that it will stand on the FACC. Defendants shall then 21 have 21 days to answer or otherwise respond. 22 Finally, the Court ORDERS the parties to appear for a case management conference on 23 November 4, 2022 at 11:00 a.m. The parties shall file a joint case management conference 24

25 11 In In re Big Heart Pet Brands, the Court distinguished its holding in Jones on the basis that the named plaintiffs in that case had not attempted to bring based on the laws of “jurisdictions in 26 which they do not reside or where they did not purchase the” product at issue. No. 18-cv-861- JSW, 2019 WL8266869, at *12 (N.D. Cal. Oct. 4, 2019). This case is analogous to Jones. 27 ] statement by October 28, 2022. 2 IT ISSO ORDERED. ~ } 3 || Dated: August 19, 2022 / □ Nt / / 4 \ l

JEFFREY, S/ WHIT

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