market to compete with defendants extremely lucrative cancer drugs the district court erred in dismissing the complaint for three reasons first on antitrust standing the district court improperly imposed a pleading requirement of probable f d a approval second on the application of the foreign trade antitrust improvements act the court did not properly apply this court's directed at test for imports and it imposed too strict a standard of directness for domestic facts and third the court drew no reasonable inferences in favor of bio cad which led to disregard the implications of key facts most notably by a cat's investments in creating an f b i certified f d a compliant laboratory to make its biosimilars and the fact that it already is competing with defendants in other countries for sales the district courts erroneous ruling enables the defendants to perpetuate their monopoly in a multibillion dollar sale of cancer drugs in the united states against its only competitor around the world who are three of these biosimilars now with respect to the antitrust injury this we would submit is the key the test as it has been traditionally applied for one hundred years is a twofold test intent and preparedness the factors for preparedness go to the background experience in the field here by a cad pleaded that it was the only worldwide competitor to have developed three of these having spent six years doing so financial capability here by a cat had invested millions of dollars including setting up a u s business for the purpose of facilitating its imports and actual and affirmative steps to intreat such as the implementation of contracts the development of a world wide trade or later are you saying just are you saying that i'm clear that we should adopt the tests of other circuits with respect to intention and preparedness for example the fifth circuit scase opinion and sanger insurance agency versus h u b international which lays out  four different dishes the plaintiff's background experience in the prospective business the ability to finance entry talked about those due in a particular way to finance facilities and equipment the consummation of contracts related to the potential in entry and other affirmative action by the plaintiff to engage in the proposed business or newmarket your honor those are factors that go to intent and preparedness i don't think that we take the position and you shouldn't take the position that there is one set of factors that automatically accounts for intent and preparedness that intent and prepared in a standard has been around since american banana you know a century ago and the idea is that in different antitrust context you're going to be looking at different factors here those factors all point to the fact that by a cat had an intent and was prepared to take the necessary steps to interim market we are in required a very large investment and because by a cat is the only worldwide competitor with the defendants as to these three by a similar drugs roche had the perfect incentive to try to crush bio cad in its home think those two different factors it is true that we did not plead that we had begun the process of formally applying to the f d a but just like the seven or how how much intent there is to enter you can enter unless there is a group that's correct judge hears however the district court did not credit or give reasonable inferences to the following allegations we had spent six years developing these biosimilars and were the only drug company in the world to be able to do so second that we had spent the hundred thousand hours developing quality control so that we would have a lab to produce these biosimilars that would comply with f d a standards when we got to the point of making that formal application now as we cite cases in the district courts on pages thirty seven and thirty eight no court other than the court below has imposed a requirement of the nation for a approval as a requirement for intent and preparedness and the execution case we cite the district court case from the northern district of illinois points out that the competitor had been selling drugs around the world but had not even made an application for an a true new drug application that case importantly went up on appeal in the seventh circuit and a decision by judge easterbrook i believe noted that there had not been an application yet for the a but yet the seventh circuit nonetheless found that there wasn't a proper proper pleading of antitrust injury so we don't think that is the proper rule that the district court applied and had it given reasonable inferences for the other allegations we easily s rmount the point of antitrust injury at the pleading stage i understood you're correct me if i if i'm misunderstanding at the amended complaint explicitly alleges that bio cad and i'm quoting anticipated a approval and such f d a approval is probable it did he did plead that and the district court discredited that direct pleading by saying he it the court did not think that there were other facts that would support that so if there is a requirement for pleading probability f d a approval we certainly pleaded that you pleaded it without saying that there's any application correct we did it with all the other factors and keeping in  mind this is a company that is selling this drug in dozens of other countries has developed a portfolio of sales into the tens of millions of dollars in those other countries and so the question of about intent and preparedness is one that has to be looked at more expansive leave than simply has an application been filed for the reasons that the district courts on that in those cases and i'm talking about  and tough phyllis discuss and explain how does the if at all the biologics prize combat competition innovations act of two thousand and nine figure into your story well that act was designed to make it easier to compete on the by a similar front while containing a set of requirements that are biased similar had to fulfill in the way of testing a so we there is no allegation here that there was noncompliance with fact that simply sets the standards for determining when a biosimilars deemed to be equivalent keeping in mind she judge katzman we're talking about very complicated proteins and one of the things that has to happen in order for that by a similarity to occur is for there to be elaborate testing with the product that is being made similar to and competitive conduct that occurred in russia all directed at limiting ability to import its by a similar once it had obtained the necessary approval let me ask you if i might about the f t you say in your brief that the phrase conduct involving commerce commerce conduct involving import commerce and that act means conduct that is intended to affect and does affect import commerce but the word involving in the statute also modifies the phrase trade or commerce with foreign  nations which then determines what conduct this subject to the f d a i understand it and so in reading involving the way you ask us could arguably expand the reach of the  i itself let me give you if i could a hypothetical let's say that an american company let's call it company x has a monopoly on some product in russia but is competing with company y here in the us market and it worries that company y may try to enter the russian market so company x decides to start undercutting companies wise prices in the us and gives kickback kickbacks to american doctors and gauging and other an competitive behavior in the us all with the intent of maintaining its russian monopoly by crippling wise financial ability to enter the russian mark now all that conduct that i described is taking place in the united states and its direct effects are felt here but it's tended to affect and does affect trade with a foreign nation so wouldn't that domestic conduct is suddenly fall under the f d a under your reading of the word involving no because it's directly affecting the export market one of the things that i think hypothetical the way you would analyze the question is you look at was the was there a direction of the activity at exports and if it was under the way the men cam analysis would be it just falls outside of the a i a and you look at it under normal substantive sherman act standards and i would submit that the same analysis applies here in reverse because what the directed at language in this is from  your honor your opinion in the krooman case where you looked at the standard for what constitutes in the import for this purpose and the test the second circuit adopted was directed at what we're perfectly fine applying that standard here we're not asking you to change that standard at all and if you look at what the defendants here are striving to do their actions really aren't directed at the imports because that's what they're trying to protect against they know they have a nine billion dollar profit nut here in the united states that they are trying to protect the only competitor around the world who can conceivably threaten that monopoly is in russia and so under cutting the market in russia is the way of starving by a cat of the capital necessary to become a viable competitor in the market that they most care about which is the one here in the united states and that's why the complaint alleges why only vast different price differentials between what the defendants are charging in the united states for their cancer drugs and what they're charging in russia now is it your is it your relevant domestic effect the decreased output that results from bio kat's exclusion they both they both go hand in hand the exclusion is the antitrust injury and effect that we're talking about here that vin by economic terms has the effect of you know decreasing the amount of competitive product in a thereby allowing the defendants to char super competitive prices here in the united states where the district court erred however was in thinking that the complaint was only alleging the heightened prices here in the united states the injury is the exclusion from the market in the exclusion from the market then has those corollar it's not framed as a rightness issue but we're not there yet i mean we're not even in the market you know we don't know for sure that you will be in the market the question is at the pleading stage judge chin are we are we allowed to or we for a application and the reasons that you look at this problem can textually and that's why if you were to affirm you would be the only court that would hold that this f d a approval standard is a pleading requirement you're right that it is unripe in the sense that facts have to be developed but that's why this case coming as it does under rule eight splitting standard simply requires a notice of what the theories of the plaintiffs are and  the reasonable inferences have to be drawn in the plaintiff's favor the district court didn't do that going back for a second to going back to a second to that the question that i is the development of the relevant to mastic effect is to decrease output and you say they go hand in hand so how does the decreased output caused by a cad's injury it seems that they're katzman i may not fully understand it so if i start the stay on a road and we're not speaking to each other directly please interrupt and help me clarify the defendant's conduct here which is at issue is there exclusion there attempted exclusion from the market that has the effect of precluding cad from being able to participate in the market now what effective that is to make the availability of these  cancer drugs under the sole control of the defendants to the extent that that is in effect cognize simple which we submit it is as an antitrust injury it clearly qualifies on the injury side and also qualifies under the f d a i a as a significant a mess to fact so to that extent you're really looking at things that go hand in hand to the extent that what it also enables the defendants to do is to raise their prices to super competitive levels the complaint alleges that that in fact happened at the time when emergence is a potential competitor in russia it became clear in the twenty fourteen twenty sixteen  tamed approval from the russian authorities to begin selling these bio similar drugs and when bio cad intrade into contracts around the world for the sales of the spy a similar so i think it from the perspective of which lens you're looking at really does turn in part on which question you're asking whether it pertains to the e talk trust injury side or whether it pertains to the application of the statute side what we do know is that the statu was not designed to change the function of how antitrust law applied for foreign conduct that was directed at the united states and that's where we're in the heartland of that now what it was designed to do is to avoid the problem of having courts try to look at anti competitive conduct that didn't have those effects in the united states back unless  finishing with standing issues if there's time so i just on the on the state of the allegations and what this case is about i just want to point out that there's there's a very artful phrase that is over and over again in the complaint about how bio cad is the only company in the world that competes with the defendants in all three of these cancer drugs that are  all three the reason that's important to focus on that is because the complaint does not allege and could not allege that that the defendant's lack competition in the three drugs overall so there is as soon as the drugs are off patent there will be competition in the united states for all of them and by ok very cleverly tried to plead around that by saying if they were the only one who was making all three but of course from the from the perspective of the interest of competition who cares as as long as there are they are out there now turning to the f d a i a i think it is impossible to get this case right without grounding the analysis as judge sullivan did in the allegations of anticompetitive conduct in russia those are summarized it at paragraph one thousand of the complaint at a one forty three and they are as russian issue could get there is this there's a very unusual theory of predatory pricing in russia which not only combines low pricing but is intertwined with russian regulations on on posting of drug pricing there is commercial bribery of professionals employed by the russian government there's fraudulent bidding on russian government contracts there's a conspiracy with employees of the russian ministry of health to exclude bio cad from the russian health insurance program  and there is a there is a unique time claim affecting russian cancer patients that the brief of bio cad tries to say that most but not all of the conduct is in russia but that's not true all of the conduct that is alleged to create any injury occurred in russia the only exception to that to the russian conduct is the theme of limiting distribution that you will find at paragraphs one eighty one one ninety one of the complaint at a one sixty one and one sixty two and which are also addressed in footnote six of judge solomon's decision and this is the idea that that the distribution system of june in tech was limited in some way to make it harder to get reference samples to go forward with the f d a process but you will search those paragraphs in vain for any allegation that bio cad tried but was unable to get reference samples and obviously since we come here today with with with applications for all of these drugs on file and two of the three already approved there's a way to get reference samples out in the world so so that doesn't actually contribute to their cause of action their cause of action is one hundred percent rooted in what happened in russia now russia does have a competition law and rooted in what happens in  russia i understand that but the idea is that the conduct would bankrupt ultimately bankrupt rivals in the process making it to deal with this and while it can be complicated i actually think that it comes down complicated it is in it and by the way don't forget when you write your opinion that it's now become bigger to say that it's complicated in every opinion it's a very funny i don't remember it's an odd structure but but remember that what you're dealing with is what are our pair is a pair of complimentary rules that are supposed to deal with two easy cases and then all other cases in between the two easy cases are when we are actually dealing with import transactions and export transactions and why are they easy they're easy because by definition one foot is in the united states and as a result of that the interest in the united states in being able to regulate that with it's and the trust laws without interfering with the sovereign interests of other nations is clear and in those instances the court doesn't have to go through an effects substantiality or anything else it simply has to do what this court did in the krooman case which is identify the conduct as one that is acting upon the import transaction but let's then go through the list here but if you look under bio can't interpretation the domestic effects exception at least as i understand it would apply to foreign conduct that doesn't have the ultimate goal of restricting import distinction i don't think it is the distinction that congress adopted what congress wanted to say is in in these easy cases of exports and imports where where the conic by definition is partially in the united states we do not need to go through what is really the core of the f d a which is the direct effects exception six a one in sixty two and the idea of are that are the effects direct foreseeable substantial and is the injury that is being complained of the secondary effect of the us effects we have these easy cases because the conduct as in the christie's auction case that you covered in crewman is is either is or is not on the import transactions and cells in that case held that it was not that doesn't mean the plaintiff is out of court it doesn't mean the u s doesn't care about that conduct all it means is it has to go through the filters of six and one and six a two which is not an unreasonable thing because that's where congress did its work in the statute to try to synthesize and to some degree modify the prior law around the six a one and six  two concepts now below cad took the position that that this was soley and import exclusion case and they made this essentially intent based argument that that even though obviously a bribe to keep bio cad out of the russian health care program is not an important restraint that we could treat it as such by simply having an inten allegation which says that it is that's not either a sensible usage of the word involves nor is it what this court used interpreted the words to mean in it's very interesting we actually had a battle of the dictionary definitions in in the briefs here and we came forth in our brief saying that involved should mean includes or contains and frederick came back in his brief saying that it should mean affects or implicates because you can find those in the dictionary as well but do you notice that all of those terms are about the objective relationship between things none of them are about the subjective relationship between things and congress could have put involves or was intended to affect but that's not what they did and in all of the of the decisions that imply the import commerce  exclusion take that objective look at the conduct for what it is approach including in in increment what about you've got the in two thousand and seventeen the f t c in the end i trust division issued guidelines for international and for force mini cooperation yes and there are they say in the guidelines conduct may involve import commerce even if it is not directed specifically or exclusively at import commerce yes and quite frankly i disagree with that i think that to the extent that it doesn't involve it it has to go through the direct effects exception and you know my colleagues in the end it's just a vision i respect very highly but they're in the prosecution business and they've been frequently on the other side of these issues and they take a somewhat expansive view but if you look way now when we turn to that i think you know there's two parts of it there's six a one and there's there's six a two i don't think that the court could find a better candidate for finally addressing what it means to have a direct effect then then this one where you are presented with a complaint which is one hundred percent about exclusionary conduct that occurred in russia far removed in time  place from the alleged facts that occurred in the united states the reasonable proximate cause all nexus is the standard that was adopted in the lotes decision and in a number of problems of proximate cause factors are mentioned let's just go through them very quickly now and lo it's i think it's also important to keep in mind that the object of the conspiracy in that case was a foreign market  the conduct was occurred in a foreign market the plaintiff's theory in los was was that the united states is the largest consumer market for electronic devices would be firmly in the minds of everyone who  trying to raise the price of u s b three point zero connectors because so much of the demand for them would be here and they were arguing essential to pass through theory that which would bring the overcharges into the united states is a matter of of inevitability that is actually a more linear causal chain than what is alleged here it's much more direct actually than what's alleged here because what you have here instead is the unlikely proposition that trying to keep them out of the russian health care program is is is going to have the direct effect of keeping them out of the united states there are very specific allegations of paying bribes to particular physicians in smolensk you know these are not things that that anyone would think that the natural and probable consequences of paying bribes to physicians in smolensk is that they will be kept out of the united states there are superseding and intervening causes galore here not the least of which is the implausibility of that financing thing because if you if you take the allegations of the complaint at face value that that there is this incredibly lucrative market and then they are at least one of the unique competitors to get into that why couldn't they find alternate financing if that's if that is really what the effect of the russian conduct was was was that it cashed the start of them too to some extent i think what's going on here is in love it's your honest your own thought that this can't just be but for causation it can't just be anything more than it antecedent event without which the harm in the us when the curd but that's what we have here that's what we have here is is the most remote most in direct causal chain that you will find in any reported f domestic effect to be increased prices as opposed to bio cad exclusion itself or reduced output so i'm trying to figure out a way to say yes or no to that but but effect is higher drug prices and that's the cognizable effect because the exclusion of of one competitor from a market in and of itself wouldn't even be in any trust offense level let alone one that would lead to consumer injury you need  the reduction in output and so forth that causes a consumer injury and so i do think that the causal chain is very very similar to loads in which the idea is is that i'm getting through six a one with higher prices in the u s and now the problem is there's no credible argument that higher prices in the u s cause the injury to buy a cat but i think there's a second way to to do with that also comes from los because  not only tells us what you what you have to say it tells us what you can't say and specifically what it says is is that you you cannot the plaintiff cannot  cannot satisfy sixty two when it's exclusion from the relevant market actually precludes the domestic effect that's it seven fifty three at three ninety eight and then later on again at page fo fourteen where the court says that that is injury flowed directly from the defendant's exclusionary foreign conduct looks complaint thus seeks redress for precisely the type of independently caused for an program held falls outside of congress's intent well one thing we can say with certainty about this complaint is that the single engine of causation is the alleged destruction or suppress it's not that it wasn't destroyed but the alleged suppression of their russian business and therefore it indeed if you read their complaint broadly what they're talking about in terms of the united states is one of the places that they were unable to enter into it it is it's essentially the consequential damages of their exclusion from from from russia and because the causal chain of that begins so clearly in russia with with acts that are that are about anti competitive conduct in russia with with no independent u s connection i think that that is in the wheel house of what lott says is is is not i'm way over my time be crystal clear we would not be saying that there is a standing problem in this case if everything that the complaint says that that by a cad has done with respect to product development  n building plants and so forth was was directed at the u s market the reason the standing issue exists here is because this is a company who's who up to up to the time of the complaint appeared to be focused entirely on russia and on a number of other countries that do not have the standards for by a similar approval that the has and that the european medicines agency has they say they they've undertaken a number of steps indeed so that they would be able to enter the american market including making investments in the united states itself right why at this stage isn't that enough you may ultimately prevail but i'm just trying to understand because in the context of this case and in this industry with this regulatory framework  about what their what their plan or ability is to get this product through the u s or i would even spot them the european if you will if you were their lawyer what would you counsel them to do well give you a give you a number of specific suggestions of things they could have done i'll start with some that are actually inspired by a by a single press release that was put out by another one of our biosimilars competitors the same month this this complaint was filed by i could have alleged that there biosimilars were in late stage phase three development and their primary endpoints had been successfully achieved in other words they could alleged that the state of their testing they could have alleged that one or more of the drugs had actually been submitted to the european medicines agency for review which would be very credible because that's not russia and partner who had a strong u s presence in oncology they didn't allege that here's one that wasn't in this inspired by the press release they could've allege that they actually saw those reference samples and and i will note that the that the complaint their own complaint alleges that one of their consultants told them that one of the things that they should do in order to get this product ready to bring to the united states was to conduct comparative testings of their product with a reference product and there is no allegation in the complaint that they did that at all that's the context in which one has to consider what judge sullivan ruled he did not as as counsel likes to say demand a check list what he said you have not alleged anything at all which he followed up with what i would seem to me to be just a number of examples that he was throwing out there are things about the f d a process that one might have have pled none of which were pled here none of which were played require allegations of actual f d a approval but he was saying still in this context someone who's claiming to be real in the united states would have been able to give me something something at all on the regulatory side of their you'll have three minutes thank you your honor let me start with standing because it was an afterthought until you raise the question if you accept the proposition that the defendants are seeking to protect a nine billion dollar profit stream the u s market is the key for any worldwide company that is seeking to develop these biosimilars that is what bio did and if you look at the time frame which has pleaded in the complaint is twenty sixteen that's when bio cat got the second and third of its by a similar approvals in russia and it was at the exactly at that point that the pricing structure by the defendants changed at that time it raised the prices in the united states to help subsidize the decrease in the prices that it was charging in russia it was as alleged in the complaint direct cause and effect as a standing matter clearly being precluded from the u s market is antitrust injury and the way that you get antitrust injury is through choking off the ability of a foreign company to import into the united states and once you accept that as a stay standing matter then all the facts that the other side would like you to be considering really are irrelevant at the pleading stage they're going to get their opportunity to develop their facts they're going to get their opportunity to argue for summary judgment that there wasn't proximate cause but that's not appropriate to do at the pleading stage and notably nowhere has mr wall today defended what the district court said with respect to standing which is that we had to plead a lot of facts that went around the f d a approval process that's never been the standard and that has never been accepted by any other court other than the district court below in this case so once you've accepted our argument with respect to antitrust standing then the f t a i a a issues sort of fall together because we meet the we meet the import seppo provision because the actions here clearly are directed at their ability to import into the united states and under the lotus decision in under a min cam in the seventh circuit that is enough to take us completely out of the f t a a land and you don't really need to say more about it than that unless you want to now what the coo what is being argued here are a lot of facts that are outside the pleading there is no rule of antitrust law that simply because there might be some other competitors emerging that enables you to engage in the anti competitive acts against one of your competitors and that's what our suit here alleges so the idea that they can get away with kneecapping bio cad and russia as a way of protecting even if it's only protecting for another year or so their market stream is a multibillion dollar protection of their monopoly profit stream and that is what we are a seeking to to protect here chief judge katzman we agree with your reading of lotus to the extent that it is talking about what is being directed at and the apod ject of the conspiracy as it here was to protect their us market and their revenue stream here and so we believe that under a proper reading of lotus where the object of the conspiracy there was to create exclusion in the chinese market that's different than what is proximately causing the problems here which is an object to conspire to protect their us profit stream in this situation unless the court has for the