Wednesday, July 29, 2009

FTC, Minnesota Can Proceed with Claims Against Drug Company’s Acquisition

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The federal district court in Minneapolis will allow the Federal Trade Commission and the State of Minnesota to proceed to trial with their claims against Lundbeck, Inc., in connection with the drug company’s 2006 acquisition of a drug—NeoProfen—used to treat a potentially-deadly congenital heart defect in premature babies.

The court denied Lundbeck’s motion for summary judgment and set a set a trial date of December 7, 2009.

When it acquired NeoProfen, Lundbeck—formerly Ovation Pharmaceuticals, Inc.—had already held the rights to Indocin (injectable indomethacin)—the only drug available to treat patent ductus arteriosus (PDA) in the United States. NeoProfen (injectable ibuprofen) had not been approved by the Food and Drug Administration to treat PDA but was used in Europe to treat the disease.

Government Allegations

The FTC alleged that—by acquiring the rights to NeoProfen—Lundbeck violated Sec. 7 of the Clayton Act and Sec. 5 of the FTC Act.

Similarly, the State of Minnesota argued that Lundbeck violated Sec. 7 of the Clayton Act by acquiring the rights to NeoProfen and violated Sec. 2 of the Sherman Act by willfully maintaining its monopoly power in the market for the sale of drugs for the treatment of PDA.

Same Market?

On its motion for summary judgment, Lundbeck contended that Indocin and NeoProfen were not in the same market. It maintained that doctors distinguish Indocin from NeoProfen based on clinical and safety attributes and that doctors do not switch between the drugs based on price. The court rejected the contention.

The FTC and Minnesota responded that Indocin and NeoProfen treated the same medical condition in the same patient population. In addition, a significant number
of hospitals stocked either Indocin or NeoProfen but not both, and hospitals considered price when purchasing drugs.

Market Power

The court also rejected Lundbeck’s argument that it lacked market power because the entry of a generic manufacturer of indomethacin was imminent. The FTC and the State of Minnesota pointed to manufacturing difficulties, and there was no agreement that generic indomethacin would be in the market within the calendar year, the court explained.

The July 21 decision in FTC v. Lundbeck, Inc., appears at 2009-2 CCH Trade Cases ¶ 76,682.

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