Monday, July 13, 2009
Monopoly Leveraging Claims Against Abbott Laboratories Rejected
This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.
HIV patients and their medical plans purchasing Norvir—a drug made by Abbott Laboratories that “boosts” the effectiveness of protease inhibitors used to fight the disease—failed to sufficiently allege monopoly leveraging claims against the pharmaceutical company, the U.S. Court of Appeals in San Francisco has ruled.
A decision of the federal district court in San Francisco (2008-1 Trade Cases ¶76,164), allowing the antitrust claims to proceed to trial, was reversed.
The patients and medical plans contended that Abbott leveraged its monopoly over Norvir to attempt to monopolize the market for its “boosted” protease inhibitor, Kaletra, which consisted of Abbott’s protease inhibitor compound lopinavir combined in a single pill with a boosting does of ritonavir (the generic name for Norvir).
It was alleged that Abbott dramatically increased the price of Norvir, but not the price of Kaletra, after the Food and Drug Administration approved the marketing of Norvir as a booster to be taken along with protease inhibitor sold by Abbott’s competitors. The purported effect was to raise the total cost to the patient of boosted protease inhibitor therapies provided by the competitors.
Refusal to Deal
The monopoly leveraging claimed failed, however, because the patients and medical plans did not allege a refusal to deal at the booster level (monopoly market) or below cost pricing at the boosted level (second market), as required by the U.S. Supreme Court’s decision in Pacific Bell Telephone Co. v. linkLINE Communications, Inc. (2009-1 Trade Cases ¶76,500). Abbot’s conduct was the functional equivalent of the price squeeze found unobjectionable in linkLINE, in the court’s view.
The parties entered into a settlement agreement after the district court denied Abbott’s motion for summary judgment on the antitrust claims. The terms of the settlement depended on the outcome of the appeal.
Under the settlement agreement, Abbott was to take an interlocutory appeal on condition that, if the case ended up being dismissed, Abbott would pay no more than $10 million into a settlement fund. If the plaintiffs had prevailed, Abbott would have been required to pay up to an additional $17.5 million depending on the degree of success.
The July 7 decision is Doe v. Abbott Laboratories, 2009-1 Trade Cases ¶76,671.