Insights

Health Plans Lack Standing to Sue GlaxoSmithKline Over Generic Paxil

On January 30, 2006, the U.S. District Court for the District of Minnesota ("Court") dismissed with prejudice a claim for unlawful monopolization in violation of Section 2 of the Sherman Act by seventy-eight health benefit plans ("plans") against GlaxoSmithKline. Blue Cross and Blue Shield of Minnesota et al v. GlaxoSmithKline et al, Case No. 05-cv-00910-DWF-AJB (D. Minn. January 30, 2006). These plans had opted out of the settlement of an indirect purchaser class action suit in the Eastern District of Pennsylvania. Two similar cases involving respectively the City of New York and a class of direct purchasers also settled.

The plans had asserted that GlaxoSmithKline violated Section 2 of the Sherman Act by (1) obtaining patents through fraud on the United States Patent and Trademark Office; (2) improperly listing those patents in the Food and Drug Administration's Orange Book; and (3) enforcing the patents by engaging in sham infringement cases again potential generic drug producers. According to the plans, GlaxoSmithKline ("GSK") did so in order to delay generic entry into, and thereby monopolize, the market for Paxil. They alleged that although they were not direct purchasers, they were not precluded by the Supreme Court's Illinois Brick case from recovering damages under Section 4 of the Clayton Act, because GSK's actions caused direct injury to their managed care programs. In order to avoid the prohibition against suits by indirect purchasers, the plans argued that GSK prevented them from reducing prescription drug prices through the use of generics, and that therefore the plans incurred supracompetitive costs. However, the Court found that the plans were seeking to recover for the same injuries suffered by direct purchasers, held that they did not have standing under Section 4 of the Clayton Act, and dismissed the suit with prejudice.

A copy of the Memorandum Opinion and Order is available at this link.

For additional information about this Antitrust Development, please contact Toby G. Singer, leader of the Health Care Antitrust Practice.

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