534 F.Supp.2d 146, 2008-1 Trade Cases P 76,060 (Cite as: 534 F.Supp.2d 146)
Antitrust and Trade Regulation 29T

AstraZeneca Pharmaceuticals L.P. et al., Defend- To obtain antitrust relief, an antitrust plaintiff AstraZeneca Pharmaceuticals L.P. et al., Defend- must prove an antitrust injury, which is to say in- jury of the type the antitrust laws were intended to Louisiana Wholesale Drug Co., Inc. et al., prevent and that flows from that which makes de- AstraZeneca Pharmaceuticals LP et al., Defendants.
Antitrust and Trade Regulation 29T
Burlington Drug Company, Inc. et al., Plaintiffs, AstraZeneca Pharmaceuticals LP et al., Defendants.
Civil Action Nos. 06-2084 (RWR), 06-2089(RWR), 06-2155(RWR), 06-2157(RWR), 07-0041(RWR).
Background: Five actions were filed alleging that
pharmaceutical manufacturer engaged in exclusion- ary conduct, in violation of the Sherman Act. Man- ufacturer moved to dismiss all actions.
The antitrust injury requirement in an antitrust case ensures that a plaintiff can recover only if the loss stems from a competition-reducing aspect or that manufacturer switched the market for its pre- scription heartburn drug, just as that drug's patentwas about to expire, to its new prescription and Antitrust and Trade Regulation 29T
over-the-counter (OTC) drugs, was insufficient tostate a claim for attempted market monopolization.
2012 Thomson Reuters. No Claim to Orig. US Gov. Works.
534 F.Supp.2d 146, 2008-1 Trade Cases P 76,060 (Cite as: 534 F.Supp.2d 146)
Antitrust and Trade Regulation 29T
, Sidley Austin LLP, Los Angeles, CA,, , Sidley Aus- ley Austin, LLP, Washington, DC, for Defendants.
Under the Sherman Act, offense of monopoliz- Plaintiffs in the five above-captioned cases ation has two elements: (1) the possession of mono- poly power in the relevant market, and (2) the will- leging that defendants AstraZeneca*148 Pharm-
ful acquisition or maintenance of that power, as dis- ceuticals L.P., AstraZeneca L.P., Zeneca, Inc., and tinguished from growth or development as a con- Zeneca Holdings, Inc. (collectively, “AstraZeneca”) sequence of a superior product, business acumen, or market monopolization. Plaintiffs allege that As-traZeneca deliberately switched the market from its Antitrust and Trade Regulation 29T
prescription heartburn drug , just as patent was about to expire, to both its newly patent that would not expire for several years, and (“OTC”) . AstraZeneca, arguing that its conduct was procompetitive rather than anticompet- itive, filed motions to dismiss the complaints under Allegation that pharmaceutical manufacturer switched the market for its prescription heartburn to state a claim upon which relief may be granted.
drug, just as that drug's patent was about to expire, Because plaintiffs have not alleged facts sufficient to its new prescription and over-the-counter (OTC) to support a reasonable inference that AstraZeneca's drugs, was insufficient to state a claim for attemp- decision to market and aggressively promote ted market monopolization in violation of the Sher- man Act; manufacturer's decision to market and ag- of the Sherman Act, the motions to dismiss will gressively promote its new drug did not eliminate be granted and the complaints will be dismissed.
Because these cases do not survive the motions to dismiss, all other pending motions will be denied as *147 Kaplan Fox & Kilsheimer LLP, New York,
Arnold, Critchlow & Spector, PA, Miami, FL, bertson's, Inc., Safeway, Inc., Hy-Vee, Inc.
Civil Action No. 06-2084; Rite Aid Corp.
& Pudlin, Harrisburg, PA, for Plaintiffs.
and Rite Aid Headquarters Corp. in CivilAction No. 06-2089; Meijer, Inc. and Meijer Distribution, Inc. in Civil Action 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.
534 F.Supp.2d 146, 2008-1 Trade Cases P 76,060 (Cite as: 534 F.Supp.2d 146)
Co., Inc. in Civil Action No. 06-2157; andBurlington Drug Company, Inc., Dik Drug Florence, Inc. in Civil Action No. 07-41.
treatment of heartburn and related condi- The latter three actions were filed on be- half of a proposed class consisting of all Aciphex are prescription treatments manu- persons and entities in the United States conditions. (See Mot. to Dismiss at 12.) its enantiomers directly from any of the de- AstraZeneca also owns the patent for, manufac- fendants after December 18, 2002. Because tures, and markets the brand-name prescription identical, all references to a complaint will be made to the complaint in the first-filed just eight months before the patent expired.
The patent does not expire until 2014, and is not *149 subject to generic substitutions
(Walgreen Co. et al. v. AstraZeneca Pharms. et al., Civil Action No. 06-2084, First Am. Compl.
(“FAC”) ¶ 42.) contains the drug substance time ceased promoting and detailing .
“Detailing” in the retail pharmaceut- ical business refers to the practice of send- ing company representatives to doctors' of- ive drug in the parietal cells of the stomach of a fices to distribute samples and promotional person who ingests the substance. (Id. ¶¶ 53-54.) AstraZeneca obtained a patent for in 1981,and began marketing 20 mg capsules in Based on sales data, plaintiffs calculate that in September 1989 after obtaining approval from the 2002-the year after hit the market-Nexium siphoned off one-third of the prescriptions that lion in revenue to AstraZeneca. The patent not been an alternative. (See id. ¶¶ 63, 65.) expired in October 2001, and a company not in- Plaintiffs also project that if had not gone volved in this case first marketed a generic equival- to market, the manufacturers of generic substitutes ent of in December 2002. AstraZeneca still manufactures and markets its prescription their current 30% of the market, and consumers capsules. In June 2003, the FDA approved an OTC would have collectively saved $11.5 billion by the version of prescription , and granted As- end of the year 2006. (Id. ¶ 68.) traZeneca exclusivity in that market through June2006 after AstraZeneca conducted and submitted The gravamen of plaintiffs' complaint is that AstraZeneca “switch[ed] the market from ,which now has generic competition, to a virtually identical drug, , which does not [have gen- erosive esophogitis and symptomatic gast- eric competition.]” (Id. ¶ 1.) Asserting that there is 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.
534 F.Supp.2d 146, 2008-1 Trade Cases P 76,060 (Cite as: 534 F.Supp.2d 146)
and that there is no pharmacodynamic reason why a act with the stomach's parietal cells any differently to obtain antitrust relief an antitrust plaintiff must prove an “antitrust injury, which is to say injury of (id. ¶ 54), plaintiffs contend that this switching the type the antitrust laws were intended to prevent is exclusionary and violates of the Sherman and that flows from that which makes defendants' Act. They also allege that to effectuate this market switch, AstraZeneca used distortion and misdirec- tion in marketing, promoting and detailing .
(See id. ¶¶ 69, 90-95, 116, 122.) In addition, suffer antitrust injury merely because they are in a plaintiffs contend that AstraZeneca engaged in pro- worse position than they would have been in had hibited exclusionary conduct when it introduced for three years from the FDA. (See id. ¶¶ 96-103.) sures that a plaintiff can recover only if the lossstems from a competition-reducing aspect or effect thorizes dismissal of a complaint for failure to state a claim upon which relief can be granted. See ginal). “Thus, antitrust injuries include only those injuries that result from interference with the free- motion to dismiss assumes all factual al- legations to be true, even if they are doubtful. felony to “monopolize or attempt to monopolize .
any part of the trade or commerce among the sever- the complaint “liberally in the plaintiffs' favor” and “grant plaintiffs the benefit of all inferences that polization has two elements: ‘(1) the possession of can be derived from the facts alleged”). A court monopoly power in the relevant market and (2) the need not, however, “accept inferences drawn by willful acquisition or maintenance of that power as plaintiffs if such inferences are unsupported by the distinguished from growth or development as a facts set out in the complaint. Nor must [a] court consequence of a superior product, business acu- accept legal conclusions cast in the form of factual dismiss does not need detailed factual allegations, . a plaintiff's obligation to provide the grounds of ). The undesirable “willful acquisition or mainten- his entitle[ment] to relief requires more than labels ance” conduct that prohibits is often referred to and conclusions, and a formulaic recitation of the as “exclusionary.” See Philip R. Areeda & Herbert elements of a cause of action will not do.” Hovenkamp, 3 Antitrust Law § 650a(1) at 67 (rev.
ed. 1996) (“Areeda & Hovenkamp”). Exclusionary and quotations omitted) (alteration in original).
conduct is “that which prevents actual or potentialrivals from competing or impairs their opportunities to do so effectively.” Id. § 651b at 76. The term en- 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.
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compasses “at most behavior that not only (1) tends deliberately limit rather than expand consumers' to impair the opportunities of rivals, but also (2) choices when it successively introduced new paten- either does not further competition on the merits or ted drugs by merely changing the formulation of does so in an unnecessarily restrictive way.” Id. § the drug-once from capsule form to tablet form and 651b at 77. “Whether any particular act of a mono- then again to a second tablet form-and then stopped polist is exclusionary, rather than merely a form of manufacturing the prior formulations, and repur- vigorous competition, can be difficult to discern: the means of illicit exclusion, like the means of le- gitimate competition, are myriad. The challenge for was a critical factor in the court's decision to deny an antitrust court lies in stating a general rule for Abbott's motion to dismiss the complaint. distinguishing between exclusionary acts, which re- (“But here . consumers were not presented with a duce social welfare, and competitive acts, which in- choice between . formulations. Instead, Defend- ants allegedly prevented such a choice by removing issue to be determined is whether plaintiffs' asser- the old formulations from the market while introdu- tions that AstraZeneca engaged in exclusionary cing new formulations.”). Thus, in both conduct are supported by factual allegations-which and the defendants' offending conduct had to must be taken as true for the purposes of this mo- do with eliminating choices available to the con- tion-that yield a reasonable inference that As- sumer. Yet, here, there is no allegation that As- traZeneca's conduct was of the type that is prohib- ited by as exclusionary, or whether plaintiffs' Rather, AstraZeneca added choices. It introduced a assertions of exclusionary conduct amount to no new drug to compete with already-established more than “labels and conclusions, and a formulaic drugs-both its own and others'-and with the generic recitation” of this essential element of a substitutes for at least one of the established drugs.
Plaintiffs allege that AstraZeneca engaged AstraZeneca in this case, is classic exclu- in exclusionary conduct “by introducing , a sionary conduct. See Philip R. Areeda & drug virtually identical to and no more effective Herbert Hovenkamp, 3A Antitrust Law § than ” (FAC ¶¶ 116, 122), and “switching 776c at 242-53 (2d ed. 2002) (“Areeda & Hovenkamp 2d ed.”) (discussing the tying competition, to a virtually identical drug, , which does not [have generic competition.]” (Id. generally, Ch. 7D-4 at 228-67; (discussing 1.) To make their case, plaintiffs contend that As- various issues involved in vertical integra- traZeneca's conduct is analogous to conduct held ted by a patent and not superior to , As- the facts. In the firm violated antitrust traZeneca's conduct is exclusionary. Plaintiffs are laws when it tied a specific internet browser to a not able to show that enjoying the benefits of patent specific operating system on which it *151 had a
protection is exclusionary conduct under . “[A] monopoly, and by so doing effectively eliminated patent is presumptively not a monopoly . [and] is no different than any other property right . [such as] ownership of an airplane or pipeline [that] ex- alleged that Abbott was a monopolizer that sought cludes others from using them. Further, the Patent to defeat competition from generic substitutes and Act creates a federal right to exclude others from 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.
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practicing the patent. As a result, antitrust must its advertising directed to lay persons. Plaintiffs tread lightly.” Areeda & Hovenkamp, § 704a at have not identified any antitrust law that prohibits 151. See also id. § 706d at 164-66 (advising that market switching through sales persuasion short of antitrust remedies should not be applied to mono- polists who introduce new products under patents has identified such conduct as exclusionary for pur- or, presumably, other official grants of exclusivity).
poses of of the Sherman Act. The law allowsAstraZeneca “to bathe [its] cause in the best light Plaintiffs have also not identified any antitrust possible. Advertising that emphasizes a producer's law that requires a product new on the market-with strengths and minimizes its weaknesses does not, at or without a patent-to be superior to existing least unless it amounts to deception, constitute anti- products. Antitrust law holds, and has long held, to the contrary. Courts and juries are not tasked with determining which product among several is superi- thermore, before a court allows “misrepresentation or. Those determinations are left to the market- to buyers to be the basis of a competitor's treble place. New products are not capable of affecting damage action under ,” it should “at least require competitors' market share unless consumers prefer the plaintiff to overcome a presumption that the ef- the new product, regardless of whether that product fect on competition of such a practice was de min- is superior, equivalent, or inferior to existing products. “[N]o one can determine with any reason- posit that the de minimis presumption should be able assurance whether one product is ‘superior’ to overcome only where the plaintiff can show another. Preference is a matter of individual taste.
“cumulative proof that the representations were The only question that can be answered is whether clearly false, clearly material, clearly likely to in- there is sufficient demand for a particular product duce reasonable reliance, made to buyers without to make its production worthwhile, and the re- knowledge of the subject matter, continued for pro- sponse, so long as the free choice of consumers is longed periods, and not readily susceptible of neut- preserved, can only be inferred from the reaction of ralization or other offset by rivals.” Areeda & Hov- enkamp 2d ed., § 782b at 274. Plaintiffs cannot hope to make such a showing because sales polist's products gain acceptance in the market, necessarily depended on prescriptions written by therefore, it is of no importance that a judge or jury medical professionals, that is, persons knowledge- may later regard*152 them as inferior, so long as
able of the subject matter. In short, plaintiffs have that success was not based on any form of coer- not alleged facts that support an inference that As- cion.” See also Areeda & Hovenkamp 2d ed., § traZeneca's conduct in switching the market from 776b2 at 236 (discussing the basic analytical points the court made in id. § 781e at 271 poses of , rather than procompetitive albeit to (“We therefore conclude that all product innovation should be lawful in the absence of bundling.”).
Here, plaintiffs have alleged no coercion, bundling, sion directed to medical professionals andlay persons was distorted in multiple re- Plaintiffs also complain that when AstraZeneca spects. They have not, however, asserted a transferred its considerable sales efforts from to , it used distortion in its efforts topersuade doctors and other medical professionals Indeed, plaintiffs here have not identified an antitrust injury that they have suffered. They com- 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.
534 F.Supp.2d 146, 2008-1 Trade Cases P 76,060 (Cite as: 534 F.Supp.2d 146)
plain that AstraZeneca's conduct cost them sales oftheir generic substitutes. The fact that a newproduct siphoned off some of the sales from the oldproduct and, in turn, depressed sales of the genericsubstitutes for the old product, does not create anantitrust cause of action. Simply stated, plaintiffshave not alleged facts showing that AstraZeneca“interfere[d] with the[ir] freedom to compete.”Plaintiffs are as free tocompete with as they would have been hadnever been introduced. remainsavailable as a consumer choice either by prescrip-tion or over-the-counter. The complaint reflectslittle reason for plaintiffs' circumscribed ability torealize sales other than AstraZeneca introducing anew competitive product and successfully compet-ing in marketing the new product. This is not an an-titrust injury.
Plaintiffs have not pled facts that support a reasonable inference that they have *153 been dam-
aged by an antitrust injury, or that AstraZeneca en-
gaged in exclusionary conduct prohibited by of
the Sherman Act. Without such facts, plaintiffs' al-
legations of antitrust injury and exclusionary con-
duct constitute no “more than labels and conclu-
sions, and a formulaic recitation of the elements of
a cause of action.” Ac-
cordingly, AstraZeneca's motion to dismiss will be
granted for plaintiffs' failure to state a claim upon
which relief may be granted.
An appropriate order accompanies this memor- D.D.C.,2008.
Walgreen Co. v. AstraZeneca Pharmaceuticals L.P.
534 F.Supp.2d 146, 2008-1 Trade Cases P 76,060 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.


710 malcolm’s money transcript

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aDENTSPLY International, Inc., Susquehanna Commerce Center,221 West Philadelphia Street, York, PA 17405-0872, USAbBaltimore College of Dental Surgery, University of Maryland,Aesthetics of the teeth is of great importance to many patients. Public de-mand for aesthetic dentistry, including tooth whitening, has increased in re-cent years. Patient interest in whitening and articles on whitenin

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