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FTC v. Ovation Update (and Opinion)

The Opinion is available here.  My earlier analyses of the FTC’s Ovation complaint are here and here. Judge Ericksen first summarizes the complaint:

The FTC claims that Lundbeck violated Section 7 of the Clayton Act, 15 U.S.C. § 18 (2006), and Section 5 of the FTC Act, 15 U.S.C. § 45 (2006), by acquiring the rights to NeoProfen and that Lundbeck violated Section 5 of the FTC Act by willfully maintaining its monopoly power in the market for the sale of drugs for the treatment of PDA in the United States. Minnesota claims that Lundbeck violated Section 7 of the Clayton Act by acquiring the rights to NeoProfen, that Lundbeck violated Section 2 of the Sherman Act, 15 U.S.C. § 2 (2006), by willfully maintaining its monopoly power in the market for the sale of drugs for the treatment of PDA in the United States, and that Lundbeck?s conduct violated state law. The cases are before the Court on Lundbeck?s motions for summary judgment.

A quick editorial note: Ovation Pharmaceutical became Lundbeck.  The punchline here is that Judge Ericksen rejects the FTC’s claim that the two drugs, Indocin and NeoProfen, are in the same relevant market as a matter of law and concludes that Lundbeck has raised a triable issue of fact on market definition:

Lundbeck maintains 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 FTC and Minnesota respond that Indocin and NeoProfen treat the same medical condition in the same patient population, that the differences between the drugs are minor, that a hospital?s pharmacy and therapeutics committee determines which drugs appear in the hospital?s formulary, that a significant number of hospitals stock either Indocin or NeoProfen but not both, and that hospitals consider price when purchasing drugs. The Court?s review of the record reveals that the FTC and Minnesota have raised a genuine issue of material fact as to whether Indocin and NeoProfen constitute a market for drugs that treat PDA.

Footnote 2 of the opinion is also interest.  The Court rejects Lundbeck’s argument that the FTC must present evidence of cross-elasticities in order to survive summary judgment.

Filed under: antitrust, economics, federal trade commission, patent

Full post as published by Truth on the Market on September 03, 2010 (boomark / email).