June 2005
On June 13, 2005, an Arnold & Porter LLP antitrust litigation team representing Wyeth prevailed on a motion for summary judgment in an antitrust class action brought by a nationwide class of direct purchasers of Wyeth's leading estrogen therapy product, Premarin. Plaintiffs had alleged that Wyeth had violated Sections 1 and 2 of the Sherman Act by entering into restrictive contracts with pharmacy benefit managers ("PBMs") and other managed care organizations. Plaintiffs CVS Meridian, Inc. and Rite Aid Corporation opted out of the class and brought a separate monopolization suit under Section 2 of the Sherman Act. These cases were consolidated before Judge Beckwith in the Southern District of Ohio (Cincinnati).
The Arnold & Porter team persuaded the court to grant summary judgment in favor of Wyeth and dismiss both suits—which had collectively sought hundreds of millions of dollars in damages to direct purchasers—in their entirety. Plaintiffs argued that Wyeth unlawfully restricted competition from other estrogen therapy products through "exclusive" and "de facto exclusive" contracts that gave Premarin favored positioning on PBM formularies and/or awarded rebates based on the share of reimbursements that the PBMs made for Premarin products. Plaintiffs contended that, by limiting the competitive threat posed by competing products, such contracts allowed Wyeth to charge supracompetitive prices for Premarin.
With respect to plaintiffs' claim under Section 1, the court agreed with Wyeth that its "favorable or exclusive formulary placement for Premarin in many PBMs" does not constitute "actionable market foreclosure." Numerous competing estrogen products were able to achieve formulary status, and in any event, obtaining formulary listings was just one method of competition. The court also rejected plaintiffs' claim under Section 2 of the Sherman Act, finding that Wyeth's contracts were a "practice that is widespread throughout the larger and unique pharmaceutical market" and that plaintiffs had failed to put forth sufficient evidence that Wyeth's conduct adversely affected overall competition in the relevant market. Finally, the court ruled that plaintiffs could not establish that they had suffered "antitrust injury," because plaintiffs "have not established a 'but-for' causative link between Wyeth's PBM contracts and Wyeth's price increases."