In New England Carpenters Heath Benefits Fund v. McKesson Corporation, 573 F.Supp.2d 431 (D.C.MA 2008), the District Court of Massachusetts granted McKesson's Motion to Dismiss Plaintiffs' proposed national class action based on the allegations that the drug wholesaler engaged in unlawful price-fixing by entering into an agreement with First DataBank, a publishing company, to inflate the "average wholesale price" ("AWP") for numerous prescription pharmaceuticals in violation of the Sherman Act and various state antitrust laws. The scheme allegedly increased the AWP from 20% to 25% for over 400 brand-name, self-administered drugs sold through retail pharmacies. This "price fixing conspiracy" was intended to "cause over-reimbursement . . . and thereby increase retail pharmacy profit margins on the sales of the Marked Up Drugs to the detriment of the Classes."
Plaintiffs contended that the alleged "conspiracy" in this case qualifies as a "per se" unreasonable restraint on trade. The District Court, however, noted that to qualify for "per se" treatment, a defendant's conduct must fall into a category recognized as having "manifestly anticompetitive effects." While, McKesson and First DataBank were not competitors, Plaintiffs argued that this was a "distinction without a difference" because the harm resulting from the alleged price-fixing conduct was similar to that caused by the traditional horizontal restraints which trigger the "per se" treatment. The court disagreed, noting that McKesson's conspiracy to charge higher prices is not sufficient by itself to establish an "antitrust injury." Adding that "both antitrust and ordinary contract or tort claims may sometimes arise out of the same body of conduct," antitrust claims are concerned "with conduct that stifles competition."
In analyzing the Plaintiffs' claim, the Court noted the Plaintiffs' failure to show any anticompetitive effect in any relevant market resulting from the higher prices. The fundamental flaw in the Plaintiffs' claim was that the alleged conspiracy between McKesson and the publisher did not appear to involve any lessening of competition. Purchasers may have been harmed by the scheme, the court noted, but not through any reduction of competition. Looking to the Supreme Court decision in NYNEX Corp. v. Discon, Inc., 525 U.S. 128, 136, 119 S. Ct. 493, 142 L. Ed. 2d 510 (1998), the District Court held that while the defendant's conduct "hurt consumers by raising telephone service rates," the increased rates did not result from "a less competitive market for removal services;" therefore dismissal of the complaint was warranted.
George Gowen, a member of the Cozen O'Connor Philadelphia office, believes the New England Carpenters ruling properly followed the Supreme Court's guidance on antitrust claims. George, who has counseled corporate clients on antitrust issues, thinks that the dictates of a free market system should require plaintiffs, particularly class plaintiffs, to continue to face a high bar for the establishment of a direct injury allegedly resulting from anti-competitive activities.
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