In June, Judge Linares of the U.S. District Court, District of New Jersey, denied motions by Becton, Dickinson and Co. to dismiss several class action complaints challenging its use of loyalty rebate programs in connection with the sale hypodermic needles. The plaintiffs in these cases purport to represent 3 distinct groups: hospitals and healthcare providers; retail pharmacies; and drug wholesalers. In re Hypodermic Products Antitrust Litigation (Medstar Health), In re Hypodermic Products Antitrust Litigation (Jabo’s Pharmacy) , In re Hypodermic Products Antitrust Litigation (Louisiana Wholesale Drug Co.).
Although the complaints varied in terms of the specific products and the precise allegations at issue, the basic challenges were similar in alleging that Becton entered into restrictive agreements with its customers that enabled it to shut its competitors out of the relevant markets. Some of the specific claims by plaintiffs were that Becton: entered “commitment contracts” with GPOs that required exclusivity; awarded GPOs with monetary payments in exchange for exclusivity; implemented anticompetitive rebate structures that included conditioning rebates on a customer buying a high share of a particular line of products from Becton (i.e., market share requirements); and engaged in illegal bundling.
Becton’s motions to dismiss argued that the plaintiffs had not adequately alleged the essential elements required for their claims. Linares disagreed, holding that plaintiffs had adequately pled that the agreements were unreasonable restraints of trade, monopoly abuses, and violations of various state laws. Linares also disagreed with Becton’s position that plaintiffs failed properly to plead antitrust injury and standing. Becton had argued that the failure of the complaints to allege with specificity which competitors were injured and how competition was affected was fatal to plaintiffs’ action. The court found that Becton did not present binding authority indicating that such specificity was required, and held that plaintiffs allegations that competitors were unable to compete with Becton as a result of its conduct, and Becton’s subsequent pricing power, were sufficient to meet pleading requirements.
As with the Wyeth case above, this case highlights the proliferation in litigation about bundling and loyalty discounts. It also highlights the inconsistency in approaches taken by different courts, with the Becton court much more sympathetic to plaintiffs than the courts in Wyeth.