The Sheet Metal Workers National Health Fund (SMW) has voluntarily withdrawn its antitrust classaction suit against Amgen Inc. in the wake of a federal district court dismissing most of its claims. The health fund had sued the biotech company for allegedly tying its products and engaging in a bundled pricing scheme in violation of federal and state antitrust law. On August 13, the Federal District Court for the District of New Jersey dismissed all of the plaintiff’s federal claims and several of its state claims due to SMW’s failure to plead an antitrust injury. SMW had alleged that Amgen illegally tied sales of two types of medication to oncology clinics. Aranesp, a red blood cell growth factor (RBCGF), is used to treat chemo-induced anemia. Neupogen and Neulasta, white blood cell growth factors (WBCGF), are used to grow white blood cells in cancer patients. Neupogen and Neulasta make up 98% of the market for WBCGFs sold to oncology clinics.
SMW alleged that Amgen illegally conditioned the purchase of its WBCGFs on the purchase of its Aranesp product by offering a rebate to oncology clinics that purchased both. In order to receive the discount, clinics had to follow certain restrictions, which included purchasing below a maximum quantity of WBCGF and above a minimum quantity of Aranesp. Since the cap on WBCGF purchases was below the rebate threshold, the scheme forced clinics seeking discounts to purchase both products. SMW alleged that this bundling system was tantamount to coercion, and that the rebate scheme was an attempt to eliminate competition in the RBCGF market. The district court threw out most of SMW’s claims due to a lack of standing. In order to find statutory standing under federal antitrust laws, the plaintiff must claim that they suffered an “antitrust injury.” How courts define “antitrust injury” in illegal tying cases, however, is not a settled matter. In fact, no circuit court had ever decided this issue of law. The case turned on which school of thought the court elected to follow.
Under the “tied products” approach, the buyer suffers antitrust injury when it must pay an above market price for the tied product. According to SMW, that is precisely what happened here: the tying-scheme caused insurers to pay higher reimbursement rates for the tied product, Aranesp. Under the “package” approach, however, the buyer suffers antitrust injury only when the seller’s bundling forces it to pay above market price for both the tied and tying products combined. SMW made no such allegation.
To SMW’s detriment, the court elected to follow the “package” approach. It reasoned that, in most tying arrangements, any increase in the tied product’s price will be accompanied by a decrease in the tying product’s price, resulting in no net economic harm to consumers. If courts only consider the increase in the price of tied products, they will often assume injury where one did not actually exist. Thus, the court concluded, the soundest approach to tying cases is to consider the price impact on both the tied and tying products. Based on this interpretation of law the court dismissed most of SMW’s claims. Because SMW had not pled the “package” approach, it made no claim that it paid more for the combined bundle, and therefore its complaint did not demonstrate that it suffered any antitrust injury. Accordingly, SMW lacked federal statutory standing and could not receive relief under the Clayton Act or the Sherman Act.
The court also dismissed several of SMW’s state law claims. It dismissed monetary damages claims under Florida, Massachusetts, New Jersey and Louisiana law because those states bar indirect purchasers from seeking damages for antitrust violations. Since SMW is a third-party payer, it qualifies as an indirect purchaser and thus could not sue under those states’ laws. The court chose not to dismiss other claims under laws of several other states, however, reasoning that the case was still too premature to assess Amgen’s defenses. Nonetheless, SMW’s surviving state claims appear to be moot now that the health fund has decided to voluntarily dismiss the case. It is not yet clear whether the plaintiff plans to refile suit.