Prior relationship not required for antitrust 'refusal to deal' suit, FTC official says

18 September 2017. By Leah Nylen

US antitrust law doesn't require a plaintiff have a prior course of dealing with a monopolist before it can bring a monopolization suit over refusal to deal, a senior Federal Trade Commission official said.

The comments, by Markus Meier, assistant director in the FTC's Bureau of Competition, came in support of antitrust suits filed by generic drugmakers against branded drug companies that have restricted access to potentially dangerous drugs.

"The Supreme Court has never held that a prior course of dealing is an essential element for a refusal to deal case," Meier said. "Some courts have mistakenly read this requirement into the law [but] such a rule makes no economic sense."

In a controversial 1985 Supreme Court decision, Aspen Skiing, the high court held that a company can be required to do business with a rival if it is deemed to control an 'essential facility' without access to which it is impossible for competitors to compete. That holding, which the court itself said was "at or near the outer boundary of" US antitrust laws, has never been applied to refusals to license intellectual property.

Meier, who heads the FTC's health care division, cited two amicus briefs submitted by the agency in 2013 and 2014 in cases that involved restricted drug distribution programs. In both cases, generics sued branded drugmakers for refusing to sell samples of drugs that are subject to Risk Evaluation and Mitigation Strategies, or REMS, procedures.

REMS programs limit access to drugs that are useful but might be dangerous.

In both cases, the FTC argued that a brand's refusal to sell to generic rivals may violate of US antitrust laws.

While the FTC has investigated cases in which branded drugmakers have allegedly abused the REMS procedures, it hasn't yet brought a case challenging that conduct.

While some brands have argued that they shouldn't provide samples of restricted drugs to generics because of the risk of product liability suits, reputational harm and patent suits, Meier said those justifications "ring hollow."

"The reason they ring hollow is because product liability suits, reputational harm and patent lawsuits in a REMS case are no different from every other drug that's been genericized and every drug that will be genericized in the future," he said. " All the generic company is trying to do is get to the starting line of the FDA approval process. They're trying to get the samples necessary to do the testing so they can file an [application.] It's not as if they're going to immediately be able to market a product. They're just trying to get to the very, very beginning of the process."

	Eliot Gao