Antitrust Complaint in Drug Data Markets
PHILADELPHIA (CN) - A federal antitrust complaint accuses IMS Health of monopolizing pharmaceutical data markets by acquiring competitors and blocking others' access to data.
Symphony Health Solutions and its subsidiaries Source Healthcare Analytics and ImpactRx sued IMS Health Inc. in Federal Court.
Headquartered in Plymouth Meeting, Pa., IMS Health is the largest provider of pharmaceutical data in the world. It supplies data gathered and centralized by hospitals, doctors, pharmacies and insurance companies, which pharmaceutical and biotechnology companies use to increase production and profits and predict drug prescription and consumption patterns, according to the complaint.
Symphony, its main competitor, claims IMS Health's anticompetitive actions have cost it millions of dollars in sales, and hurt customers and other data suppliers.
Symphony was formed in May 2012 by the Symphony Technology Group. It combines four complementary healthcare insight companies - AlphaDetail, ImpactRx, TargetRx and Source, according to the complaint.
"IMS is the largest pharmaceutical data and analytics company both in the United States and the world, and boasts of having 'nearly every major pharmaceutical and biotech company in the world' as a customer," the complaint states. "After swallowing every other major U.S. competitor by acquisition, IMS has engaged in an unlawful scheme to protect its monopoly and to eliminate from these markets the only formidable competitor left standing: Symphony, a company that provides often better products than IMS but which is dwarfed by IMS in size and market power.
"IMS and Symphony provide pharmaceutical data products in markets with high and costly barriers to entry. They collect and analyze a vast array or prescription, medical claims, and distribution data from thousands of sources as a part of the products and services they provide to pharmaceutical and biotechnology companies, the government, consulting services, and the financial community. In addition to providing commercial benefits, these products provide substantial public benefit, as clients use them to compile reports for public agencies (such as the United States Food and Drug Administration ('FDA')), address public safety concerns, and to disseminate safety information to doctors.
"Over the past decade, IMS has engaged in a series of anticompetitive acts designed to maintain and strengthen its monopoly power in certain markets and to leverage that power to obtain monopoly power in additional markets. This scheme has included nearly every type of unlawful horizontal and vertical exclusionary conduct:
"Entering into exclusive, long-term agreements with pharmacy benefit managers, pharmacies, distributors, long-term care facilities, and other data suppliers, which has prevented Symphony from accessing over 80 percent of data generated by long-term care facilities and a substantial percentage of the specialty drug data in the United States;
"Requiring other data suppliers to sign most-favored-nations clauses ('MFNs'), which have enabled IMS to set artificially high prices for any data purchased from those suppliers by Symphony and other competitors;
"Acquiring data suppliers, including foreign data suppliers, to prevent Symphony and other competitors from disturbing IMS's monopoly share of the market for integrated global pharmaceutical data products;
"Bundling its products to protect its monopoly in one market, while attempting to gain a monopoly in another;
"Leveraging monopoly power in one product market (such as the markets for integrated global market data and targeting and compensation data) to monopolize or attempt to monopolize other markets;
"Acquiring competitors to eliminate competition and collaboration among its rivals;
"Revoking ImpactRx's access to critical data IMS compiled for all of its clients after Symphony, a competitor, acquired ImpactRx;
"Falsely disparaging Symphony's products and corporate ethics; and
"Poaching Symphony's employees to help IMS in its efforts to obtain a monopoly in a market where its products were traditionally weaker than Symphony's." (Parentheses in complaint).
IMS Health operates on every continent except Antarctica, and gets pharmaceutical data from suppliers in more than 100 countries, according to the complaint.
Symphony claims that IMS Health has exclusive or nearly exclusive relationships with many data suppliers, to the detriment of competitors.
In 2009, the last year IMS Health was a publicly traded company, it reported more than $2.2 billion in operating revenue, according to the lawsuit.
"IMS's business strategy had relied on growth through horizontal and vertical acquisitions," the complaint states. "Throughout its history, it exhibited a pattern of consolidating competitors and data and analytics suppliers into its company. Between 2005 and 2008, for example, IMS spent $345 million on 28 acquisitions. In January 2012, IMS completed the acquisition of the third and only other viable competitor (aside from Symphony) in the relevant U.S. pharmaceutical data markets, SDI Health LLC ('SDI'). In fact, SDI had recently merged with Verispan LLC, formerly the industry's fourth competitor. In essence, IMS combined three out of the four companies that historically competed in these markets."
Symphony claims IMS Health has monopolized or is "dangerously close" to monopolizing four markets:
the targeting and compensation data market, which is worth $500 million annually, and is 86 percent dominated by IMS Health;
the managed markets data market, where IMS Health has expanded by bundling its managed markets data with other products and by recruiting Symphony's experts;
the integrated global data market, 90 percent dominated by IMS Health, which supplies market information to the 11 countries that represent most of the world's prescription drug market, including the United States and Canada;
and the anonymous patient longitudinal data market, also dominated by IMS Health.
Symphony claims IMS Health has abused its monopoly power and continues to strengthen it through restrictive arrangements, acquisition of key foreign data suppliers, bundling of data products, and blocking competitors' access to data.
It claims high market entry costs and high switching costs for clients prevent IMS Health's competitors from taking back a larger share of the markets.
Symphony claims it has lost and will continue to lose clients, business opportunities and profits due to IMS Health's monopoly.
It claims IMS Health has harmed competition and customers by limiting customer choice, coercing suppliers, eliminating checks on its prices, and preventing Symphony from researching and developing better products.
Symphony seeks an injunction, lost profits, and treble damages for federal antitrust and state law violations.
It is represented by Leslie John with Ballard Spahr.