(CN) – Abbott Laboratories won dismissal of an antitrust lawsuit accusing it of leveraging its monopoly on the HIV drug Norvir in order to monopolize the market on its similar drug, Kaletra.
The 9th Circuit reversed the lower court’s ruling for HIV patients and their medical plans, saying “Abbott’s conduct is the functional equivalent of the price squeeze” that the Supreme Court rejected in Pacific Bell Telephone v. linkLine Communications.
Abbott’s Norvir “boosts” the effectiveness of protease inhibitors used to fight HIV. Norvir gives Abbott a monopoly in the booster market, according to the lawsuit filed by HIV patients and their medical plans. Abbott also sells a “boosted” protease inhibitor called Kaletra.
When the Food and Drug Administration gave competitors Bristol Meyers-Squibb and GlaxoSmithKline permission to promote Norvir as a booster for their own protease inhibitors, Reyataz and Lexiva, Abbott allegedly hiked the price of Norvir, but not of Kaletra.
This raised the total cost of competitors’ boosted protease inhibitors, patients claimed, giving Abbott’s lower-priced Kaletra the monopoly advantage.
In a series of rulings, the district court rejected Abbott’s defense that it lacked monopoly power in the boosted protease inhibitor market, and that the plaintiffs failed to show antitrust injury.
The parties then entered into a settlement agreement, whereby Abbott agreed to pay $10 million into a settlement fund. If the case ends up getting dismissed, the drug maker will pay no more. But if the plaintiffs win, Abbott will kick in up to $17.5 million more.
The 9th Circuit ruled that time and the high court’s ruling in linkLine called for dismissal. In linkLine, independent Internet service providers accused AT&T of charging too much for wholesale use of its infrastructure and too little for retail service, squeezing competitors out of the market. The justices ruled for AT&T on the basis that AT&T had no duty to provide the wholesale services in the first place.
“If a firm has no antitrust duty to deal with its competitors at wholesale, it certainly has no duty to deal under terms and conditions that the rivals find commercially advantageous,” the high court wrote.
The Supreme Court added that price-squeeze claims should not be recognized unless they’re below market; otherwise, companies would be encouraged to raise prices to avoid antitrust liability.
Applying linkLine, the 9th Circuit said the claims in the HIV drug case “fell short as well.”
“They allege no refusal to deal at the booster level, and no below-cost pricing at the boosted level,” Judge Rymer concluded.