District Court Permits Section 2 Claim To Proceed Against Pharmaceutical Manufacturer For Denying Generic Rival Access To Branded Drug Samples

On December 22, 2014, a federal district court in New Jersey found that Mylan Pharmaceuticals, Inc. ("Mylan") alleged facts sufficient to plead an antitrust claim under Section 2 of the Sherman Act against defendant, Celgene Corporation ("Celgene"), for denying a generic rival access to samples of its branded drugs (Thalomid® and Revlimid®) that are distributed pursuant to a Risk Evaluation and Mitigation Strategies ("REMS") program. Citing the Supreme Court's decisions in Otter Tail Power Co. v. United States1 and other relevant cases that discuss the scope of an affirmative duty to deal with rivals, the district court preserved the Plaintiff's Section 2 claim by finding that Celgene's conduct fit within one of the limited exceptions to the general rule that there is no duty to deal with competitors, concluding that antitrust liability could be found without allegations of a prior course or history of dealing with the Plaintiff. However, the court dismissed the Plaintiff's conspiracy claims, concluding that the Complaint did not contain sufficient facts to support allegations of an unlawful conspiracy between Celgene and its distributors that would give rise to liability under Section 1 of the Sherman Act. Oral Opinion, Mylan Pharmaceuticals, Inc. v. Celgene Corp., No. 2:13-cv-02094-ES (D.N.J. Dec. 22, 2014).

This decision comes at a time when refusals to provide access to drugs distributed pursuant to REMS programs are under close scrutiny by the Federal Trade Commission ("FTC"). According to Commissioner Maureen Ohlhausen, "the refusal to sell restricted distribution drugs to potential generic manufacturers can constitute exclusionary conduct under Section 2 of the Sherman Act."2 Although the FTC has filed an amicus brief in a similar case in the District of New Jersey, the Commission has not yet filed a complaint challenging such conduct. As such, this case is noteworthy because it is one of the few cases to address potential liability under Section 2 in connection with FDA-required REMS programs and is likely to be instructive on such issues as litigation in this area unfolds. The court's analysis also adds to the continuing debate over the application of Section 2 to situations involving a refusal to deal with a rival, as lower courts continue to adopt disparate interpretations of the Supreme Court's 2004 decision in Verizon Communications Inc. v. Law Offices of Curtis V. Trinko.3

Background

Mylan's complaint centers on its inability...