When Does Sharing Make Sense?: Antitrust & Risk Evaluation and Mitigation Strategies

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Jan Rybnicek, Apr 29, 2014

There exists a new front in the battle to define the precise circumstances under which a monopolist’s refusal to deal with a rival constitutes exclusionary conduct that violates Section 2 of the Sherman Act. The latest clash arises in the context of a brand-name drug manufacturer’s decision not to sell samples of a patented drug that is subject to certain government-mandated restricted distribution protocols to a potential generic rival seeking to use those samples to conduct bioequivalence testing necessary to develop a generic version of the product. Without access to these pharmaceutical samples, the generic firm may be unable to develop, manufacture, and ultimately sell a generic version of the drug to consumers at a significantly lower price than the branded product.

Against the compelling backdrop of a health care system afflicted by rapidly rising costs, some now argue that the antitrust laws should be used to force brand-name drug companies to share samples of their products with generic rivals to further competition and reduce the cost of prescription drugs.Although significant ambiguity remains about the exact contours of “refusal-to-deal” law in the United States, it is unlikely that this problem can or should be remedied through the blunt instrument of the antitrust laws. A better approach might be to rely instead on existing regulatory tools that are better tailored to addressing potential problems arising in the pharmaceutical industry. Another option would be to seek Congressional action establishing an appropriate process for the development of generic versions of branded drugs with restricted distribution protocols.