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From Antitrust Law Daily, March 10, 2015

Nuclear pharmacy fails to show that distribution agreement was anticompetitive

By Linda O’Brien, J.D., LL.M.

An independent nuclear pharmacy failed to state plausible claims that a nuclear drug manufacturer’s nonexclusive distribution agreement with a global pharmaceutical distributor was anticompetitive, the U.S. Court of Appeals in San Francisco has ruled in an unpublished opinion. Thus, the district court’s dismissal of the pharmacy’s complaint was affirmed (PharmaRx v.GE Healthcare, Inc., March 9, 2015, Per Curiam).

GE Healthcare, a subsidiary of General Electric, provides medical imaging and information technologies, medical diagnostics, patient monitoring systems, drug discovery, biopharmaceutical manufacturing technologies, and performance solutions services. In 2008, GE entered into an agreement with Cardinal Health, granting Cardinal nonexclusive distribution rights to GE’s Myoview cardiac imaging agent so it could be available through Cardinal’s network of specialized nuclear pharmacies. GE also entered into an agreement with independent nuclear pharmacy PharmaRx Pharmaceuticals, which authorized PharmaRx to sell Myoview only where GE and Cardinal did not have their own nuclear pharmacies.

PharmaRx filed a putative class action suit against GE, alleging violations of Sections 1 and 2 of the Sherman Act. PharmaRx asserted that the distribution agreement between GE and Cardinal was anticompetitive and created a monopoly on Myoview sales. The district court granted GE’s motion to dismiss the complaint.

The district court properly held that the plaintiff failed to state a plausible claim for relief, the Ninth Circuit ruled. Even taking as true PharmaRx’s allegation that the anticompetitive agreement was a secret term of an otherwise public agreement, the pharmacy’s conclusory allegation failed to answer the basic questions of “who, what, where and when” about the purported anticompetitive agreement.

Moreover, PharmaRx’s allegations regarding Cardinal’s history of dealings with different manufacturers of a different cardiac imaging agent were merely suggestive and insufficient to plausibly raise an inference of an anticompetitive agreement. Finally, PharmaRx’s examples of GE’s refusal to deal with independent nuclear pharmacies all predate the alleged anticompetitive agreement and could easily suggest rational, legal business conduct as well as an illegal conspiracy. These limited and ambiguous allegations were insufficient to state a plausible claim, the court concluded.

The case is No. 13-55354.

Attorneys: Gabriel Shanti Barenfeld (Kreindler and Kreidler LLP) for PharmaRx Pharmaceutical, Inc. John D. Lombardo (Arnold & Porter LLP) for GE Healthcare, Inc.

Companies: PharmaRx Pharmaceutical, Inc.; GE Healthcare, Inc.

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