3rd Circuit: Foreign Drug Maker Lacks Antitrust Standing to Challenge Actions Allegedly Taken Against Its U.S. Distributor

In Ethypharm S.A. France v. Abbott Laboratories (3d Cir. Jan. 23, 2013), the 3rd Circuit U.S. Court of Appeals held that a French pharmaceutical manufacturer lacked antitrust standing to challenge allegedly anticompetitive actions taken against its U.S. distributor. The French manufacturer was not itself authorized to sell its drug in the United States. The defendant, Abbott, argued that it therefore was not a competitor in the relevant market (the market for the sale of certain drugs in the United States) and did not suffer injuries that were the means by which Abbott allegedly sought to achieve its anticompetitive ends.

In directing the district court to dismiss the plaintiffs’ federal antitrust claims, the 3rd Circuit agreed. “Ethypharm is not a competitor because in the highly regulated pharmaceutical market in this country, there is no cross-elasticity of demand between Ethypharm’s offerings and Abbott’s offerings … Ethypharm structured its business in a way that assured that only [its distributor] could supply the drug.” The distributor was not a “mere conduit” to the U.S. market, but took the risk and bore the expense of filing with the FDA and gaining FDA approval. Ethypharm could not have it “both ways,” i.e., it could not pass on to a licensee the expense and risk of qualifying to compete in the market, but when that arrangement fails to achieve success, “seek to avail itself of the United States laws protecting fair competition.” The court stressed that it was not the “general arrangement” of manufacturer and distributor that is problematic; “it is the fact that Ethypharm cannot sell [its drug] in the United States because of legal barriers particular to the pharmaceutical market, barriers that Ethypharm chose not to surmount.”

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