A price-fixing case that has kicked around California courts for the last 8 years has again been decided on behalf of Big Pharma. A California appeals court, siding with the 20 drug companies, including Pfizer ($PFE), GlaxoSmithKline ($GSK), AstraZeneca ($AZN), Merck ($MRK) and the rest of pharma's heavyweights, said the pharmacies that brought the case never could produce evidence of price-fixing or that the drug companies colluded to stop cheap imports from Canada.
Also a defendant in the case was the Pharmaceutical Research and Manufacturers of America (PhRMA), which was accused of conspiring with its members to fix prices by working on initiatives that would prohibit discounted imported drugs from Canada. PhRMA's law firm, Latham & Watkins, says in a statement that the court agreed "that PhRMA's conduct involved traditional lobbying and trade association activity protected by the First Amendment."
According to today's ruling, the case revolved around the "Canadian floor theory." The suit alleged the drug companies conspired "to eliminate price competition and fix prices in the United States" by agreeing "they would not sell their drugs at or below the price at which they sold those same drugs in Canada." The pharmacies said the fact that most of the drugmakers took steps to keep Internet pharmacies in Canada from re-importing drugs to the U.S. was evidence that they conspired on prices.
But the 67-page ruling says the pharmacies never could prove that the big companies charged significantly more for drugs in the U.S. than they did in Canada or that they worked together to stop re-importation.
"But even if that evidence were before us, the argument would still fail, because evidence of defendants' attempts to block Canadian imports is not evidence of an agreement to fix prices."
A lower court and an appeals court earlier ruled for the drug companies, but the California Supreme Court in 2010 returned it to the lower court for reconsideration and it eventually returned to the court of appeals.
- here's the Latham & Watkins press release
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