State Antitrust Lawsuits: A Good Way To Balance Costs and Incentives For Patented Drugs

O'Melveny counsel James Kidder and Alexander Okuliar recently authored an article about state antitrust lawsuits that was published in the June 27 issue of the Washington Legal Foundation's Legal Backgrounder.   Titled, "State Antitrust Lawsuits: A Good Way To Balance Costs and Incentives For Patented Drugs?", the story discusses the implications of a recent suit filed by 25 states and the District of Columbia against drug maker Abbott Laboratories and its French partner Fournier.  Kidder and Okuliar write that the suit "highlights a growing trend of state enforcers using the antitrust laws to interject themselves into the federal domain of regulating pharmaceuticals." The court's decision, they believe, will likely help resolve nagging questions about the inherent conflicts between the patent and antitrust laws, and will have far-reaching implications for the drug industry.

Although the states appear to be motivated by a desire "to speed the entry of cheaper generic drugs to the marketplace as a counterweight to increased health care costs," the authors contend that effectively, the states are asking the court to "second guess the Food and Drug Administration new-drug approval process and cast doubt on intellectual property protections designed to encourage innovation and to reward risk-taking."

The authors conclude that these attempts to use the antitrust laws to attack the drug approval process could have "serious negative repercussions on drug development" and could end up harming consumers by reducing "drug makers' financial incentives to invest in new and better medicines."

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