Antitrust Law Daily Wrap Up, ANTITRUST—D. Nev.: Price discrimination claims involving government drug program fail, (Oct 30, 2014)

By Linda O’Brien, J.D., LL.M.

A private medical clinic could not pursue price discrimination claims against a drug manufacturer, drug distributor, and public health agency for their participation in a government prime vendor program that established price ceilings for drugs purchased by certain covered entities, the federal district court in Las Vegas has decided (Vaccine Center, LLC v. Glaxosmithkline LLC, October 29, 2014, Mahan, J.).

The U.S. Department of Health and Human Services (HHS) developed a “prime vendor program” under which HHS could enter into agreements with drug manufacturers to establish price ceilings for drugs purchased by certain covered entities. In 2008, HHS selected Apexus as its prime vendor, whereby Apexus would negotiate pharmaceutical pricing and establish a distribution center for the program. Subsequently, public health agency, Southern Nevada Health District (SNHD) entered into a prime vendor participation agreement with Apexus which enabled SNHD to purchase certain drugs from pharmaceutical company, Glaxosmithkline (GSK), at discounted prices negotiated by Apexus.

Vaccine Center operates a private medical clinic and also purchases vaccines from GSK. Since Vaccine Center is a private, for-profit entity, it does not qualify for the prime vendor program rates. Vaccine Center filed suit against GSK, Apexus, and SNHD alleging (1) that its business has been harmed by the misuse of the prime vendor program and (2) the entities engaged in price discrimination under the Robinson-Patman Act. The defendants moved for summary judgment.

Implied immunity. Apexus sought conduct-based immunity from the plaintiff’s claims pursuant to its agreement with HHS, a federal agency. It was undisputed that the purpose of the prime vendor agreements was to provide pharmaceuticals at discounted prices. In choosing Apexus as its prime vendor, HHS expressly adopted the terms of Apexus’ bid which listed a number of vaccines to be made available from drug manufacturers at discounted rates. Thus, the court determined that there was no genuine issue of material fact regarding whether the vaccines may be administered under the prime vendor program and, based on those facts, it was unreasonable to subject Apexus to antitrust liability.

Own-use exemption. SNHD contended that the Nonprofit Institutions Act (NPIA) covered its provision of vaccines and exempted it from liability under the Robinson-Patman Act as SNHD’s own use. According to the court, SNHD was created by statute and authorized to maintain public health in Clark County. The agency operates on a not-for-profit basis and serves the community through the operation of health clinics and the provision of preventative health services. Any fees SNHD charges go into a general fund which is spent for solely public health purposes. Because SNHD’s sale of vaccines furthers its institutional purpose, its conduct is covered by the own-use exemption to the Robinson-Patman Act.

Finally, since the plaintiff had no viable claim against SNHD under the Robinson-Patman Act, Apexus and GSK could not be liable for the same alleged discriminatory conduct. Accordingly, each defendant’s motion for summary judgment was granted, the court concluded.

The case is No. 2:12-cv-01849-JCM-NJK.

Attorneys: Billie-Marie Morrison (White Meany & Wetherall, LLP), and Courtney Ashe Palko (Blecher Collins Pepperman & Joye) for Vaccine Center, LLC. Jason A. Leckerman (Ballard Spahr LLP) for GlaxoSmithKline LLC. Mark E. Ferrario (Greenberg Traurig) for Apexus, Inc. Micah S. Echols (Marquis & Aurbach) for Southern Nevada Health District.

Companies: Vaccine Center, LLC; Glaxosmithkline LLC; Apexus, Inc.

Cases: Antitrust NevadaNews