Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Drug companies ask High Court if Illinois Brick applies to certain lost profits damages, (Mar 12, 2026)

By Peter Reap, J.D., LL.M.

They also ask the Supreme Court to resolve whether joint lobbying or participation in a trade association plausibly suggests an antitrust conspiracy.

Drug companies AstraZeneca Pharmaceuticals LP, Sanofi-Aventis U.S., Eli Lilly and Company and Lilly USA, LLC, and Novo Nordisk Inc. have filed a petition for certiorari with the U.S. Supreme Court asking it to resolve two issues of antitrust law they assert were undermined by a ruling of the Second Circuit. That appellate court reversed a federal district court opinion dismissing a suit brought against the Petitioners by healthcare providers who purchase Petitioners’ medicines that have been discounted under the federal 340B program through wholesalers. The questions posed by the petition are whether (1) antitrust law’s Illinois Brick doctrine applies to certain lost profits damages; and (2) joint lobbying or participation in a trade association plausibly suggests an antitrust conspiracy.

Background—lawsuit and district court ruling. Two federally funded health centers (Mosaic Health, Inc. and Central Virginia Health Services, Inc.) operating a total of 40 safety-net clinics sued the Petitioners—four diabetes drug manufacturers. The health centers said these manufacturers conspired to limit the availability of diabetes drugs under the Section 340B Drug Discount Program. The drugs at issue were rapid- and long-acting analog insulins and incretin mimetics. The 340B program creates a discount for providers like the health clinics here by establishing a ceiling price.

Manufacturers that provide drugs paid through Medicare and Medicaid must offer the Section 340B discount, and the instant manufacturers did so for safety-net hospitals and clinics like those here for at least a decade. However, as of 2020, the manufacturers allegedly lobbied the government to limit Section 340B diabetes drug discounts. The lobbying efforts were not successful, and despite a presidential executive order, the four manufacturers largely curtailed 340B discounts. A few exceptions applied, for example, for safety-net providers with no in-house pharmacy if they designated one local pharmacy to serve their patients. The health centers alleged the restrictions caused significant financial loss to safety-net hospitals and clinics.

The health centers alleged violations of federal and state antitrust laws and state common law. After the district court granted the manufacturers’ Fed. R. Civ. P. 12(b)(6) motion to dismiss, the court denied the health centers’ motion for leave to file a second amended complaint. The court reasoned the health centers failed to allege parallel conduct and failed to allege plausible facts to infer a conspiracy. The health centers appealed.

Second Circuit ruling—Illinois Brick. Applying de novo review, the Second Circuit reversed, vacated dismissal, and remanded.

At the threshold, the Second Circuit disagreed with the manufacturers’ contention that Supreme Court decisions barred the health centers from asserting claims under the Sherman Act. See Astra USA, Inc. v. Santa Clara County, 563 U.S. 110 (2011); Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977).

The Second Circuit said the manufacturers were wrong about Astra in two ways. First, Astra did not say the health centers, as indirect purchasers, could not bring Sherman Act claims to the same extent they could not bring Section 340B claims. The Second Circuit noted the health centers were not seeking to enforce Section 340B mandates or pricing agreements at the 340B ceiling price. Second, unlike the overcharge claims in Astra, Congress did not intend for the Health Resources and Services Administration (HRSA), a unit of HHS, to adjudicate and enforce antitrust price-fixing claims. HRSA would only resolve disputes to ensure covered entities pay at or below the ceiling price. HRSA would not police antitrust violations.

Illinois Brick also did not bar the action because the health centers expressly disclaimed damages for overcharges. Where Illinois Brick might apply, the health centers sought recovery for losses as a result of “lost access” rather than increased prices. Accordingly, there was no risk here of duplicative recovery per Illinois Brick.

Second Circuit ruling—conspiracy. The Second Circuit found the proposed second amended complaint alleged sufficient parallel conduct to infer a possible horizontal price-fixing conspiracy.

The Second Circuit said it was plain that the health centers did not need to plead the exact same conduct within a tight timeline to state a claim under Section 1 of the Sherman Act. Second Circuit precedent after Twombly has accepted a broad understanding of parallel conduct. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The proposed second amended complaint plausibly alleged the manufacturers acted “similarly enough in substance” by curtailing 340B discounts and raising prices in the market for certain popular diabetes medications within four months of each other. Three of the four manufacturers announced curtailment of 340B discounts within only one month of each other.

The health centers pleaded sufficient plus factors. The four manufacturers allegedly controlled the diabetes drug marketplace as direct competitors. By acting together, the manufacturers would plausibly enjoy “safety in numbers” limiting their market share risk and risk of exclusion from Medicare and Medicaid. Allegations of high level of interfirm communications on the 340B issue, sharing of lobby services, and joint participation on the PhRMA industry association board, likewise supported an inference of conspiracy.

Petition for certiorari. In their filing, the Petitioners accused the Second Circuit of undermining two Supreme Court rules for disposing of weak and improper antitrust claims. First, under Illinois Brick, only direct purchasers or sellers may sue alleged antitrust violators. The Second Circuit improperly held that an indirect purchaser can evade Illinois Brick’s bar simply by characterizing its harm as “lost profits” from sales that did not occur, rather than being overcharged for purchases that did occur.

Other courts of appeals have rejected that approach, holding that “Illinois Brick adopts a plaintiff-specific rule, not a damages-specific rule.” Acad. of Allergy & Asthma in Primary Care v. Amerigroup Tenn., Inc., 155 F.4th 795, 817 (6th Cir. 2025). In departing from that settled framework, the decision below converts Illinois Brick from an easily administrable rule into one that can be circumvented through artful pleading, the Petitioners contend.

Twombly, the second Supreme Court rule undermined by the Second Circuit’s opinion, provides that a plaintiff who relies on circumstantial evidence of parallel conduct must also allege additional facts, commonly known as “plus” factors, that plausibly suggest collusion. The Second Circuit erred in holding that an inference of conspiracy is warranted when competitors have an “opportunity to conspire,” such as when they engage in joint lobbying or participation in a trade association.

Most other courts of appeals—including the Third, Sixth, Ninth, Eleventh, and D.C. Circuits—have rejected that approach, holding that participation in a trade association is not only compatible with, but indeed more likely explained by, lawful and unchoreographed free-market behavior. Those other courts are right, the Petitioners argue. Treating such activities as if they were inherently suspect will chill core First Amendment conduct, while simultaneously lowering Twombly’s threshold.

Questions presented. The two questions presented by the petition are:

1. Whether Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), which bars antitrust claims by indirect purchasers and sellers, applies to a claim of “lost profit” damages based on indirect purchases or sales that were not made due to the alleged conspiracy.

2. Whether the allegation that businesses had an “opportunity to conspire,” such as through joint lobbying and participation in a trade association, plausibly suggests an antitrust conspiracy.

The Case is No. 25-1070.

Attorneys: Allon Kedem (Arnold & Porter Kaye Scholer LLP) for AstraZeneca Pharmaceuticals LP. Alyssa C. Kalisky and Katie R. Lencioni (Kirkland & Ellis LLP) for Eli Lilly and Co. and Lilly USA, LLC. Ashley C. Parrish and Robert M. Cooper (King & Spalding LLP) for Novo Nordisk Inc. Noel J. Francisco (Jones Day) for Sanofi-Aventis U.S. LLC.

Companies: AstraZeneca Pharmaceuticals LP; Eli Lilly and Co.; Lilly USA, LLC; Novo Nordisk Inc.; Sanofi-Aventis U.S. LLC; Mosaic Health, Inc.; Central Virginia Health Services, Inc.

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