Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Drug company Valeant sued over specialty contact lens price hikes, (Dec 28, 2015)

By Linda O’Brien, J.D., LL.M.

A pharmaceutical company has engaged in anticompetitive conduct by acquiring the only two manufacturers of an orthokeratology material used in the manufacture of gas permeable contact lenses and then using its monopoly power to significantly increase the price of that material which is sold to contact lens manufacturers, according to a complaint filed in the federal district court in Trenton, New Jersey (Tru-Form Optics, Inc. v. Valeant Pharmaceuticals International Inc., December 22, 2015).

Tru-Form Optics is a Texas corporation that manufactures gas permeable contact lenses.

According to the complaint, gas permeable lenses (GP) are a type of contact lens made from a firm, durable plastic. Orthokeratology (OrthoK) refers to the use of GP lenses worn while the patient is sleeping in order to slowly reshape the cornea and correct vision. OrthoK lenses are the only non-surgical treatment for myopia that permits a patient to be free from contacts or glasses during daytime hours. The manufacturing process for OrthoK begins with shaping of small disks of FDA-approved material called “buttons” that are then finished into GP lenses designed in conjunction with the patient’s specific prescription.

In August 2013, Valeant, a multi-billion Canadian pharmaceutical company, entered the OrthoK lens market by acquiring Bausch & Lomb, the second largest manufacturer of OrthoK buttons. In May 2015, Valeant acquired Paragon Vision Sciences, the only remaining competitor in the OrthoK button market. Following the Paragon acquisition, Valeant now controls 100 percent of the market for OrthoK buttons, the complaint alleges.

The complaint states that in September 2015, Valeant used its monopoly power to implement large price increases on OrthoK buttons. Valeant also eliminated volume discounts on OrthoK buttons and increased the prices on all OrthoK buttons sold to finishing labs in the United States. Such steep price hikes on OrthoK buttons are “an unlawful abuse of its monopoly power in order to extract profits from customers that have no other options in the marketplace.” As a direct result of Valeant’s anticompetitive actions, competition in the market for OrthoK buttons has been restrained, if not eliminated, the complaint charges.

Tru-Form asserts claims for monopolization in violation of Section 2 of the Sherman Act and New Jersey Antitrust Act. The action seeks declaratory and injunctive relief, restitution, disgorgement, treble and punitive damages, pre- and post-judgment interest, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 3:15-cv-08824-MAS-DEA.

Attorneys: Bruce D. Greenberg (Lite DePalma Greenberg, LLC) and Stuart M. Paynter and Celeste H.G. Boyd (The Paynter Law Firm PLLC) for Tru-Form Optics, Inc.

Companies: Tru-Form Optics, Inc.; Valeant Pharmaceuticals International Inc.

News: Antitrust IllinoisNews