Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Pharmaceutical data provider charged with abuse of monopoly position in four data markets, (Jul 26, 2013)

By Tobias J. Gillett, J.D., LL.M.

Pharmaceutical data provider IMS Health Inc. has abused its monopoly or near-monopoly power in the markets for four kinds of data through a wide range of anticompetitive practices, according to a complaint filed by competitor Symphony Health Solutions Corp. in the federal district court in Philadelphia (Symphony Health Solutions Corp. v. IMS Health Inc., filed July 24, 2013).

Symphony Health Solutions Corp. and IMS Health Inc. compete in the markets for the provision of pharmaceutical data. According to Symphony’s complaint, IMS has engaged in anticompetitive conduct in four of those markets: the markets for targeting and compensation (T&C) data, managed markets data, anonymous patient longitudinal (APL) data, and integrated global data. Symphony alleges a geographic market of the United States, and relevant product markets for each of those four types of data.

In the T&C data market, IMS holds an 86 percent market share, with Symphony possessing the remaining 14 percent, according to the complaint. IMS’s acquisition of former competitor SDI Health LLC has given it the largest share of the managed markets data market. In the integrated global data market, IMS, through its Multinational Integrated Data Analysis System (MIDAS), is an “indisputable monopolist” with over 90 percent of the market. Finally, IMS’s acquisition of SDI has allegedly given it a majority share of the APL data market.

Symphony alleges that all four of these markets “have similar, substantial barriers to entry and expansion,” including data acquisition costs; technological capability and experience; IMS’s exclusive contracts with several key data providers; regulatory requirements, including Health Insurance Portability and Accountability Act (HIPAA) and Health Information Technology for Economic and Clinical Health Act (HITECH) compliance; and switching costs that customers must pay to change from IMS products to those from other companies. The complaint notes an FTC investigation of the impact of IMS’s acquisition of SDI on a fifth market, the audits product market, that resulted in a requirement that IMS divest SDI’s medical audit business.

IMS purportedly engaged in a range of anticompetitive act to maintain its monopolies or increase its market shares. It allegedly bundled its T&C data products with its “industry-essential” MIDAS global data product, offered customers discounts for purchasing bundles of products, and threatened customers with dramatic price increases for MIDAS if they bought T&C data from Symphony. IMS also has allegedly engaged in bundling and predatory pricing of its managed markets products, and has offered customers its managed markets data for free if they agree to also purchase IMS’s T&C products.

Symphony also claims IMS “has a practice of entering into exclusive contracts with suppliers of data, preventing Symphony and other actual or potential customers from obtaining the same data,” and thus eliminating competition. In addition to the exclusive contracts, IMS also places most favored nation clauses in contracts with data suppliers that have caused them to charge artificially high and unaffordable prices to IMS’s competitors.

In addition, IMS has engaged in a series of acquisitions to protect its monopolies and cut off Symphony’s access to data suppliers and customers. IMS has also allegedly refused to sign third party agreements (TPAs) that would grant competitors access to data maintained for mutual clients and were previously customary in the industry. This included refusing to sign TPAs with pharmaceutical research company ImpactRx after Symphony acquired it, even though IMS routinely signed TPAs with ImpactRx prior to the acquisition.

IMS also allegedly has made false representations to potential customers regarding Symphony, in attempts to obtain their business or prevent them from doing business with Symphony. Finally, IMS has purportedly engaged in predatory hiring of key Symphony employees, and thereby misappropriated Symphony’s trade secrets.

The complaint asserts claims for unlawful monopolization, attempted monopolization, and monopoly leveraging in violation of Section 2 of the Sherman Act; unlawful use of exclusionary contracts in violation of Sections 1 and 2 of the Sherman Act; and tortious interference with existing and prospective contractual relationships and unfair competition under Pennsylvania common law.

Symphony seeks an award of actual and treble damages, with interest; punitive damages; costs of suit; attorneys’ fees; and an injunction requiring IMS to (1) terminate its bundling programs, (2) terminate its exclusive contracts with data providers, (3) void its MFN clauses; (4) cease unreasonable refusals to sign TPAs with Symphony; (5) permit Symphony access on reasonable terms to data held by suppliers that IMS has acquired; and (6) refrain from disparaging Symphony to current and prospective clients.

The case is No. 2:13-cv-04290-JD.

Attorneys: Leslie E. John (Ballard Spahr LLP) for Symphony Health Solutions Corp.

Companies: Symphony Health Solutions Corp.; Source Healthcare Analytics LLC; ImpactRx, Inc.; IMS Health Inc.

News: Antitrust PennsylvaniaNews