FTC v. Ovation Opinion

Josh Wright —  9 September 2010

The opinion in Ovation (i.e. FTC v. Lundbeck) is now available.  Commentary to follow.

UPDATE: The first footnote in Judge Ericksen’s opinion notes that “the FTC and Minnesota began their closing argument by disclaiming the notion that these cases were ‘about unhappiness about the high price of Indocin.’  Nevertheless, the FTC and Minnesota cited in their post-trial response a press release issued by the FTC to announce the action’s commencement.  The press release asserts that the acquisition of NeoProfen resulted in the increase of Indocin IV’s price by almost 1300%; characterizes the prices charged by Lundbeck as ‘artificially high;’ and notes one commissioner’s view that Lundbeck’s ‘profiteering on the backs of critically ill premature babies is not only immoral, it is illegal.”

The morality line belongs to Chairman Leibowitz.  These cases certainly would be less complicated if they were easy enough to cast them accurately by assigning positions that are pro and anti- the health of premature babies.  Though I suspect that line renders it fair game to ask what the Chairman might think about the morality of antitrust policy that reduces the incentive to innovate new drugs for premature babies or other conditions.  Judge Ericksen also singles out the press release, which takes a similar heartstring-tugging approach:

Because there are no other drugs available to treat patent ductus arteriosus, hospitals treating babies with this critical condition have no choice but to pay Ovation’s monopoly price. And ultimately, the artificially high prices paid by hospitals are passed on to families, government programs such as Medicaid, and other public and private purchasers.

My critique of the FTC enforcement theory in Ovation is here; though it should be noted that Judge Ericksen’s opinion turns on market definition.

The FTC has not yet issued a new press release.  Not even a webcast.