Avoiding Antitrust Issues - - BioPharm International


Avoiding Antitrust Issues

BioPharm International
Volume 1, Issue 8

"Unfortunately, poorly drafted or executed licenses can be perceived as potentially reducing fair competition or market efficiencies," and lead to antitrust liability. 44(p50) For example, in 1999, the FTC and several states successfully pursued antitrust claims based on a series of licensing arrangements involving Mylan Laboratories and three other companies designed "to monopolize the markets for two generic and anti-anxiety drugs, lorazepam and clorazepate."46 Mylan was able to dramatically increase the prices of the drugs through exclusive licensing arrangements for the raw material necessary to produce them.

A host of other potential antitrust issues can arise through licensing relationships, including illegal resale price maintenance. The 1995 Antitrust Guidelines for the Licensing of Intellectual Property (IP Antitrust Guidelines) sternly warn, "the Agencies will enforce the per se rule against resale price maintenance in the intellectual property context."47(5.2) Thus, a license which requires the licensee to sell a product for a minimum stated price could subject the licensor to potential antitrust liability. Another potential basis for antitrust issues involves Hart-Scott-Rodino filing obligations,44(n50) and illegal territorial and field-of-use restrictions.44(n50) Therefore, all licensing relationships should be carefully reviewed by antitrust counsel paying close attention to the 1995 IP Antitrust Guidelines.47, 7(1537)


The penalties for violating the antitrust laws can be severe. However, through careful diligence and proactive antitrust counseling, biopharm companies can exploit their intellectual property in a diverse variety of potentially profitable ways without violating the antitrust laws.


1. 15 USC 1-7 (1890).

2. von Kalinowski J. Antitrust Laws and Trade Regulation: Desk Edition. Vol. 1. 2nd ed. Newark, NJ: Matthew Bender & Co Inc; 2004.

3. Northern Pacific Railway Co v United States, 356 US 1 (1958).

4. 15 USC 12-27 (1914).

5. 15 USC 41-58 (1914).

6. 15 USC 13 (1936).

7. ABA Section of Antitrust Law. Annual Review of Antitrust Law Developments. 5th ed. Chicago, IL: American Bar Association; 2002.

8. FTC File No. 021-0192, Docket No. C-4075 (2003). In the Matter of Pfizer Inc and Pharmacia Corporation. 2003 May 30. Available at: http:// http://www.ftc.gov/os/caselist/c4075.htm

9. Lincoln A. Second Lecture on Discoveries and Inventions. In: Basler RP, ed. The Collected Works of Abraham Lincoln. Vol. 3. Piscataway, NJ: Rutgers Univ. Press; 1953:361.

10. Madison J. Federalist No. 43. In Hamilton A, Madison J, Jay J.The Federalist Papers. Rossiter C, ed. New York: New America Library; 1961:271-272.

11. Drug Development: Alliances Essential in Reducing Pharmaceutical Costs, Study Shows. Biotech Bus Wk. 2004 Feb:108. Cited in: Horton TJ. Protecting Your Life Sciences and Biotech Licenses from the Specter of the Antitrust Laws. Licensing J. 2005 March:1.

12. Tom WK, Newberg JA. Antitrust and Intellectual Property: From Separate Spheres to Unified Field.66 Antitrust Law J. 1997; No. 1:167.

13. Symposium: Antitrust Issues in the Pharmaceutical Indus. 71 Antitrust Law J. 2003; No. 2:577.

14. Cutting Edge Information. Pharmaceutical Alliances, Licensing, and Deal-Making (PH56) (Partial Summary). 2003 October. Available at: http:// http://www.pharmadealmaking.com/.

15. Automatic Radio Mfg Co v Hazeltine Research, Inc, 339 US 827, 834 (1950).

16. Walker Process v Food Machinery and Chemical Corp, 382 US 172 (1965).

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