41 F. Supp. 3d 906
C.D. Cal.2014Background
- Retrophin, a biopharmaceutical company, alleges Questcor is the sole U.S. supplier of FDA‑approved long‑acting ACTH (Acthar) and has raised its price dramatically since acquiring it.
- Retrophin asserts three relevant U.S. product markets: ACTH therapeutics, Infantile Spasms treatments, and last‑resort Nephrotic Syndrome treatments; Questcor allegedly holds dominant/monopoly positions in those markets.
- Retrophin negotiated for nearly a year to license Synacthen (an ACTH used abroad but not FDA‑approved) from Novartis and had an agreement ready to sign when Questcor purchased Synacthen the same day.
- Retrophin claims Questcor’s acquisition foreclosed Retrophin’s lower‑cost entry into the markets and entrenched Questcor’s monopoly; Retrophin was also developing an independent product (RE‑034) but alleges it is a slower, riskier route to market.
- Questcor moved to dismiss under Rule 12(b)(6) arguing lack of antitrust injury/standing, no market or monopoly power, failure to plead attempted monopolization, business justification, and insufficiency of state‑law claims; Court denied the motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Antitrust injury / standing | Retrophin was foreclosed from entering markets by Questcor’s purchase of Synacthen, causing the type of injury antitrust laws protect | Injury is speculative (FDA approval uncertain), and Retrophin could have pursued RE‑034 instead | Court: Retrophin plausibly alleges antitrust injury and standing; allegations of intent/preparedness and foreclosure suffice at pleading stage |
| Market/monopoly power | Questcor monopolizes defined relevant markets; barriers to entry include FDA approval, orphan designation, and R&D costs | Entry barriers are low; no direct evidence of market power | Court: Direct evidence lacking but circumstantial allegations (market definition, market share, barriers) plausibly plead market/monopoly power |
| Harm to competition (Section 1) | Exclusion of a potential competitor (Retrophin) injured competition by preserving monopoly | Harm is speculative and transient; Novartis or others might have acted differently | Court: Alleged exclusion is inseparable from harm to competition and sufficiently pleaded to survive dismissal |
| Attempted monopolization / business justification | Questcor’s acquisition was exclusionary; plaintiff need not negate defendant’s business justification at pleading stage | Questcor’s conduct has legitimate business justifications; attempted monopolization inconsistent with actual monopoly pleaded | Court: Alternative/ inconsistent theories may be pleaded; defendant bears initial burden to assert business justification and factual disputes are inappropriate to resolve on motion |
Key Cases Cited
- Hemi Group, LLC v. City of New York, 559 U.S. 1 (2010) (pleading facts assumed true on motion to dismiss)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for antitrust pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (legal conclusions not accepted as true on dismissal)
- Brunswick Corp. v. Pueblo Bowl‑O‑Mat, Inc., 429 U.S. 477 (1977) (antitrust injury requirement)
- Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104 (1986) (antitrust standing and remedies under Clayton Act)
- Lucas Automotive Eng’g, Inc. v. Bridgestone/Firestone, Inc., 140 F.3d 1228 (9th Cir. 1998) (competitor lacks standing where injury is no different than would occur from any exclusive grant)
- Glen Holly Entm’t, Inc. v. Tektronix Inc., 352 F.3d 367 (9th Cir. 2003) (distinguishing Brunswick/Lucas where exclusionary conduct lacks procompetitive justification)