00-4206, 00-4264 to 00-4266 In re Brand Name

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“The theory is that the wholesalers joined the manufacturers’ conspiracy. And of that there is too little evidence to permit a reasonable jury to infer the wholesalers’ guilt. There is first of all no evidence that the wholesalers knew that the manufacturers’ price discrimination was collusive rather than individual. To argue that because the uniform refusal to grant discounts even to pharmacies that seemed to have competitive options as good as hospitals and HMOs smacks of collusion the wholesalers knew that the manufacturers were colluding is too much of a stretch; it would amount to basing an inference of conspiracy on negligence, a careless failure to tumble to the nature of one’s suppliers’ business methods. It would mean that any time a seller asked a distributor not to engage in arbitrage the distributor would be in peril of being found to have conspired with the seller to fix prices should it turn out that the price discrimination engaged in by the distributor was collusive rather than individual.

“An inference of knowledge would be particularly shaky here because, so far as appears, the chargeback system was adopted before the alleged collusion of the manufacturers began and because the system is supported by commercial reasons independent of any desire to prevent arbitrage, let alone to facilitate collusive pricing. Without the chargeback system or some simulacrum, a hospital or other purchaser of brand-name prescription drugs that was entitled to a discount would have to pay the full price to the wholesaler and then ask the manufacturer for a rebate. The delay entailed in that system would give these purchasers something the wholesalers dreaded, namely an incentive to buy directly from the manufacturers. The chargeback system enabled the purchasers to obtain their discount at the moment of purchase, just as they would have done had they bought directly from the manufacturers. It was a wholesaler survival tactic.”

On this record, no reasonable jury could find for the plaintiffs, and so the judgment of the district court must be

Affirmed.

Prescription Drugs Antitrust Litigation

Appeals from the United States District Court for the Northern District of Illinois, Kocoras, J., Posner, J.