On May 2, 2018, Cohen Milstein developed a proprietary case against Merck & Co., Inc. on behalf of a class of direct purchasers, alleging that Merck engaged in an anticompetitive bundled discount scheme to maintain its monopoly power in the rotavirus vaccines market after entry by GlasxoSmithKline plc (GSK).

Plaintiffs bring this putative antitrust class action for treble damages under the antitrust laws of the United States.

Case Background

Merck is one of the world’s largest vaccine manufacturers and a leading manufacturer of vaccines in the United States. It is the sole United States manufacturer in the markets for multiple pediatric vaccines, including MMR (measles, mumps, and rubella), Varicella, and human papilloma virus (HPV) holding 100% of United States sales for those vaccines. Merck is by far the dominant seller in the Rotavirus Vaccine Market, marketing its vaccine under the trade name RotaTeq; its only competitor in the Rotavirus Vaccine Market is GSK, which markets its rotavirus vaccine under the trade name Rotarix.

Merck was the only seller of rotavirus vaccine in the United States from 2006 – 2008, when GSK received approval to market Rotarix. In preparation for GSK’s introduction of a competing rotavirus vaccine, Merck added a condition to its contracts that required customers to buy all or nearly all of their pediatric rotavirus vaccines from Merck or face substantial price penalties on not only RotaTeq, but also on all other bundled Merck vaccines. This new Merck Bundle meant that any customer who wanted to buy significant amounts of Rotarix from GSK had to be willing to accept substantial penalties on any RotaTeq the customer continued to buy and substantial penalties on all other Merck vaccines (including those for which there is no other supplier).

The Merck Bundle substantially forecloses competition by limiting GSK’s ability to profitably win sales to foreclosed buyers with price cuts, thereby allowing Merck to maintain its monopoly share of the Rotavirus Vaccine Market despite continuing to charge foreclosed buyers monopoly prices.  The Merck Bundle bifurcated the market between loyal and disloyal customers, reducing the ability of GSK to compete on price for the former, and the incentive to compete on price for the latter. The Merck Bundle thus incentivized GSK to maintain high prices instead of competing aggressively with Merck on the price of rotavirus vaccines.

As a result, Plaintiff and the proposed class have been overcharged for RotaTeq.

The case name is: Schwartz Pediatrics, et al. v. Merck & Co., Inc., Case No. 2:18-cv-01851-JCJ, U.S. District Court, Eastern District of Pennsylvania