January 23, 2019

Merck Sharp & Dohme Corp. cannot force each individual in a proposed class action to arbitrate claims that its pediatric vaccine bundles with alleged artificially inflated price tags are anti-competitive, a Pennsylvania federal judge ruled Tuesday, finding that the plaintiffs never signed arbitration agreements.

U.S. District Judge J. Curtis Joyner found that just because Merck had contracts containing arbitration clauses with three physician buying groups doesn’t mean the pediatric medical practices bringing the action were signatories to those contracts when they bought rotavirus vaccines bundled with other common childhood vaccines through those groups, according to the order filed Wednesday.

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Sugartown Pediatrics LLC sued Merck on April 25, and its suit was consolidated with Schwartz Pediatrics SC on June 1. The complaint says that when GlaxoSmithKline PLC released its Rotarix vaccine, the price of Merck’s RotaTeq should have decreased, as is typical when a competitive entry hits a monopoly market. However, the price remained artificially high no matter which brand the doctors chose, Sugartown’s complaint said.

When GSK’s vaccine threatened Merck’s monopoly, Merck started persuading its customers to sign an exclusionary contract to bundle RotaTeq with other vaccines, many of which are only sold by Merck, according to the suit.

Customers who refused to do so faced higher prices for RotaTeq and vaccines targeting hepatitis A, hepatitis B, Hib, chickenpox, human papillomavirus and combined measles, mumps and rubella, the suit says. In some cases, those prices were 58 percent higher than when the drugs were bundled.

In July, Merck made a motion to toss the proposed class action, saying its bundling of pediatric vaccines isn’t anti-competitive because it kept prices at “rock bottom” and didn’t block other companies from competing.

That motion to dismiss was also denied Tuesday, after the judge found that the consolidated class action complaint is “more than sufficient to plead viable causes of action against [Merck] for antitrust violations” related to the Sherman Antitrust Act.

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The proposed class is represented by Eric L. Cramer, Zachary D. Caplan, Karissa Sauder and Daniel J. Walker of Berger Montague PC; Daniel A. Small, Daniel H. Silverman and Gary L. Azorsky of Cohen Milstein Sellers & Toll PLLC; Brent W. Landau, Gary I. Smith and Tamara Freilich of Hausfeld LLP; Linda P. Nussbaum and Bart D. Cohen of Nussbaum Law Group PC; Michael Gavin of Gavin Law LLC and Marc H. Edelson of Edelson & Associates LLC.

The complete article can be accessed here.