Counsel for codefendant Warner Chilcott retained Cornerstone Research and Professor Henry Grabowski of Duke University to determine if an exclusive supply agreement between Warner Chilcott and Barr Pharmaceuticals had any anticompetitive effects.
Retained by Simpson Thacher & Bartlett
Counsel for codefendant Warner Chilcott retained Cornerstone Research and Professor Henry Grabowski of Duke University to determine if an exclusive supply agreement between Warner Chilcott and Barr Pharmaceuticals had any anticompetitive effects. The Federal Trade Commission; thirty-four states’ attorneys general; and classes of consumers, third-party payors, and direct purchasers alleged that the supply agreement was anticompetitive because it delayed Barr’s introduction of a lower-priced, generic version of Warner Chilcott’s oral contraceptive Ovcon.
The court noted that the plaintiffs “faced significant risks in establishing both liability and damages” because of the savings that accrued to consumers from free samples.
Professor Grabowski analyzed the effect an earlier introduction of Barr’s generic version of Ovcon would have had on consumers and third-party payors. He showed that Warner Chilcott’s distribution of free samples resulted in an effective price discount substantially larger than the price discount Barr’s generic product likely would have provided. Because Warner Chilcott would have ended its distribution of free samples after generic entry, Professor Grabowski concluded that consumers and third-party payors would have paid more for the oral contraceptive had Barr introduced its generic product earlier rather than participating in the supply agreement with Warner Chilcott.
Warner Chilcott settled the cases with the consumer and third-party payor classes for attorneys’ fees and an agreement to distribute a small amount of free product to primary care physicians, health clinics, and charitable organizations. In approving the settlements, the court noted that the plaintiffs “faced significant risks in establishing both liability and damages” because of the savings that accrued to consumers from free samples.