Antitrust Suit Over Sanofi Vaccine Can Proceed

Last December, several doctors filed a lawsuit charging Sanofi with illegally dominating the market for meningococcal vaccines in the US by using a “web of anticompetitive contracts” with physician buying groups. The alleged goal was to promote its Menactra vaccine after Novartis entered the market with the rival Menveo vaccine. Now, a federal judge has ruled that, despite protests from Sanofi, the doctors have sufficient standing to proceed with the case.

The decision does not mean that the doctors are likely to win, only that the judge found there is sufficient evidence for the physicians to attempt to prove Sanofi is violating antitrust laws. "The court finds that Plaintiffs have alleged sufficient facts to support such a showing at this stage," wrote US District Court Judge Jose Linares in a ruling earlier this week (here it is). We have asked Sanofi for a comment and will update you accordingly.

Basically, the doctors charges that Sanofi blocked competition three different ways: a "web of contracts" with physician buying groups that include anticompetitive terms, enforcement of the contracts in a way that blocks sales to competitors, and cooperative deals with Merck to further restrict competition from GlaxoSmithKline and Novartis in the pediatric vaccine market, according to court documents.

Specifically, the doctors allege that Sanofi was able to use its market power to impose bundled-pricing contracts on physician buying groups, and these contracts required purchasers to “buy 90 percent or more" of various childhood vaccines, including Menactra, to avoid price penalties on Menactra, specifically. In other words, the doctors charge the discounts act as penalties for purchasing from other vaccine makers.

How so? Allegedly, a buyer could wind up paying a higher price - anywhere from 15 percent to 35 percent - on all Sanofi vaccines. And the doctors contend they "cannot afford to forgo the bundled discounts on all Sanofi pediatric vaccines to purchase one vaccine from a competitor," according to court documents. They add that Sanofi has bundled contracts with the majority of physician buying groups for pediatric vaccines in the US.

Their lawsuit also charges doctors were told they may not purchase Glaxo or Novartis vaccines while on a Sanofi contract or they can face penalties. One line quoted from a communique says that "if you succumb to a sales pitch and buy Menveo or Boostrix you will not get the 1 percent bonus and may put your 2.5 percent annual rebate at risk.” And the doctors charge Sanofi changed contract terms and more aggressively enforced the changes beginning in 2010, when Novartis launched Menveo and subsequently captured nearly 20 percent of the market for pediatric meningococcal vaccines.

And since Novartis does not offer other pediatric vaccines, the drugmaker is unable to counter Sanofi tactics and make comparable bundled offers or offer substantive discounts to compete. Meanwhile, Sanofi market share rose above 80 percent after it changed contract terms and practices, the court documents state. As a result, Sanofi has been able to "stifle competition and raise prices at the same time," the doctors allege.

[UPDATE: A spokesman writes that, "naturally, we are disappointed in the judge’s ruling, but we are confident that once the court sees the evidence of competition in the marketplace, it will rule against the plaintiffs. We continue to defend our company and our product, and we maintain that allegations in the class action complaint are without merit. Sanofi Pasteur’s primary goal is, and has always been, to offer our healthcare provider customers innovative, safe and effective vaccines at competitive prices to maximize immunization rates and protect public health."]

Last March, by the way, the Citizens for Responsibility and Ethics in Washington and three other groups contacted the US Federal Trade Commission for an investigation into Sanofi practices and claimed they have a whistleblower – someone who formerly ran the Sanofi Merck vaccine program at an unnamed physician buying group - who can offer more details (back story).