Justice Holmes said that “the law” is merely a “prophec[y] of what the court[] will do” in the next case to come before it. Economists would call Holmes’ definition of the law a “rational expectation.” An antitrust economist examining Sanofi’s appeal in this case would ask: Would we rationally expect five members of the current Supreme Court to displace the well-established “equally efficient competitor” principle and replace it instead with the novel “effective entrant burden” heuristic, which the district court rejected below? Surely not. There is no serious prospect that the Supreme Court is about to strip the law of monopolization down to the studs and give it an entirely different façade. Nor is there any sound reason why the Court should want to do so.
To the extent that any factual premise is necessary to frame amicus curiae’s economic arguments, it can be concisely summarized. Sanofi accused Mylan of monopolizing the market for epinephrine auto injectors, like Mylan’s EpiPen and Sanofi’s Auvi-Q. EpiPen had a high market share going back many years before Sanofi entered in 2013. Mylan had always paid small rebates to the pharmaceutical benefit managers (“PBMs”). After Auvi-Q entered, Mylan paid larger rebates, often in exchange for preferential or sometimes exclusive positions on PBM formularies. After a year or more of being disinclined to compete on price, Sanofi began to respond to PBM requests for competitive rebates and did much better in formulary coverage and market share. Some PBMs gave Auvi-Q exclusive coverage, and there Mylan’s share of EpiPen shrank close to zero. In mid-2015, however, Auvi-Q was withdrawn for unreliable dosing, and Sanofi gave up the product.
Sanofi’s expert economic witness, Professor Fiona Scott Morton, opined that Mylan had monopoly power, as evidenced by its share, and that its exclusionary rebates anticompetitively foreclosed the market, making competition impossible. Scott Morton relied on Mylan’s documents expressing its intent to win. She also relied on her 2017 law review article arguing that discounts can be foreclosing where much demand is non-contestable. Scott Morton opined that the rebates in essence taxed Auvi-Qs so they could not compete.
The district court found undisputed proof that Sanofi and Mylan could compete vigorously over rebates for preferential positions on PBM formularies and eventually did so (once Sanofi decided to compete on net price); that net prices consequently fell; that there was little foreclosure of entry under any economic definition; that there was little non-contestability of demand for EpiPens; and that Sanofi ultimately exited the market following problems maintaining its own product’s quality.
This brief is a rifle shot addressing solely the economic merits of Sanofi’s last-gasp argument. Sanofi cannot win on the facts under existing law. Its only recourse is to ask this Court to replace the equally efficient competitor principle as the controlling law with Scott Morton’s novel theory and then decide the case in Sanofi’s favor—not based on whether the challenged conduct harmed competition and consumer welfare, but rather on the presence or absence of an “effective entrant burden.”
That novel theory would flout Supreme Court antitrust jurisprudence by incorrectly elevating competitor welfare over consumer welfare. It finds no support in current antitrust law or economic principles, and it could not plausibly become the law of monopolization in the Holmesian sense. This Court should affirm.