When the Price Isn't Right—Lundbeck and a Path to Analyze Competition in Drug Research and Development

Abstract

The classic starting point in antitrust merger analysis is to view market definition and competition in terms of price, which was reaffirmed in the 2010 Horizontal Merger Guidelines. But in some cases, such as FTC v. Lundbeck, price is not a determining factor. This article begins by looking at Lundbeck in enough detail to understand why the court rejected the FTC's price-driven market definition arguments. It then lays out a way to analyze potential competitive impact in such nonprice, patent-centric cases. To predict whether or not a transaction will lessen competition in research and development requires an understanding of the industry at issue and an appreciation for the facts (such as patent life) that motivate investment decisions.