Cardinal Health has agreed to pay $26.8 million to resolve charges it illegally monopolized 25 local markets for the sale and distribution of low-energy radiopharmaceuticals and forced hospitals and clinics to pay inflated prices for these drugs, according to the Federal Trade Commission.
This represents the second largest monetary settlement the FTC has scored in an antitrust case.
The money will be deposited into a fund for distribution to injured customers, according to the FTC. The proposed order is subject to court approval.
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The order also includes provisions to prevent future violations and restore competition in six markets where Cardinal remains the dominant radiopharmacy.
Dublin, Ohio-based Cardinal Health specializes in the distribution of pharmaceuticals and medical products. It owns the nation's largest chain of radiopharmacies, which sell and distribute drugs known as low-energy radiopharmaceuticals, according to the FTC. These radiopharmaceuticals are used by hospitals and clinics to diagnose a range of medical conditions, including heart disease. Due to the short half-life of the radioactive isotopes used in these drugs, hospital and clinics rely on radiopharmacies located nearby, resulting in highly localized markets.
As alleged in the FTC complaint, between 2003 and 2008, Bristol-Myers Squibb and General Electric Co., which acquired Amersham in 2004, were the only U.S. manufacturers of heart perfusion agents used to perform heart stress tests.
According to the FTC's complaint, between 2003 and 2008, Cardinal employed various tactics to coerce and induce both BMS and GE to refuse to grant distribution rights for their respective HPA products to new competitors in the relevant markets.
As a result, the complaint alleges that Cardinal obtained exclusive distribution rights to the only HPAs available on the market and prevented numerous potential entrants from gaining access to these radiopharmaceuticals.
Cardinal violated the FTC Act in monopolizing the sale and distribution of radiopharmaceuticals in 25 markets ranging from Albany, N.Y. to cities in West Virginia, North Carolina, South Carolina, Alabama, Tennessee, Florida, Indiana, Mississippi, Kentucky, Arkansas, Missouri Nebraska, Oklahoma, Kansas, Texas and Washington, according to the complaint.
Cardinal's anticompetitive tactics included, according to the complaint, cancelling, and threatening to cancel, Cardinal's current or future purchases of the manufacturers' radiopharmaceutical products; threatening to switch, and actually switching, customers from BMS's Cardiolite to GE's Myoview in the relevant markets to pressure BMS to abandon plans to license Cardiolite to new competitors; threatening to compete, and offering to forego competing, against BMS as a generic HPA manufacturer; and conditioning Cardinal's future relationship with GE in the radiopharmaceutical industry on GE's refusal to grant Myoview distribution rights to new competitors in the relevant markets.
"We have reason to believe that Cardinal, by preventing other radiopharmacies from entering its markets, was able to deny customers the benefits of competition and reap monopoly profits from the sale of radiopharmaceuticals for a sustained period of years," said FTC Chairwoman Edith Ramirez. "In addition to obtaining important injunctive relief to restore lost competition and prevent future misconduct, the settlement ensures that Cardinal disgorges the monopoly profits it obtained and that affected customers get relief."