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Bates White Partner Douglas Bernheim’s analysis cited extensively in court decision favorable to Amgen, Inc.

On October 2, 2008, the U.S. District Court for the District of Massachusetts granted a permanent injunction for Bates White client Amgen, Inc., barring Hoffman La-Roche from entering the United States market with a competing drug in the case Amgen, Inc. v. F. Hoffman-La Roche. After a lengthy review, the judge issued an order that extensively cited Dr. Douglas Bernheim’s testimony. Dr. Bernheim concluded that Roche’s entry would likely result in higher prices and increased Medicare expenditures, and he testified that Roche’s entry would cause substantial recurring harm to Amgen that would not be adequately compensated by monetary damages. Dr. Bernheim also testified that the harms to Amgen would outweigh any burden on Roche stemming from the permanent injunction.

Bates White’s involvement in this lawsuit relates to a 2007 decision in which a federal court jury found that a drug Roche intended to sell in the United States infringed certain patents held by Amgen. Following the jury verdict, the judge scheduled a four-day hearing to determine whether Amgen should be granted a permanent injunction to prevent Roche from selling its drug in the United States. Counsel for Amgen retained Bates White to provide an economic opinion on factors described in the U.S. Supreme Court’s recent opinion in eBay Inc. v. MercExchange, L.L.C. relevant to the Court’s determination of whether to grant the permanent injunction.

Led by Dr. Bernheim, the Bates White team performed a detailed analysis of the economic incentives created by Medicare’s Average Selling Price (ASP) reimbursement system for entrant and incumbent drug manufacturers. The team developed innovative game theory models of competition under the ASP reimbursement system to predict pricing strategies that Roche and Amgen likely would employ should Roche be permitted to enter the U.S. market. The predictions were shown to be consistent with the parties’ business planning documents and ultimately helped the court understand the consequences of the strategies. In conjunction with this analysis, Bates White developed a historical data set of pricing information from the Centers for Medicare and Medicaid Services (CMS) to analyze the pricing decisions of previous entrants and incumbents in a variety of therapeutic segments under the ASP system.

For more information, read our Healthcare Highlights newsletter.

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