Antitrust laws are a collection of laws and regulations, put into place over time, to help govern the competiveness of large corporations. Enforced by the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice (DOJ) (“Antitrust Laws,” 2003), the laws help regulate ethical behavior between businesses to ensure that smaller businesses can compete with the bigger name corporations. Mergers and monopolies come into play and greatly affect how these businesses run. This paper will look at two different instances of possible violated laws and discuss the specifics. The first case deals with a pharmaceutical company, the second two telecommunications companies. One question being answered for both examples is what kind of ethical dilemmas are present. Read on as the cases are examined. Federal antitrust enforcers are investigating whether a multinational pharmaceutical company has attempted to minimize the impact of generic competition to one of its most profitable prescription drugs. This antidepressant drug is the company 's best seller, with sales last year of $2.11 billion, representing a 22% increase from the year before. The Federal Trade Commission (FTC) is conducting an investigation to determine whether the company engaged in activities to prevent generic alternatives to the prescription drug from entering the market. Specifically, the FTC is challenging a practice among brand-name and generic drug manufacturers to agree to
Pharmaceutical companies are provided with temporary monopoly rights on the production of new drugs which result in a higher cost on consumers. If competing companies were allowed to produce generic forms of those drugs, consumers will be able to afford those medications even in cases where those consumers have no insurance coverage. The company responsible for developing and inventing the original medication could be offered incentives to invent in the future by either obtaining tax breaks or NIH funding for future research. They could even be offered a percentage of the sales of the generic drugs. Economist Gary S. Becker advocates dropping many FDA requirements that, in his opinion, provide no additional safety measures but rather delay the development of new drugs.[12] Betamethasone, for example, has been part of the standard prenatal care in Europe since the late 1970’s while it got adopted in the U.S. after 1997. On many occasions, the FDA ignores all scientific evidence concerning certain drugs because the manufacturer did not follow their mandated bureaucratic standards.
They have also attacked patent listings in the Food and Drug Administration “Orange Book” and have alleged monopolization through fraud on the Patent and Trademark Office and sham litigation. Yet other cases have condemned distribution agreements as unlawful exclusive dealing. These government actions have led to substantial private class action litigation against the pharmaceutical industry. The FTC has also challenged numerous mergers and acquisitions in the industry over the last decade. One common feature in all of these cases is the need to define a relevant market. In nonmerger cases, the FTC and private plaintiffsgenerally allege narrow markets, limited to a single drug and its generic equivalent in some cases and to generic drugs excluding the bioequivalent “brand-name” drug in other cases. In its merger challenges, on the other hand, the FTC has alleged markets ranging from those based upon a particular chemical compound, to broader markets based upon various drugs’ manner of interaction or dosage form, to still broader markets of all drugs used to treat a disease or condition. In numerous pharmaceutical merger challenges, the government has included in the market not only currently marketed drugs but also other drugs under development, alleging “innovation markets.”
We in America tend to take medications for almost any problem we have, from headaches to gastrointestinal pain, to more serious chronic disorders such as depression and attention deficit disorder. While many of the uses of such medications may be necessary and legitimate, many are not, and due to this fact, many people become dependent on medications, mentally, and or physically. This problem is not simply the fault of the individual; in fact, the blame can also be placed upon the medical community, and the pharmaceutical companies who produce the drugs. How often can one turn on the television to see advertisements for Claritin, Aspirin, Pepto-Bismol, or even Zoloft or Ritalin? The pharmaceutical industry is motivated by monetary
Michigan has adopted the Antitrust Reform Act. Mich. Comp. Laws Ann. § 445.774a. The Act allows employers to obtain agreements , protecting their reasonable competitive business interests by prohibiting employment with competitors. Id. But the agreement must be reasonable “as to its duration, geographical area, and the type of employment or line of business.”Id. To be reasonable, a restrictive covenant must “‘protect against the employee’s gaining some unfair advantage in competition with the employer, but not prohibit the employee from using general knowledge or skill.’” Coates v. Bastian Brothers, Inc, 276 Mich. App. 498, 741 N.W.2d 539 (2007) If the agreement is found to be unreasonable, a court may “limit the agreement to
The Federal Trade Commission actively enforces antitrust laws to organizations within the healthcare field, including to Physician Hospital Organizations (PHOs). A PHO is a vehicle that enables hospitals and physicians to work cooperatively toward accomplishing several objectives (Physician, 2015). According to Susan Creighton (2004), competitive issues among PHOs can occur when a PHO acts as a contracting arrangement for a network of healthcare providers. The network can consist of groups of physicians, one hospital or several, and also some other entities that offer a bundle of healthcare services to insurance companies and other payors (Creighton, 2004). The FTC states that the core antitrust law principle is that it is illegal for competitors to agree on prices they will charge, except where they come together and integrate in a legitimate joint venture that results in efficiencies or other precompetitive benefits that outweigh the restriction of competition (Creighton, 2004). Agreements that violate the antitrust law can be determined as per se illegal. Per se illegal means that activities, such as horizontal price fixing, or group boycotts, have been conclusively presumed to restrain competition unreasonably even without a study of the market that they occurred in, or an analysis of their actual effect on competition, or their purpose (Burke, et al., 2009). South Georgia Health Partners are an example of a PHO that was charged by the commission on a per se illegal
Antitrust law in the United States is a collection of federal and state government laws regulating the conduct and organization of business corporations with the intent to promote fair competition in an open-market economy for the benefit of the public. Congress passed the first antitrust statute, the Sherman Antitrust Act, in 1890 in response to the public outrage toward big business. In 1914, Congress passed two additional antitrust laws: the Federal Trade Commission Act and the Clayton Act. (The Antitrust Laws. Web.)
In 1907 a federal court ruled that American Tobacco had a monopoly on licorice, a flavoring, and that the company was guilty of violating the Sherman Antitrust Act. After a long trial, the court prohibited the company from enjoying interstate trade until conditions were corrected. It went through the U.S. Supreme Court, which decided on May 29, 1911 that the company had to be dissolved. On Nov. 16, 1911 the Supreme Court issued a decree that the company had to be divided into three major parts: American Tobacco, Liggett and Myers, and P. Lorillard. The control of R. J. Reynolds Tobacco Company of Winston-Salem was also relinquished. James B. Duke, a multimillionaire by then, retired from active management of the American companies and turned
The first antitrust law passed by Congress was the Sherman Act, in 1890. In 1914, Congress passed two other antitrust laws: The Federal Trade Commission Act, which created the Federal Trade Commission, and the Clayton Act. With some revisions, these are the most important federal antitrust laws still in effect today. Section 7 of the Clayton Act prohibits mergers and acquisitions when the effect "may be substantially to lessen competition, or to tend to create a monopoly." (ftc.gov) The antitrust laws proscribe unlawful mergers and business practices in general terms, leaving courts to decide which ones are illegal based on the facts of each case. For over 100 years, the antitrust laws have had the same basic objective: to protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up. The enforcement authorities of the federal antitrust laws are The Federal Trade Commission and the U.S. Department of Justice (DOJ) Antitrust Division (ftc.gov).
A preliminary question is what are antitrust laws? They are a series of laws designed to protect competition in the marketplace. Antitrust laws prevent restrains of trade or commerce. Black’s Law Dictionary defines antitrust laws as “[t]he body of law designed to protect trade and commerce from restraints, monopolies, price-fixing, and price discrimination.” The main law regulating antitrust is the Sherman Antitrust Act, which makes it illegal for individuals or groups to restrain trade or commerce. Besides the Sherman Act, the other law that factors into Dental Examiners is the Federal Trade Commission Act, which prohibits any “[u]nfair methods of competition.” This law serves as the basis for the majority of Federal Trade
Antitrust laws were created to stop companies from becoming too large. One example of this is the Standard Oil Company, they owned early portion of production. This begin from the production to the transportation, all the way to the workers homes. To stop this company’s control of the markets these laws were put into place. Another example is the Microsoft Corporation which fell into this category in 1999.
Antitrust laws- laws covered under this regulation are intended to prevent the monopolizing of cer-tain services that could end up negatively affecting the market by driving up or down the price of a good or service to such an extent that people cannot afford it. It also has the responsibility to ensure there is adequate competition and to make prices fair and services accessible to as many people as possible. (Economics, 2014). Consumer Product Safety Commission (CPSC)- this regulation’s effect on the market is quite significant because if a product is deemed unsafe for the public, it can have a huge effect on all levels of production. If the company offers any sort of stock, those who have shared may be greatly impacted as well. It is even
The Sherman Antitrust Act (15 U.S.C.A. § 1 et seq.) was the first federal antitrust statute. SEC. 1, 2, and 3, stated that every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce is declared to be illegal; and person who shall monopolize, or attempt to monopolize or combine or conspire with any other person or persons shall be deemed guilty. The Act also entitled to create Federal Trade Commission, and to define its powers and duties. However, its application to mergers and acquisitions has varied, depending on its interpretation by the U.S. Supreme Court.
Consumers are the end user of products & services. Antitrust law makes products & services more affordable by lowing the prices & better products as well as services. Antitrust law have made it harder for companies to survive because of the level of competition, so only the best survives, companies who fail to meet & understand the needs of customers slowly elope due to the competitive battle. “When competitors agree to fix prices, rig bids, or allocate (divide up) customers, consumers lose the benefits of competition. The prices that result when competitors agree in these ways are artificially high”. Higher prices won’t always reflect the accurate cost, so therefore
As many other students can attest to I was quite young while this case was going on. Now
The expiration of Prozac’s patent necessitates swift, defensive action from all companies in the SSRI industry. As generics enter the market, demand for more expensive, branded medications will fall as price sensitive consumers switch to the cheaper alternatives. Additionally, incident prices on consumers themselves, in the form of copayments, will rise as insurance companies pressure their constituents to switch to more cost-effective offerings. To overcome these obstacles, we recommend the following to both GSK and Lily: