Meijer, Inc. v. Abbott Laboratories

In 1996, Abbott Laboratories (Abbott) (defendant) developed a patented protease inhibitor (PI) called Norvir to treat HIV. To be effective, Norvir was prescribed in high doses and cost approximately $18 per day. Later, it was discovered that Norvir could be used in small doses in conjunction with another PI, effectively boosting the antiviral properties of the other PI. As a booster, Norvir was more effective, yielded fewer side effects, and cost less. In 2000, Abbott introduced Kaletra, a single pill that combined a PI and the active compound found in Norvir. Kaletra, however, caused some patients to experience significant side effects. In 2003, other drug companies sought to introduce their own PIs, which were shown to be as effective as Kaletra if boosted with Norvir. GlaxoSmithKline (GSK) (plaintiff) entered a license agreement with Abbott that allowed GSK to use and market Norvir as a booster for GSK’s PI, Lexiva. In exchange, GSK paid substantial royalties to Abbott. Thereafter, Abbott raised the wholesale price of Norvir by 400 percent while maintaining the same price for Kaletra. Abbott claimed that the price increase was consistent with Norvir’s enormous clinical value. GSK and other drug companies (plaintiffs) sued Abbott for its allegedly bad-faith, monopolistic conduct. GSK asserted a claim for breach of the implied covenant of good faith and fair dealing based on Abbott’s having deprived GSK of the benefits of the license agreement by unreasonably raising the price of Norvir. Abbott filed a motion to dismiss, arguing that the claim failed because GSK had not and could not allege a separate claim for breach of contract.