Antitrust Enforcement in the Pharmaceutical Industry: Analyzing Patents Under the Rule of Reason

American consumers and lawmakers across the political spectrum agree that prescription drug prices are far too high. This Note identifies an antitrust cause of action that could drastically reduce the prices of the most expensive prescription drugs. Under section 1 of the Sherman Antitrust Act ("Section 1"), all agreements that unreasonably restrain trade are illegal. Patents are agreements between inventors and the public, and under antitrust "rule of reason" analysis, some patents, i.e., patents covering lifesaving medicines for which there are no close substitutes, may unreasonably restrain trade and therefore violate Section 1. The rule of reason analysis in this Note weighs the long-term economic benefits of robust patent protection against the relatively short-term economic inefficiencies of patent protection. While the benefits of patents almost always outweigh the harms, patents on lifesaving medicines for which there are no close substitutes are economically unique. Demand for these medicines remains immense, regardless of how high prices climb, because patients need them to live. Prices soar, sometimes to millions of dollars per dose, and the public ultimately shoulders the cost. This Note argues that under Section 1 rule of reason analysis, the patents that enable these extraordinarily high prices may unreasonably restrain trade. For now, the antitrust action proposed in this Note is likely unavailable under Supreme Court precedents that appear to immunize patents from antitrust scrutiny. This Note suggests amendments to federal law that would abrogate patents' implicit antitrust immunity and, where a Section 1 violation is proven, provide for compulsory patent licensing to generic drugmakers for a reasonable royalty. These amendments could save Americans billions annually on prescription drugs while preserving pharmaceutical companies' incentives to develop new medicines.