Warren General Hospital v. Amgen Inc.

PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 10-2778
_____________

WARREN GENERAL HOSPITAL,

Appellant

v.

AMGEN INC.

_____________

On Appeal from the United States District Court
for New Jersey
District Court No. 09-cv-04935
District Judge: The Honorable Stanley R. Chesler

Argued January 25, 2011

1
 Before: FUENTES and CHAGARES, Circuit Judges, and
POLLAK, Senior District Judge

(Filed: June 14, 2011 )

Jeffrey L. Kodroff, Esq.
Jeffrey J. Corrigan, Esq. (Argued)
Spector, Roseman, Kodroff & Willis, P.C.
1818 Market Street, Suite 2500
Philadelphia, PA 19103

Counsel for Appellant

Michael R. Griffinger, Esq.
Michael F. Quinn, Esq.
Guy V. Amoresano, Esq.
Christopher Walsh, Esq.
Gibbons P.C.
One Gateway Center
Newark, NJ 07102

Bobby R. Burchfield, Esq. (Argued)
Raymond A. Jacobsen, Jr., Esq.
Jon B. Dubrow, Esq.
William Diaz, Esq.
McDermott, Will & Emry LLP
600 Thirteenth Street, N.W.
Washington, D.C. 20005


Hon. Louis H. Pollak, Senior Judge, United States
District Court for the Eastern District of Pennsylvania, sitting
by designation.

2
Counsel for Appellee

_______________

OPINION OF THE COURT
_______________

FUENTES, Circuit Judge.

This appeal raises the question of whether a hospital
that purchases certain pharmaceutical products from a
wholesaler middleman has standing under Illinois Brick Co.
v. Illinois, 431 U.S. 720 (1977), to bring an illegal tying claim
under federal law against the manufacturer of the
pharmaceutical drugs, Amgen. In Illinois Brick, the Supreme
Court held that only direct purchasers have standing under
Section 4 of the Clayton Act. In this case, plaintiff-appellant
Warren General Hospital argues that it falls squarely within
the direct purchaser rule, despite the fact that it purchases
Amgen‟s products through a middleman, because (1) it has a
direct relationship with Amgen and (2) it is the first
“overcharged” purchaser in the chain of distribution. The
District Court granted the defendant‟s motion to dismiss after
finding that the hospital was an indirect purchaser of
Amgen‟s products and thus lacked antitrust standing under
Illinois Brick. For the reasons that follow, we will affirm.1

1
The District Court also granted Amgen‟s motion to
dismiss on the alternative grounds that the Complaint failed to
allege a per se tying claim. Because we affirm the District
Court‟s dismissal of the complaint for lack of standing, we
will not reach this claim.

3
 I.

The following narrative is adapted from facts set forth
in the Complaint. Because the District Court decided this
case on a motion to dismiss, we accept as true the factual
allegations in the Complaint and draw all reasonable
inferences in plaintiff‟s favor.

Plaintiff Warren General Hospital (“Warren General”)
is a Pennsylvania not-for-profit corporation that seeks to
represent members of a proposed class, composed of other
hospitals, clinics, and care centers, that purchase drugs
manufactured by defendant Amgen. Amgen is a corporation
with its principal place of business in California that
manufactures and sells pharmaceutical drugs. On September
25, 2009, Warren General filed an antitrust class action in the
District of New Jersey alleging that Amgen violated antitrust
law by “tying” the purchase of two of its drugs, Neupogen
and Neulasta, to the sale of another Amgen drug, Aranesp.
(Compl. ¶ 1).

The heart of plaintiff‟s claim is that Amgen used its
knowledge of medical insurance reimbursement rates to
leverage its market power in one market—the market for
White Blood Cell Growth Factor (“WBCGF”) drugs—to
impair competition in the market for Red Blood Cell Growth
Factor (“RBCGF”) drugs. Warren General alleges that
Amgen violated antitrust law by creating an unlawful scheme
that “tied” the purchase of Amgen‟s WBCGF drugs to the
purchase of its RBCGF drugs. Because of the low

4
reimbursement rates from medical payors the hospital
receives for WBCGF drugs, it is not economically feasible for
the hospital to purchase WBCGF drugs at the “market price.”
Amgen offered Warren General discounts on purchases of its
WBCGF drugs that were predicated on the hospital‟s
purchase of Amgen‟s more expensive RBCGF drug.
Although Amgen did not expressly require the hospital to
purchase its drugs, Amgen‟s monopoly of the WBCGF
market, combined with its rebate program, implicitly
“forc[ed] Plaintiff and class members to make substantial
purchases of Amgen‟s more-expensive RBCGF drug, rather
than the cheaper competing [drug] . . . in order to avoid losing
money on . . . purchases of Amgen‟s . . . WBCGF drugs.”
(Compl. ¶ 1). Absent this tying scheme, the hospital would
have preferred to buy cheaper RBCGF drugs offered by
Amgen‟s competitors.

Plaintiff‟s claims were brought under Section 1 of the
Sherman Act, 15 U.S.C. § 1 and Sections 3 and 4 of the
Clayton Act, 15 U.S.C. §§ 14, 15. “Tying is selling one good
(the tying product) on the condition that the buyer also
purchase another, separate good (the tied product).” Gordon
v. Lewistown Hosp., 423 F.3d 184, 213 (3d Cir. 2005).2
Substantively, plaintiff‟s claims are grounded in Section 1 of
the Sherman Act and Section 3 of the Clayton Act, which
proscribe tying schemes. See Town Sound and Custom Tops,
Inc. v. Chrysler Motors Corp., 959 F.2d 468, 473-74 (3d Cir.

2
A per se tying claim has three elements: “(1) a
defendant seller ties two distinct products; (2) the seller
possesses market power in the tying product market; and (3) a
substantial amount of interstate commerce is affected.” Town
Sound, 959 F.2d at 477.

5
1992) (en banc). Section 1 of the Sherman Act declares
“[e]very contract, combination in the form of trust or
otherwise, or conspiracy, in restraint of trade or commerce
among the several States, or with foreign nations . . . to be
illegal.” 15 U.S.C. § 1. Section 3 of the Clayton Act makes it
“unlawful for any person engaged in commerce . . . to . . .
make a sale or contract for sale of goods . . . or fix a price
charged therefor, or discount from, or rebate upon, such price,
on the condition, agreement, or understanding that the . . .
purchaser thereof shall not use or deal in the goods . . . of a
competitor or competitors of the lessor or seller, where the
effect . . . may be to substantially lessen competition or tend
to create a monopoly.” 15 U.S.C. § 14. Warren General
brings this action pursuant to Section 4 of the Clayton Act,
which provides a private right of action for “any person who
shall be injured in his business or property by reason of
anything forbidden in the antitrust laws.” 15 U.S.C. § 15(a).

Amgen manufactures two WBCGF drugs, known as
Neulasta and Neupogen. (Compl. ¶ 3). Neulasta and
Neupogen treat neutropenia, “a potentially life-threatening
white blood cell deficiency” . . . “which can compromise a
patient‟s immune system.” (Compl. ¶¶ 21-22). It is often a
side effect of chemotherapy, although it also occurs in other
contexts. (Compl. ¶ 21). Neulasta is the newer and more
powerful drug, and “is roughly equal to 7 injections of
Neupogen.” (Compl. ¶ 22). Warren General submits that
Amgen holds an effective monopoly in the WBCGF market.
(Compl. ¶ 24). Sales of Neupogen and Neulasta make up 98
percent of the market for WBCGF drugs; Neulasta alone

6
controls 86 percent of the WBCGF market share. 3 (Compl. ¶
24).

Amgen also manufactures a RBCGF drug called
Aranesp. (Compl. ¶ 2). Aranesp is used to treat severe
anemia of the type experienced by patients undergoing
dialysis or chemotherapy or receiving certain treatment for
human immunodeficiency virus (HIV). (Compl. ¶ 15).
Unlike the WBCGF market, Amgen faces real competition in
the RBCGF market, where Ortho Biotech Labs (“Ortho”)
sells a drug called Procrit. (Compl. ¶ 2). Procrit controls
approximately 70 percent of the RBCGF drug market.
(Compl. ¶ 2). Yearly sales of Aranesp, Procrit, Neulasta and
Neupogen are estimated to be several billion dollars. (Compl.
¶¶ 4, 20, 64).

Sometime in early 2003, Amgen crafted a rebate
program that offered the hospital and other members of the
putative class rebates on the price of WBCGF drugs that
correlated to purchases of Aranesp. Without the rebates,
Warren General “would lose money on every administration
of [Neupogen and Neulasta]” because “the cost of buying
[those drugs] . . . exceeded the amount of reimbursement such
purchasers received from Medicare and other health care

3
Another WBCGF drug, Leukine, is sold by Berlex
Laboratories. (Compl. ¶ 24). Leukine holds only a “very
small” share of the WBCGF market, a situation Warren
General attributes to the fact that Leukine is “administered
intravenously,” a “longer and more costly process.” (Compl.
¶ 24). In comparison, Amgen‟s WBCGF drugs are
administered by subcutaneous injection. (Compl. ¶ 24).

7
payors.” (Compl. ¶ 6). Therefore, it became “commercially
unreasonable” for plaintiff to purchase Neulasta and
Neupogen without the rebates. (Compl. ¶ 6). The terms of
the rebate program ensured that the greater the quantity of
Aranesp that Warren General Hospital purchased, the greater
the value of the rebates it would receive on purchases of
Neulasta and Neupogen.

The hospital claimed two types of injuries: First, it
was “forced to pay more for Aranesp than they would have
paid for Procrit,” and second, the hospital “paid more for the
bundle of Aranesp and the WBCGF drugs than they would
have paid for the bundle of RBCGF and WBCGF drugs.”
(Compl. ¶ 7). Amgen changed its rebate program over time
so that Warren General had “to continue to purchase larger
amounts of Aranesp just to receive the same level of rebates
they had been receiving.” (Compl. ¶ 5). Meanwhile, sales of
Aranesp increased significantly: by 2005, sales of Aranesp
had increased by 38 percent and were valued at $840 million.
(Compl. ¶ 59).

The Complaint did not set forth the mechanics of the
hospital‟s WBCGF and RBCGF purchases. However, at the
motion to dismiss stage, it became clear that Warren General
Hospital in practice purchases Amgen‟s drugs through an
independent middleman wholesaler known as
AmerisourceBergen.

The totality of the Complaint‟s discussion of the
hospital‟s status as a direct purchaser is contained in
Paragraph 13:

8
 During the class period, Plaintiff purchased
Aranesp, Neulasta and Neupogen directly from
Amgen, pursuant to a contract between Amgen
and Plaintiff. The contract was negotiated at
Warren Hospital between Plaintiff and an
Amgen representative, who continued to service
the account. The contract also required Amgen
to pay the rebated dollars directly to Plaintiff,
which it did.

(Compl. ¶ 13). The Complaint identified the relevant
contracts and agreements between the two parties: the
Amgen Portfolio Contract, the Momentum Rebate,
Momentum II, and the Enhanced Momentum II contracts.
(Compl. ¶ 27). Otherwise, the Complaint merely repeatedly
characterized Warren General Hospital and other members of
the putative class as “direct purchasers” of Amgen‟s drugs.
See (Compl. ¶ 14) (“Amgen . . . manufactures and sells
Aranesp [and] . . . Neupogen and Neulasta . . . to direct
purchasers such as hospitals, doctors and oncology clinics.”);
(Compl. ¶ 24) (“Amgen has a 98% share of the sales to direct
purchasers such as hospitals, doctors and oncology clinics . . .
.”); (Compl. ¶ 47) (“[T]here were no such caps on Aranesp
purchases, which further coerced direct purchasers such as
hospitals, doctors and oncology clinics.”); (Compl. ¶ 53)
(“Amgen economically coerced direct purchasers such as
hospitals, doctors and oncology clinics into purchasing their
RBCGF product.”); (Compl. ¶ 60) (“Amgen‟s efforts to use
its monopoly power in the WBCGF drug market to coerce
direct purchasers such as hospitals, doctors and oncology
clinics into buying substantial amounts of Aranesp caused
those purchasers to substantially overpay . . . . ”); (Compl. ¶
70) (“Plaintiff brings this action . . . as [a] representative of a

9
[c]lass of all direct purchasers . . . .”).

Amgen filed a motion to dismiss on the ground that
Warren General lacked antitrust standing under Illinois Brick,
which permits only direct purchasers to advance antitrust
claims under Section 4 of the Clayton Act. The District Court
granted Amgen‟s motion and dismissed the Complaint in its
entirety on the ground that Warren General Hospital was not
a “direct purchaser” within the meaning of Illinois Brick.
The District Court noted that the Complaint did not
identify the role played by the wholesaler and found that it
was appropriate to rely on extrinsic evidence, namely the four
contracts and agreements upon which the Complaint relied.4
“[T]he parties agree[d] that, as documents explicitly referred
to and relied on by the Complaint, the contracts may be
considered by the Court on this motion to dismiss, even
though the documents are extraneous to the Complaint.”
Warren Gen. Hosp. v. Amgen Inc., 2010 WL 2326254, *1 n.2
(D.N.J. June 7, 2010). After examining the contracts
identified in the Complaint, the District Court found that
Warren General purchased Amgen products through a
wholesaler known as AmerisourceBergen. Id. at *1. The
court described the relationship between the plaintiff, the
defendant, and the wholesaler as follows:

4
As a general rule, “a district court ruling on a motion
to dismiss may not consider matters extraneous to the
pleadings.” West Penn Allegheny Health Sys., Inc. v.
UPMC, 627 F.3d 85, 97 (3d Cir. 2010) (internal quotation
marks and citations omitted). However, “a limited exception
exists for documents that are integral to or explicitly relied
upon in the complaint.” Id. (same).

10
 Warren General and other end users of the
drugs transacted their purchases from Amgen
pursuant to contracts identified in the
Complaint as the Amgen Portfolio Contract
(“APC”), Momentum Rebate, Momentum II
and Enhanced Momentum II. (Compl., ¶ 27.)
The contracts are negotiated by a Group
Purchasing Organization (“GPO”) on behalf of
member hospitals. The Enhanced Momentum II
contract, pursuant to which Warren General
made purchases, structures the transaction so
that Amgen sells Aranesp, Neupogen and
Neulasta to wholesalers, which in turn sell to
hospitals. Plaintiff acknowledges in its brief that
it purchased through wholesaler
[AmerisourceBergen].

Id. (footnotes omitted). In the medical field, GPOs “negotiate
standardized contracts with manufacturers and suppliers of
medical devices on behalf of their members.” Id. at *1 n.3
(citation and quotation marks omitted). The District Court
concluded that the Complaint‟s characterization of Warren
General as a “direct purchaser” was “squarely contradicted by
the purchase contracts on which the Complaint relies” which
“demonstrate that Warren General pays a wholesaler, not
Amgen for the products based on prices which have been set
by the wholesaler.” Id. at *3. Under these circumstances,
“the written instrument controls.” Id. (citing ALA, Inc. v.
CCAir, Inc., 29 F.3d 855, 859 n.8 (3d Cir. 1994)).

After reviewing the Illinois Brick case law, including a
Ninth Circuit case with similar facts, Delaware Valley
Surgical Supply, Inc. v. Johnson & Johnson, 523 F.3d 1116,

11
1123-24 (9th Cir. 2008), the District Court held that the
hospital purchased Amgen‟s drugs through
AmerisourceBergen and thus was an indirect purchaser barred
from asserting this illegal tying claim. The court found that
the Complaint‟s characterization of the plaintiff as a “‟direct
purchaser‟ merely parrots the Illinois Brick requirement,
without providing any factual basis.” Id. at *3. Dismissal of
the Complaint in its entirety followed.5 Id. at *7.

Warren General filed this timely appeal on June 14,
6
2010.

II.

Our review of a district court‟s dismissal of a
complaint for failure to state a claim is plenary. 7 Lum v.

5
The District Court also rejected the possibility that
Warren General fell under the cost-plus exception to Illinois
Brick. Plaintiff does not appeal that conclusion.
6
We have jurisdiction over an appeal from a final
decision of the district court pursuant to 28 U.S.C. § 1291.
7
The District Court described Amgen‟s motion to
dismiss as a motion for failure to state a claim and ultimately
dismissed the complaint for lack of statutory standing. For
purposes of our review, this distinction is irrelevant. Under
most circumstances, “[a] dismissal for lack of statutory
standing is effectively the same as a dismissal for failure to
state a claim.” Baldwin v. Univ. of Pittsburgh Med. Ctr., 636
F.3d 69, 73 (3d Cir. 2011); see also Maio v. Aetna, Inc., 221

12
Bank of America, 361 F.3d 217, 223 (3d Cir. 2004). “The
issue of antitrust standing is a legal issue, over which we
exercise plenary review.” McCarthy v. Recordex Serv., Inc.,
80 F.3d 842, 847 (3d Cir. 1996) (citing In re Lower Lake Erie
Iron Ore Antitrust Litig., 998 F.2d 1144, 1164 (3d Cir.
1993)).

In reviewing a dismissal under Federal Rule of Civil
Procedure 12(b)(6), “we accept all factual allegations as true,
construe the complaint in the light most favorable to the
plaintiff.” Pinker v. Roche Holdings Ltd., 292 F.3d 361, 374
n.7 (3d Cir. 2002). Under Rule 12(b)(6), a motion to dismiss
may be granted only if, accepting all well-pleaded allegations
in the complaint as true and viewing them in the light most
favorable to the plaintiff, a court finds that plaintiff's claims
lack facial plausibility. Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 555-56 (2007). This requires a plaintiff to plead
“sufficient factual matter to show that the claim is facially
plausible,” thus enabling “the court to draw the reasonable
inference that the defendant is liable for misconduct alleged.”
Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.
2009) (internal quotation marks and citation omitted). After
Twombly and Ashcroft v. Iqbal, --- U.S. ---, 129 S. Ct. 1937
(2009), “conclusory or bare-bones allegations will no longer
survive a motion to dismiss: threadbare recitals of the
elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Fowler, 578 F.3d at 210 (internal
quotation marks and citation omitted). While the complaint
“does not need detailed factual allegations . . . a formulaic

F.3d 472, 482 n.7 (3d Cir. 2000). Our standard of review is
the same in either case. Baldwin, 636 F.3d at 73.

13
recitation of the elements of a cause of action will not do.”
Twombly, 550 U.S. at 555.

On appeal, Warren General Hospital argues that the
District Court erred in finding that it lacked standing under
Illinois Brick to pursue an illegal tying claim. Warren
General urges us to find that it is a “direct purchaser” within
the meaning of Illinois Brick. Warren General does not frame
this argument as one of creating an “exception” to Illinois
Brick; on the contrary, it expressly disavows that approach.
Warren General advances two other arguments. First, it
maintains that the mechanics of the purchasing relationship
between itself, the wholesaler, and Amgen reveal that, in fact,
it is the direct purchaser of Amgen‟s pharmaceutical
products. Alternatively, Warren General contends that it has
direct purchaser standing under Illinois Brick because it is
“the first and only party in the distribution chain to be injured
by Amgen‟s tying scheme.” (Appellant Br. 35).

We find it useful to begin by reviewing the origins of
the direct purchaser doctrine. Section 4 of the Clayton Act
provides that “any person who shall be injured in his business
or property by reason of anything forbidden in the antitrust
laws may sue . . . in any district court of the United States in
the district in which the defendant resides or is found or has
an agent, without respect to the amount in controversy, and
shall recover threefold the damages by him sustained, and the
cost of suit, including a reasonable attorney‟s fee.” 15 U.S.C.
§ 15. The Supreme Court has developed two limitations on
Section 4. See Merican, Inc. v. Caterpillar Tractor Co., 713
F.2d 958, 962-63 (3d Cir. 1983). The first restriction, the
“direct purchaser rule,” limits antitrust actions to suits
brought by parties that are the direct purchasers of the

14
product. See generally Illinois Brick v. Illinois, 431 U.S. 720
(1977). The second limitation asks whether the “injuries [are]
too remote [from an antitrust violation] to give them standing
to sue for damages under § 4.” Blue Shield of Va. v.
McCready, 457 U.S. 465, 476 (1982) (bracketing in
original).8 In this appeal, only the first limitation is at issue.

The direct purchaser rule was first considered by the
Supreme Court in Hanover Shoe, Inc. v. United Shoe Mach.
Corp., 392 U.S. 481 (1968). There, the namesake shoe
manufacturer brought suit against a manufacturer and
distributor of shoe machinery, alleging that the manufacturer
had illegally monopolized the shoe industry, in violation of
Section 2 of the Sherman Act. Id. at 483-84. The defendant
argued that the plaintiff lacked standing to sue under Section
4 of the Clayton Act because the plaintiff had effectively
“passed on” any injury to its customers.9 Id. at 488 n.6. The

8
This is in addition to, and distinct from, the
constitutional requirement of injury in fact. See Associated
Gen. Contractors v. Cal. State Council of Carpenters, 459
U.S. 519, 535 n.31 (1983).
9
In general, “[p]assing on describes the action of an
overcharged buyer who passes the extra expense on to those
who buy from him.” In re Sugar Industry Antitrust Litig.,
579 F.2d 13, 16 n.4 (3d Cir. 1978) (internal quotation marks
omitted). The “passing-on” theory has been invoked in one
of two ways: “Defensive passing on refers to efforts by
antitrust defendants to show that a particular plaintiff was not
injured because he had foisted the inflated price onto his own
customers. Offensive passing on is used to characterize
plaintiffs' strategy proving that an overcharge was imposed

15
Supreme Court rejected that defense, finding that only the
direct purchaser of an illegally overcharged good, and not
others in the chain of manufacturing or distribution, is the
party “injured” within the meaning of Section 4. Id. at 489-
91. The Court based its decision on two conclusions: (1) if
indirect purchasers were permitted to bring antitrust suits, the
offer of proof alleging injury and the extent of that injury
would become extremely complicated, id. at 491-93, and (2)
because indirect purchasers would have “only a tiny stake in a
lawsuit” and have fewer incentives to sue, a doctrine that
allowed only indirect purchasers to bring suit would enable
antitrust violators to “retain the fruits of their illegality,” id. at
493-94.

Illinois Brick tackled the next logical question: may
an indirect purchaser bring suit against an antitrust violator
on the ground that the overcharge cost was passed on to him
by the direct purchaser? 431 U.S. at 726. In that case, the
defendant was a brick manufacturer and distributor who sold
bricks to masonry contractors, who then in turn submitted
bids (relying on those bricks) to general contractors. Id.
These general contractors then created and submitted bids to
final consumers, like the State of Illinois, who became the
indirect purchaser of the bricks. Id. The State of Illinois,
representing a number of customers, sued the original
manufacturer of the bricks under Section 4 of the Clayton Act
alleging that the brick manufacturer had engaged in an illegal
price-fixing conspiracy. Id. at 726-27. The Supreme Court
held that Illinois, which purchased the bricks following “two

upon them by buyers closer to the defendant in the chain of
distribution.” Id. (internal quotations omitted).

16
separate levels in the chain of distribution,” id. at 726, was an
indirect purchaser without standing, id. at 735.

Illinois Brick rests on three policy considerations. The
first policy rationale that the Court drew on was the “serious
risk of multiple liability for defendants.” Id. at 730. The
Court found that permitting the offensive use of the pass-on
theory without the defensive use (prohibited in Hanover
Shoe) would “create a serious risk of multiple liability for
defendants,” since defendants could be sued by indirect
purchasers and direct purchasers. Id. This would
“substantially increase[] the possibility of inconsistent
adjudications and therefore of unwarranted multiple liability.”
Id.

Next, the Court drew attention to the “evidentiary
complexities and uncertainties” involved in ascertaining how
much of the overcharge was “passed on” to the indirect
purchasers. Id. at 732. This problem, which constituted
“[t]he principal basis for the decision in Hanover Shoe,” was
also present in the Illinois Brick factual scenario. Id. at 731-
32. The calculations necessary to determine how much of the
overcharge had been “passed on” would be “long and
complicated” and would have to be “repeated at each point at
which the price-fixed goods changed hands before they
reached the plaintiff.” Id. at 732-33 (internal quotation marks
omitted). Therefore, “the difficulty of reconstructing the
pricing decisions of intermediate purchasers at each step in
the chain beyond the direct purchaser generally will outweigh
any gain in simplicity from not having to litigate the effects of
the passed-on overcharge on the direct purchaser‟s volume.”
Id. at 733 n.13. This is because of the “uncertainties and
difficulties in analyzing price and out-put decisions in the real

17
economic world rather than an economist‟s hypothetical
model.” Id. at 731-32 (internal quotation marks omitted).

Finally, the Court also examined the third policy
rationale: the need for effective enforcement of antitrust law.
Id. at 733-34. Relying on Hanover Shoe, the Court explained
that “the antitrust laws will be more effectively enforced by
concentrating the full recovery for the overcharge in the direct
purchasers rather than by allowing every plaintiff potentially
affected by the overcharge to sue only for the amount it could
show was absorbed by it.” Id. at 735. Therefore, this
rationale also weighed against conferring direct purchaser
status.

Although the direct purchaser rule was grounded in
these policy rationales, the Supreme Court explicitly stated
that its rule was the result of statutory construction. Id. at
736-37 (explaining that “considerations of stare decisis weigh
heavily in the area of statutory construction” and a
“presumption of adherence to our prior decisions construing
legislative enactments would support our reaffirmance of the
Hanover Shoe construction of [Section 4]”). In making this
point, the Court manifested its unwillingness to recognize any
exceptions to the direct purchaser rule, id. at 743-45, warning
that “the process of classifying various market situations
according to the amount of pass-on likely to be involved and
its susceptibility of proof in a judicial forum would entail the
very problems that the Hanover Shoe rule was meant to
avoid,” id. at 744-45.

The final case in this trilogy is Kansas v. UtiliCorp
United, Inc., 497 U.S. 199 (1990). In UtiliCorp, several
public utilities brought suit against a pipeline company and

18
natural gas producers under Section 4 of the Clayton Act,
alleging that the defendants conspired to inflate the price of
the natural gas supplied to public utilities. Id. at 204-05. The
states of Kansas and Missouri, acting as parens patriae,
asserted the same claims on behalf of all persons residing in
the states who purchased the gas. Id. at 204. The defendants
argued that the utility companies—the direct purchasers of
the gas—lacked standing to bring suit because state and
municipal regulations ensured that the utility companies had
“passed on” 100 percent of the alleged overcharge to their
customers. Id. at 205. The states argued that the residential
customers should have standing to bring suit because none of
the policies underlying Hanover Shoe or Illinois Brick were
implicated and because the customers bore the full cost of the
price-fixing conspiracy. Id. at 208.

The Supreme Court acknowledged that “the rationales
of Hanover Shoe and Illinois Brick may not apply with equal
force in all instances” but held that it was “inconsistent with
precedent and imprudent in any event to create an exception
for regulated public utilities.” Id. With regard to the states‟
argument that there would be no litigation over the
apportionment of the overcharge because they “prove the
exact injury to the residential customers,” id., the Court found
that this argument “oversimplified the apportionment
problem,” id. at 209. First, the nature of market forces meant
it was possible that the overcharge still injured the utility,
“even if the utility raise[d] its rates to offset its increased
costs.” Id. Second, “[e]ven if, at some point, a utility can
pass on 100 percent of its costs to its customers, various
factors may delay the passing-on process,” and thus the utility
is also injured by the defendant‟s actions. Id. at 210. The
states also argued Illinois Brick‟s second policy rationale, the

19
risk of multiple recoveries, was inapplicable because the
plaintiffs sought different damages, that is, the residents
“would recover the amount of the overcharge and the utilities
would recover damages for their lost sales.” Id. at 212-13.
The Court roundly rejected this argument, noting that the
“case already ha[d] become quite complicated” and
“involve[d] numerous utilities and other companies . . . under
federal, state, and municipal regulation” and had the potential
to expand to other direct purchasers and unrepresented
consumers. Id. at 213. Any “expansion of the case would
risk the confusion, costs, and possibility of error inherent in
complex litigation.” Id. Finally, the Court concluded by
dismissing the argument that suits by indirect purchasers are
more effective at “promot[ing] the vigorous enforcement of
the antitrust laws.” Id. at 214.

III.

A.

We now turn to Warren General Hospital‟s first
argument: that, in practice and based on the facts in the
Complaint and its cited agreements, the hospital is the direct
purchaser of Amgen‟s products under Illinois Brick. The
hospital argues that the District Court “improperly exalted
form over substance in failing to look beyond the existence of
a wholesaler and ignoring many other facts that are evidence
of [Warren General‟s] purchaser status,” and urges us to hold
that the District Court erred when it found that the hospital
was an indirect purchaser. (Appellant Br. 26).

In support, the hospital directs our attention to the
following features of its relationship with Amgen: (1)

20
“Amgen required [Warren General] to negotiate the purchase
requirements, rebates and thus net prices for Aranesp,
Neulasta, and Neupogen directly with Amgen”, id. at 26-27;
(2) Amgen required Warren General to “only communicate
directly with Amgen on the net costs and on any other issue
regarding these drugs”, id.; (3) the contracts between Warren
General and Amgen were negotiated at the hospital; (4) the
contracts were serviced by an Amgen representative; (5) the
costs and rebate amounts were set by Amgen; (6) the rebate
opportunities for Warren General were not contingent on
AmerisourceBergen‟s purchases; and (7) Amgen paid the
rebates directly to Warren General.

After considering the Complaint, the contracts and
documents referred to therein, and the parties‟ arguments on
appeal, we conclude that the District Court correctly
determined that plaintiff was an indirect purchaser of
Amgen‟s products and, therefore, the Complaint failed to
allege a cause of action under Rule 12(b)(6). The mechanics
of the transactions between Warren General, Amgen, and
AmerisourceBergen reveal Warren General to be an indirect
purchaser of Amgen‟s WBCGF and RBCGF drugs. First,
when Warren General wants to purchase Amgen‟s WBCGF
and RBCGF drugs it places its order through
AmerisourceBergen. Accordingly, AmerisourceBergen
charges Warren General for its order. Second,
AmerisourceBergen maintains the right to set the price of the
drugs it sells, and thus AmerisourceBergen‟s price is not
necessarily the price it paid Amgen. Third, Warren General
physically takes delivery of the shipment from
AmerisourceBergen. Fourth, Warren General pays
AmerisourceBergen directly; it transmits no funds to Amgen.

21
 We agree that the hospital is “the immediate buyer”
from AmerisourceBergen, and does not purchase directly
from the “alleged antitrust violators.” UtiliCorp, 497 U.S. at
207. The purchases go through at least one other stage in the
chain of distribution before reaching Warren General, and
therefore the situation before us is akin to the facts in
UtiliCorp and Illinois Brick. There are no allegations that
AmerisourceBergen is controlled or owned by Amgen and
thus part of the conspiracy; AmerisourceBergen is a publicly
traded company. (Appellee Br. 12). In light of this record,
there is no way of getting around the conclusion that Warren
General is the second purchaser in the chain of distribution.

The facts that Warren General marshals in its support
do not persuade us otherwise. We assume the truth of the
Complaint‟s allegations that Amgen and Warren General
negotiated the value of the rebates directly, that those
negotiations took place on the hospital‟s property, that
Warren General communicated exclusively with Amgen
about any cost and issues relating to the drugs, that Warren
General was “serviced” by an Amgen representative, and that
Warren General‟s “rebate opportunities” were not contingent
on AmerisourceBergen‟s purchases. Nevertheless, these facts
do not transform Warren General into a direct purchaser. At
best, they reveal that there were some direct interactions
between Amgen and the hospital relating to the rebate
program and the volume of Amgen drugs the hospital
required.

The only direct financial transaction between Amgen
and Warren General was Amgen‟s payment of the rebates
directly to Warren General. Even this financial transaction
does not confer direct purchaser standing on the hospital. The

22
value of the rebates was transmitted after the purchases had
concluded. The key question in an illegal tying claim is
whether the plaintiff purchased the tied product from the
antitrust defendant. In this case, the hospital simply did not.
The situation is similar to one that arises when a
customer buys, for example, a bottle of shampoo from a
supermarket. The shampoo manufacturer may offer a rebate
to the customer that the customer must submit directly to the
manufacturer. Yet it cannot be said that the customer
purchased the shampoo from the manufacturer just because it
subsequently received a rebate from the manufacturer. The
customer paid the price of the shampoo directly to the
supermarket and received the shampoo from the supermarket.
The customer is an indirect purchaser of the shampoo even if
the manufacturer set the price of the rebate or communicated
with the customer regarding his purchase.

In analyzing the mechanics of the purchasing
relationship between Amgen, Warren General, and
AmerisourceBergen, our decision in Howard Hess Dental
Laboratories Inc. v. Dentsply International, Inc., 424 F.3d 363
(3d Cir. 2005), is instructive. In that case, the plaintiffs were
dental laboratories that manufactured dentures using artificial
teeth made by Dentsply. Id. at 366. The plaintiffs brought a
class action on behalf of themselves and other laboratories
that manufactured dentures, asserting that Dentsply and its
dealers conspired to monopolize and fix prices in violation of
Section 2 of the Sherman Act and Sections 3 and 4 of the
Clayton Act. Id. The complaint alleged that the laboratories
“purchased [the teeth] through Dentsply Dealers”. Id. at 372.
We held that the dental laboratories were indirect purchasers
of Dentsply‟s products and thus lacked standing under Illinois
Brick. Id. at 371. Plaintiffs also sought direct purchaser

23
standing “for teeth drop shipped directly from Dentsply to the
labs.”10 Id. at 372. With regard to that allegation, we held
that plaintiffs could not “avoid Illinois Brick by claiming they
were direct purchasers of drop shipments when their
complaint specifically alleges that they did not directly
purchase from Dentsply.” Id. at 372-73.

Moreover, even assuming that “some of the teeth are
drop shipped directly from Dentsply,” that did not change
“the economic substance of the transaction.” Id. at 373. The
facts still made out that the laboratories were indirect
purchasers because:

[T]he dealers still make the sale to Plaintiffs
and Dentsply makes the sale to the dealers.
Plaintiffs pay the dealers their usual price, the
dealers take their profit, and then the dealers
pay Dentsply. While it is true that the dealers
do not take physical possession of the teeth,
this is nothing but a formal difference from the
typical transaction. Thus, even as to teeth drop
shipped directly from Dentsply to the labs,
Plaintiffs are indirect purchasers potentially
subject to Illinois Brick.

10
Drop shipping occurs when “a dealer does not have
certain teeth in stock or could not fulfill a [customer]‟s order
for some other reason and asks Dentsply to ship the teeth
directly to a [customer]. When teeth are drop shipped, the
dealer never has physical custody of them, but it does bill the
[customer] for the teeth, collect payments from the
[customer], and pay Dentsply.” Howard Hess, 424 F.3d at
367.

24
Id. at 373 (internal citation omitted). The transactions
between Warren General, AmerisourceBergen, and Amgen
share similar features. AmerisourceBergen “make[s] the sale
to Plaintiff[]” while the antitrust defendant “makes the sale to
the dealer[].” Warren General pays the middleman its price,
who “take[s] [its] profits,” and finally AmerisourceBergen
“pay[s]” Amgen. Id. Moreover, Warren General takes
“physical possession” of the drugs from AmerisourceBergen,
and unlike the situation in Howard Hess, there are no direct
shipments between Amgen and the hospital.

Warren General maintains that the Enhanced
Momentum II Contract, which is cited in the Complaint,
reveals the existence of a contract “between Amgen and
[Warren General] for the purchase of Amgen‟s drugs.”
(Appellant Br. 29) (emphasis added). The Enhanced
Momentum II Contract, dated March 31, 2005, sets forth the
WBCGF “Rebate Opportunit[ies]” available to Warren
General based on its net purchases of RBCGF. (JA 220).
Again, there is no doubt that Amgen and Warren General had
some direct interactions. However, in our view the Enhanced
Momentum II Contract does not confer direct purchaser
standing on Warren General. The Enhanced Momentum II
Contract sets forth the parameters of the rebate program. It is
not a contract for purchases. Moreover, Warren General‟s
status as an indirect purchaser is borne out by another
document cited in the Complaint, the Amgen Portfolio
Contract. This sample letter agreement sets forth the
standards for “physician practice[s]” to participate in
Amgen‟s rebate program. (JA 43). The agreement reveals
the role of the middleman wholesaler as an intermediary
between Amgen and Warren General. The agreement notes

25
that qualifying physician practices are represented by “a
group purchasing organization” which “acts on behalf of its
member[s].” (JA 43). It notes that the physician practices
and the GPO have a separate agreement and states the
physician practice “has engaged Purchasing Group as an
exclusive agent to provide purchasing opportunities for its
eligible members.” (JA 43) (emphasis added).

On appeal, Warren General Hospital also asks us to
consider several documents that the District Court
“overlooked.” (Appellant Br. 30). This argument is
unavailing. As a threshold matter, we note that, because
standing was decided at the motion to dismiss stage, the
District Court properly limited itself to the pleadings
contained in the Complaint and the agreements cited therein.
See West Penn, 627 F.3d at 97. Moreover, assuming that the
District Court had considered these documents, they would
not have resulted in a different outcome.11

11
This evidence consists of: (1) a sample 2004
“Physician Clinic Agreement,” referring to the “purchase” of
the drugs by “Physician Practice[s];” (2) a 2008 “Physician
Clinic Agreement” stating that any conflict between the
clinics relating to “any purchaser order or invoice” was
controlled by the clinic‟s Agreement with Amgen; (3) a 2007
letter from Amgen to the Centers for Medicare and Medicaid
Services discussing a proposed rule that included an
attachment where Amgen referred to patients as “customers”;
(4) a 2007 letter sent by Amgen to class members that address
doctors, clinics, and hospitals as “valued customer[s],” and
(5) a template contract between Amgen and a sample clinic
that refers to “purchasing opportunities” for eligible members
and “purchases” by physicians. (Appellant Br. 31-33)

26
 Finally, Warren General Hospital directs us to two
cases that, in its view, reveal that a more flexible approach in
determining direct purchaser status is appropriate. See
Gulfstream III Assocs., Inc. v. Gulfstream Aerospace Corp.,

(emphases omitted) (internal quotation marks omitted).
Warren General also draws our attention to statements
Amgen made in Ortho Biotech Products, LP., v. Amgen Inc.,
Case No. 05-cv-4850 (D.N.J.), an antitrust suit Aranesp
manufacturer Ortho brought against Amgen.

These various documents do not give rise to direct
purchaser standing. First, there is no allegation that Warren
General was a party to these agreements or contracts.
Moreover, although the contracts show that Amgen permitted
physician clinics to purchase products either directly from
Amgen or from “Authorized Wholesalers,” Warren General
concedes that all of its purchases were through a wholesaler.
Therefore, even if we considered those agreements, they
would not support the hospital‟s position. Second, we
question the relevance of Amgen‟s characterization of its
relationship with class members in promotional materials or
correspondence to an agency in a different context. Even if
Amgen considered hospitals and clinics to be “customers,”
that would not negate the fact that Amgen sold its products to
hospitals and clinics through an intervening customer—the
middleman agency. We find for the same reason that
Amgen‟s use of the word “customer” or “purchaser” in
describing hospitals and clinics, or its failure to mention
AmerisourceBergen in responding to Ortho‟s complaint in a
separate lawsuit, does not contradict our conclusion that
Warren General is an indirect purchaser.

27
995 F.2d 425 (3d Cir. 1993); In re Mercedes-Benz Anti-Trust
Litig., 364 F. Supp. 2d 468 (D.N.J. 2005). These cases are
distinguishable. In Gulfstream III, the plaintiff signed an
agreement to purchase an aircraft, but assigned its purchase
agreement to another party before the plane was ready for
delivery. 995 F.2d at 430. We held that the plaintiff was a
direct purchaser under Illinois Brick because, despite
subsequently assigning that right to another party, he had
signed the original purchase agreement and thus “remained
contractually bound to pay the [aircraft‟s] total purchase price
up to and including the date of delivery.” Id. Thus, he began
his relationship as a direct purchaser; the issue was whether
he retained that status.

Whether Mercedes-Benz was properly decided or not,
it is also distinguishable. There, plaintiffs were lessees of
Mercedes-Benz automobiles who sued Mercedes-Benz and its
dealers for price-fixing the costs of repair parts. 364 F. Supp.
2d at 476-78. The district court held that the lessees were
direct purchasers because of “[t]he mechanics of how a
leasing transaction is initiated,” id. at 480, namely the car
lessees negotiated the monthly lease payments directly with
the dealership, made its first payments to the dealership, and
received the car from the dealership. Id. at 472. In the matter
before us, Warren General did not begin its relationship with
Amgen as a direct purchaser. Although Warren General and
Amgen negotiated the terms of the rebate contracts, plaintiff
never placed product orders with Amgen, never paid Amgen
directly, and never received any drugs directly from Amgen.

For these reasons, we hold that Warren General
Hospital is an indirect purchaser of Amgen‟s WBCGF and
RBCGF drugs and therefore the District Court did not err in

28
dismissing plaintiff‟s complaint for lack of standing. This
result is in line with numerous other cases from this Court
recognizing that standing lies with the direct purchaser and
not any subsequent downstream purchaser. See Recordex, 80
F.3d at 852 (plaintiff clients whose attorneys had purchased
copies of clients‟ records from photocopying services were
indirect purchasers of the photocopies, and thus did not have
standing under “the absolute bar of the „direct purchaser‟
rule”); Link v. Mercedes-Benz of N. Am., Inc., 788 F.2d 918,
929-33 (3d Cir. 1986) (customers of dealerships who alleged
that Mercedes-Benz had forced its dealers to purchase parts
for repairing vehicle at fixed prices were indirect purchasers
of Mercedes-Benz parts); Mid-West Paper Prods. Co. v.
Cont‟l Grp., Inc., 596 F.2d 573 (3d Cir. 1979) (plaintiffs that
purchased “consumer bags” from wholesaler middleman
lacked standing to bring an antitrust action against
manufacturer of bags).

B.

We now turn to Warren General Hospital‟s argument
that it has antitrust standing because it is the first injured party
in the chain of distribution. The hospital submits that Illinois
Brick—and the policies underlying the direct purchaser
rule—confer standing on the first harmed direct purchaser,
not just the direct purchaser. Applying that theory here, the
hospital advances the following facts: (1) Warren General
bore the full cost of the overcharge caused by Amgen‟s rebate
scheme; (2) the wholesaler was not affected by the
overcharge and was never subject to or targeted by the illegal
tying scheme; and (3) the wholesaler was not injured by
Amgen‟s actions. Warren General further submits that,

29
because AmerisourceBergen was not injured by Amgen‟s
actions, it would not have standing to sue Amgen.

It is a basic tenet of antitrust law that a cause of action
will not lie if the plaintiff has not been harmed. See
Gulfstream III, 995 F.2d at 429. However, the hospital‟s
argument conflates the different components of antitrust
standing: the statutory requirement contained in Section 4 that
the plaintiff be the direct purchaser as set forth in Illinois
Brick and the requirement that the plaintiff have suffered a
recognizable injury. See McCready, 457 U.S. at 476
(“Analytically distinct from the restrictions on the § 4 remedy
recognized in . . . Illinois Brick, there is the conceptually
more difficult question of which persons have sustained
injuries too remote [from an antitrust violation] to give them
standing to sue for damages under § 4.”) (bracketing in
original) (internal citation and quotation marks omitted); see
also Gulfstream III, 995 F.2d at 429 (“[T]he focus of the
doctrine of „antitrust standing‟ is somewhat different from
that of standing as a constitutional doctrine. Harm to the
antitrust plaintiff is sufficient to satisfy the constitutional
standing requirement of injury in fact, but the court must
make a further determination whether the plaintiff is a proper
party to bring a private antitrust action.”) (quoting Associated
Gen. Contractors v. Cal. State Council of Carpenters, 459
U.S. 519, 535 n.31 (1983)).

The question in this case is whether Warren General is
a direct purchaser under Illinois Brick, and we hold that it is
not. Hanover Shoe and its progeny did not resolve what party
was a direct purchaser by calculating exactly where the harm
lay. In fact, the Court‟s discussion in those cases of the
policy rationales underpinning the rule manifests the Court‟s

30
intent to avoid linking direct purchaser status to injury
calculations and determinations. In UtiliCorp, the consumer
plaintiffs also argued that the public utility (the direct
purchaser) had not been harmed by the antitrust defendant‟s
actions, and that consumers had borne the full brunt of the
injuries, thus justifying an exception to the Illinois Brick rule.
The Court highlighted the need to apply the rule consistently:

[T]he process of classifying various market
situations according to the amount of pass-on
likely to be involved and its susceptibility of
proof in a judicial forum would entail the very
problems that the Hanover Shoe rule was meant
to avoid. The litigation over where the line
should be drawn in a particular class of cases
would inject the same „massive evidence and
complicated theories into treble-damages
proceedings, albeit at a somewhat higher level
of generality.

In sum, even assuming that any economic
assumptions underlying the Illinois Brick rule
might be disproved in a specific case, we think
it an unwarranted and counterproductive
exercise to litigate a series of exceptions.
Having stated the rule in Hanover Shoe, and
adhered to it in Illinois Brick, we stand by our
interpretation of § 4.

497 U.S. at 216-17 (citations omitted).

In support of its more expansive reading of Illinois
Brick, Warren General directs us to Sports Racing Services,

31
Inc. v. Sports Car Club of America, Inc., 131 F.3d 874 (10th
Cir. 1997). Warren General submits that in Sports Racing,
“the plaintiff was not barred under Illinois Brick because he
was „the first person with a cause of action‟ under the illegal
tying scheme, and there was „no other person who could
assert a claim for illegal tying as a purchaser.‟” (Appellant
Br. 38). We are not persuaded by this reading of Sports
Racing, which in any case does not bind this Court. In the
section plaintiff relies on, the Tenth Circuit is describing the
direct purchaser cases as “recogniz[ing] standing . . . in the . .
. direct victim of the anticompetitive activity and the first
person with a cause of action.” Id. at 889. In describing the
Illinois Brick rule, the court was simply equating the “direct
victim” as the “first person with a cause of action.” Id. The
court‟s later discussion makes this clear: “The Illinois Brick
rule selects the better plaintiff between two possible types of
plaintiffs—direct purchasers and indirect purchasers. The
Court chose the direct purchaser primarily to simplify
damages determinations and limit the possibility of multiple
recovery against the defendant.” Id.

Moreover, the holding of Sports Racing does not
contradict our holding in this case. There, the plaintiff John
Freeman asserted both an illegal tying claim, based on the
defendant‟s tying of “a racer‟s purchase of [the defendant‟s]
racing services . . . to the purchase of cars and parts sold by
[the defendant‟s exclusive dealerships],” and a monopoly
claim alleging that the defendant created a monopoly in car
parts. Id. at 879. The Tenth Circuit agreed that Freeman was
“not a direct purchaser from defendants of the tied product
(the cars and parts)” but was a direct purchaser of the tying
product, the car racing services. Id. at 887. However, the fact
that Freeman bought the tied product from a third party was

32
not fatal to his tying claim, because the defendants required
Freeman to purchase the tied product “indirectly through a
[sub-dealership] supplied by [the defendant] rather than
through an independent source.” Id. Thus, this did not
present “a typical tying situation.” Id. In this case, of course,
Warren General buys neither the tying product nor the tied
product from Amgen; the facts show that the hospital buys
them directly from an “independent source.”

Finally, we find that the three policy rationales
sustaining the direct purchaser rule are present in this case.
Warren General argues that there is no risk of duplicative
recovery in this case, because AmerisourceBergen was not
injured by the illegal tying scheme and has no standing to sue.
However, we are not persuaded by plaintiff‟s assurances that
AmerisourceBergen was not injured by Amgen‟s rebate
program. The second policy rationale underlying the rule
relates to the “evidentiary complexities and uncertainties
involved in ascertaining the portion of the overcharge that the
direct purchasers had passed on to the various levels of
indirect purchasers.” Howard Hess, 424 F.3d at 369-70.
Warren General contends that we can easily determine how
much of the overcharge created by the illegal tying scheme
was “passed on” to the hospital: the entire cost of the
overcharge was passed on because AmerisourceBergen‟s role
was to set a market price for WBCGF and RBCGF drugs and
then process Warren General‟s orders. Therefore, so Warren
General contends, Amgen‟s rebate program only affected the
ultimate price that Warren General paid for the drugs.

This argument oversimplifies the injury calculation. In
its direct purchaser cases, the Supreme Court has consistently
emphasized the difficulty in calculating how market forces

33
work on the different purchasers and sellers in an economic
system. “The principal basis for the decision in Hanover
Shoe was the Court‟s perception of the uncertainties and
difficulties in analyzing price and out-put decisions in the real
economic world rather than an economist‟s hypothetical
model, and of the costs to the judicial system and the efficient
enforcement of the antitrust laws of attempting to reconstruct
those decisions in the courtroom.” Illinois Brick, 431 U.S. at
731-32 (internal citations and quotation marks omitted). In
UtiliCorp, the plaintiffs also argued that apportioning
damages would be simple; because the utility company
“passed on” 100 percent of the overcharge, its customers
were injured by the whole amount of the overcharge.
Although the Court seemed to agree that the apportionment
question was easier in that case, it nonetheless noted that the
apportionment calculation presented serious difficulties:

[W]e do not know whether the [plaintiff
UtiliCorp United, a public utility corporation]
could have raised its prices prior to the
overcharge. Its customers [the indirect
purchasers] may have been willing to pay a
greater price . . . . To the extent that [UtiliCorp
United] could have sought and gained
permission to raise its rates in the absence of an
overcharge, at least some portion of the
overcharge is being borne by it; whether by
overcharge or by increased rates, consumers
would have been paying more for natural gas
than they had been paying in the past. Because
of this potential injury, [UtiliCorp United] must
remain in the suit. If we were to add indirect
purchasers to the action, we would have to

34
 devise an apportionment formula. This is the
very complexity that Hanover Shoe and Illinois
Brick sought to avoid.

497 U.S. at 210.

Because of the complicated interplay between market
forces, the possibility that the wholesaler was harmed by
defendant‟s actions exists even if the majority of the injury is
borne by the indirect purchaser. The prices charged by the
wholesaler are typically set by demand for the products it
sells. Mid-West Paper Prods., 596 F.2d at 584 (“As noted in
Hanover Shoe, “(a) wide range of factors influence a
company‟s pricing policies. . . . [P]ricing decisions are [also]
based on various other considerations, such as marketing
strategy and elasticity of demand.”). Therefore, when a
producer sets certain prices that change demand for its goods,
then the wholesaler‟s sales, prices, and profits may also be
affected. This is also true even though Warren General
received the earnings from the rebates after it paid for the
products, because Amgen would need to determine how high
a price the market would tolerate, and what to set the rebates
at in order to maximize purchases of its RBCGF and WBCGF
drug. All of these factors would make it difficult to
determine the extent of Warren General and
AmerisourceBergen‟s injuries, and, as the UtiliCorp Court
explained, consistent application of the direct purchaser rule
is necessary to avoid being mired in these difficult
calculations. 497 U.S. at 211.

We find the Ninth Circuit‟s decision in Delaware
Valley Surgical Supply Inc. v. Johnson & Johnson, 523 F.3d

35
1116 (9th Cir. 2008) to be instructive.12 In that case, a
hospital that purchased Johnson & Johnson medical products
through a medical supply company brought price-fixing and
monopoly claims under Section 4 of the Clayton Act. Id. at
1118, 1122-23. The hospital was a member of a GPO; the
GPO negotiated an agreement with Johnson & Johnson
setting the prices for certain medical products on the
hospital‟s behalf. Id. at 1119. Using those prices, the
hospital negotiated its own contract with Johnson & Johnson,
but ultimately purchased the products through a separate
contract with a wholesaler. Id.

The Ninth Circuit rejected the hospital‟s argument that
this independent contractual relationship with Johnson &
Johnson gave it antitrust standing. Because the hospital
purchased the products through a GPO, the court was bound
by the “sensible and straightforward” “bright line rule” set
forth in Illinois Brick. Id. at 1122. For two other reasons, the
court also rejected the hospital‟s request for “a new rule . . .

12
Warren General has attempted to distinguish cases
arising from price-fixing antitrust claims from tying claims,
on the ground that the direct purchaser rule has less traction in
the latter. The direct purchaser rule has its origins in statutory
construction of Section 4 of the Clayton Act, Illinois Brick,
431 U.S. at 736-37. Therefore, as the hospital conceded at
oral argument, it applies here. See also Merican, 713 F.2d at
967 (refusing to limit Illinois Brick to cases of horizontal
price-fixing). To the extent that Warren General argues that
the harm caused by an illegal tying claim is distinct from the
harm caused by a price-fixing conspiracy, we find that
argument unpersuasive, given the possible injuries in this
case.

36
better attuned to . . . health care providers and
manufacturers.” Id. at 1123. First, it explained UtiliCorp
foreclosed the possibility of any “leeway to make a policy
determination on a case-by-case basis . . . when there are
special business arrangements.” Id. at 1124. Second,
conferring standing on the hospital would offend the policy
rationales underlying the rule. Contrary to the hospital‟s
assertions, the “distributor is not a completely irrelevant
economic actor” in the economic transaction, and therefore
the risk of multiple liability and complicated economic injury
calculations was present. Id. The price increases created by
the defendant‟s anticompetitive practices might affect the
demand for the products the wholesaler sells, even if the price
increase is borne by the indirect purchaser. Id. Apportioning
the effect of the overcharge would continue to “force courts
to engage in complex factual inquiries” that the direct
purchaser rule was created to avoid. Id.

Therefore, because of the possibility that
AmerisourceBergen was injured by Amgen‟s actions, we find
that the risk of multiple liability is also present. Moreover,
even if we agreed that the middleman purchaser was unable
or unwilling to bring a suit, that conclusion does not
necessarily weigh in favor of giving the indirect purchaser
standing. The Supreme Court confronted a similar possibility
in Illinois Brick, when it recognized the possibility that direct
purchasers would “refrain from bringing a treble-damages
suit,” in that case “for fear of disrupting relations with their
suppliers.” 431 U.S. at 746. Nonetheless, the Court found
that application of the direct purchaser rule was warranted,
because “on balance . . . the legislative purpose in creating a
group of private attorneys general to enforce the antitrust laws
. . . is better served by holding direct purchasers to be injured

37
to the full extent of the overcharge paid by them than by
attempting to apportion the overcharge among all that may
have absorbed a part of it.” Id. (internal quotation marks
omitted). In Merican, we were confronted with a situation
where the direct purchaser had executed an affidavit stating
that it had not suffered any injuries from the allegedly illegal
antitrust action. 713 F.2d at 968-99. Even there, we refused
to extend standing to the indirect purchaser in part because
Illinois Brick had “recognized . . . that it was possible that
direct purchasers might not sue their suppliers in all cases,”
yet still held that only direct purchasers had standing under
Section 4. Id. at 969.

Third, given the complexities of apportionment and
the possibility of multiple recovery, the third Illinois Brick
rationale, which prioritizes efficient enforcement of the
antitrust laws, also weighs in favor of applying the direct
purchaser rule.13
Ultimately, whether all of the policy rationales
underpinning Illinois Brick are exactly replicated in the case
before us is not dispositive. The UtiliCorp Court expressly
recognized that “[t]he rationales underlying Hanover Shoe

13
We take note of Warren General‟s argument that
AmerisourceBergen would not have standing to bring an
antitrust action under Section 4, because it was not injured by
Amgen‟s actions. However, that issue is not before us and
the existence or non-existence of AmerisourceBergen‟s
injuries was not considered by the District Court, thus there is
no record for us to review. Therefore, we do not find that
only a suit brought by Warren General would enforce the
antitrust laws.

38
and Illinois Brick will not apply with equal force in all cases.”
497 U.S. at 216. Yet even then, the rule applies. Id.

While we are sympathetic to Warren General‟s
complaints regarding Amgen‟s rebate program, our
examination of the principles animating Hanover Shoe,
Illinois Brick, and UtiliCorp confirm that application of the
Court‟s bright line rule is appropriate in this case.

IV.

For all of the foregoing reasons, the judgment of the
District Court is affirmed.

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