Abbott Laboratories v. Portland Retail Druggists Assn., Inc.

PETITIONER: Abbott Laboratories
RESPONDENT: Portland Retail Druggists Assn., Inc.
LOCATION: Vermillion Police Station

DOCKET NO.: 74-1274
DECIDED BY: Burger Court (1975-1981)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 425 US 1 (1976)
ARGUED: Dec 16, 1975
DECIDED: Mar 24, 1976

ADVOCATES:
James H. Clarke -
Roger Tilbury -

Facts of the case

Question

Media for Abbott Laboratories v. Portland Retail Druggists Assn., Inc.

Audio Transcription for Oral Argument - December 16, 1975 in Abbott Laboratories v. Portland Retail Druggists Assn., Inc.

Audio Transcription for Opinion Announcement - March 24, 1976 in Abbott Laboratories v. Portland Retail Druggists Assn., Inc.

Warren E. Burger:

The judgement and opinion of the Court in 74-1274, Abbott Laboratories v. Portland Retail Druggists Association will be announced by Mr. Justice Blackmun.

Harry A. Blackmun:

The plaintiff in this case is the assignee of some 60 commercial pharmacies in Portland, Oregon, and it brought this antitrust action against Abbott Laboratories and the 11 other pharmaceutical manufacturers.

The charge was that by selling drugs to hospitals, each of which has a pharmacy, at prices lower than the manufacturers charge other retail druggists in the Portland area, the manufacturers violated the Robinson-Patman Act.

That act makes it unlawful for one engaged in commerce to discriminate in price between purchasers of like commodities where the effect may be substantially to lessen competition.

There is however another statute called the Nonprofit Institutions Act, which excludes from the Robinson-Patman Act, purchases by nonprofit hospitals of their supplies for their own use.

The District Court ruled that the hospitals involved were nonprofit and that all their drug purchases were for their own use within the meaning of the Nonprofit Institutions Act.

It granted summary judgment for the manufacturers.

On appeal, the Ninth Circuit vacated and remanded concluding that a hospital's pharmaceuticals are purchased for its own use only where dispensations are to inpatients and to emergency facility patients.

We take an immediate view.

We hold that the Nonprofit Institutions Act does not exempt all of the hospital's drug purchases but that the exempting language must be construed as applying to what reasonably may be regarded as use by the hospital in the sense that the use is a part of and promotes the hospital's intended institutional operation in the care of its patients.

When we apply this standard, we hold that drug purchases by a nonprofit hospital are exempt as being for the hospital's own use.

If the drugs are dispensed to the inpatient for use in his treatment at the hospital, or to the emergency facility patient for use there, or to the outpatient for personal use on the premises, or to the inpatient, or emergency facility patient, upon his discharge, and to the outpatient for off-premises personal use, provided that these take-home dispensations are for a limited and reasonable time, also to the hospital employee or student for personal use, or the use of his dependent, and to the physician staff member for his personal use or the use of his dependent.

We hold that purchases for the following types are not exempt since they are not for the hospital's own use; to the former patient, by way of a renewal or refill, or to non-dependents of the employee or student or physician staff member, or to the walk-in customer.

Now this disposition of course creates some possible problems for the hospital pharmacy.

What it may do is not to dispense drugs to any situation outside the exemption, or it can establish a record-keeping procedure segregating the nonexempt from the exempt use.

Accordingly, the judgment of the Court of Appeals is vacated and the case is remanded for further proceedings consistent with the opinion that has been filed by the Clerk today.

I am authorized to say that Mr. Justice Marshall while joining the opinion has filed a separate concurring opinion.

Mr. Justice Stewart has filed a dissenting opinion and he is joined therein by Mr. Justice Brennan.

Mr. Justice Stevens took no part in the consideration or decision of this case.

Warren E. Burger:

Thank you, Mr. Justice Blackmun.