Abbott Laboratories v. Portland Retail Druggists
425 U.S. 1 (1976)

Annotate this Case

U.S. Supreme Court

Abbott Laboratories v. Portland Retail Druggists, 425 U.S. 1 (1976)

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

No. 74-1274

Argued December 16, 1975

Decided March 24, 1976

425 U.S. 1

Syllabus

Respondent, as assignee of more than 60 commercial pharmacies, brought this antitrust action against petitioner manufacturers, charging that, by selling drugs to certain hospitals, each of which has a pharmacy, at prices lower than those charged to respondent's assignors, petitioners violated the Robinson-Patman Act, which makes it unlawful for one engaged in commerce to discriminate in price between different purchasers of like commodities where "the effect . . . may be substantially to lessen competition." 15 U.S.C. § 13(a). Petitioners claimed that the challenged sales were exempt under the Nonprofit Institutions Act, which, inter alia, excludes from the application of the Robinson-Patman Act nonprofit hospitals' "purchases of their supplies for their own use." § 13c. The District Court ruled on the basis of the evidence adduced that the hospitals involved were nonprofit, and that their drug purchases were "for their own use" within the meaning of § 13c, and granted summary judgment in favor of petitioners. The Court of Appeals vacated and remanded. While agreeing that the designated hospitals were nonprofit, that court concluded that a hospital's drugs are purchased for its "own use" only where the hospital can be said to be the consumer, i.e.,

Page 425 U. S. 2

where dispensations are to inpatients and emergency facility patients.

Held:

1. Section 13c does not exempt all of a nonprofit hospital's drug purchases from the Robinson-Patman Act, but the exempting language must be construed as applying to what reasonably may be regarded as use by the hospital in the sense that such use is part of and promotes the hospital's intended institutional operation in the care of its patients. Pp. 425 U. S. 8-14.

2. Applying the foregoing rule, drug purchases by a nonprofit hospital are exempt a being for the hospital's "own use" if the drugs are dispensed:

(a) To the inpatient for use in his treatment at the hospital; to the patient admitted to the hospital's emergency facility for use in his treatment there; or to the outpatient for personal use on the hospital premises. Such dispensations are part of the hospital's basic function. P. 425 U. S. 14.

(b) To the inpatient, or to the emergency facility patient, upon his discharge, and to the outpatient, all for off-premises personal use, provided these take-home dispensations are for a limited and reasonable time, as a continuation of, or supplement to, hospital treatment. Pp. 425 U. S. 14-15.

(c) To the hospital employee or student for personal use, or for the use of his dependent. Each is a member of the hospital family and dispensation to him furthers the hospital's functions. P. 425 U. S. 16.

(d) To the physician staff member for his personal use or the use of his dependent. Here the considerations are similar to those in (c), supra. Pp. 425 U. S. 16-17.

3. Purchases for the following types of dispensation are not exempt, since they are not for the hospital's "own use":

(a) To the former patient, by way of a renewal of a prescription given when he was an inpatient, an emergency facility patient, or an outpatient. The purpose of the exemption has been exceeded where the connection with the hospital has reached the refill stage. Pp. 425 U. S. 15-16.

(b) To nondependents of those covered in

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