How can a monopoly-creating acquisition that resulted in a 1,300% price increase not be a violation of antitrust law?

That's what many people within Washington's antitrust circles want to know following the Federal Trade Commission's decision on Jan. 20 not to seek Supreme Court review of lower-court rulings rejecting its bid to unwind Lundbeck Inc.'s 2006 acquisition of the only competitor to its treatment for a potentially fatal birth defect. FTC Chairman Jon Leibowitz and his fellow commission Democrats called the outcome of the case "profoundly wrong."

But San Francisco-based Al Pfeiffer Jr., the Latham & Watkins LLP attorney who defended Lundbeck, insists it's the Beltway consensus that's wrong. "I'm somewhat confounded by that reaction," Pfeiffer says.

Many Washington lawyers disagreed with a district court's finding that two drugs, both used to treat a condition known as patent ductus arteriosus, or PDA, didn't actually compete because price played little role when physicians decided which to prescribe. In a unsuccessful pitch to the U.S. Court of Appeals for the 8th Circuit in St. Louis, the FTC argued that the district judge ignored previous court rulings acknowledging that price competition is not the only consideration in determining whether two products are competitors.

But Pfeiffer counters that argument wasn't made at the district court level. "Seeing the arguments now being forwarded by the FTC is really remarkable in light of how the case was actually litigated," Pfeiffer says. "The only thing the court had to address was market definition, and the FTC failed to prove the drugs competed, in part because it didn't engage in any meaningful economic analysis."

Pfeiffer contends that price increases would have happened with or without Lundbeck's 2006 acquisition of NeoProfen. He notes that when Lundbeck bought its first PDA drug as part of several it acquired from Merck & Co. in 2005, Merck had put the drugs on the block because it wanted to free up manufacturing space. Merck would have had to build a new manufacturing facility if it had kept the drug in its stable, causing the company to charge more. The purchase of NeoProfen had little bearing on what Lundbeck would charge for PDA treatments, Pfeiffer says.

Pfeiffer, a litigator with 20 years' experience, hasn't handled a lot of merger cases but has tried a number of dominant-firm and other types of antitrust lawsuits. He joined Latham five years ago from Bingham & McCutchen LLP. "I've been practicing on the litigation side my whole career," says Pfeiffer, who earned his J.D. from Yale University in 1985. He's also litigated antitrust cases against the big telecom companies on behalf of competitive local exchange carriers, or CLECs.

"Having represented CLECs from the plaintiff side has been a help defending other clients, especially when it comes to identifying where the burden of proof lies," he says.