PharMax, a pharmaceutical manufacturer, sells its drugs for use in not-for-profit hospitals at a lower wholesale price than the price given to commercial pharmacies. CPC Inc., a commercial pharmacy chain, files suit alleging a violation of the price discrimination laws. What is the likely outcome of the suit?

CPC Inc. will probably lose the suit.

Explanation:

The Robinson-Patman Act contains the regulations that govern price discrimination. The purpose of this Act is to prevent unfair competition. The Act sets forth that a business must sell its products at the same price regardless of who the purchaser is. However, in the question at issue, there is a not-for-profit hospital involved, which is the buyer of the drugs. In this case, PharMax may resort to the Non-Profit Institutions Act (NPIA), which is the exemption to the Robinson-Patman Act referred to above, and claim that according to the NPIA, pharmaceutical manufacturers are entitled to sell hospitals, libraries and universities (non-profit institutions), discounted products. As a consequence, the hospital shall receive the drugs at a lower price than that charged to other retail pharmacy.

To sum up, there is no violation of the price discrimination laws and CPC Inc. will lose the lawsuit.