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Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 

---

In the 

United States Court of Appeals 

For the Seventh Circuit ____________________ 

No. 18-2725 

SHARIF PHARMACY, INC., 

Plaintiff-Appellant, 

v.

PRIME THERAPEUTICS, LLC, 

Defendant-Appellee. 

____________________ 

Appeal from the United States District Court for the 

Northern District of Illinois, Eastern Division. 

No. 1:17-cv-03464 — Jorge L. Alonso, Judge. 

____________________ 

No. 18-3003 

HELEN J. SCALE, et al., 

Plaintiffs-Appellants, 

v.

PRIME THERAPEUTICS, LLC, et al., 

Defendants-Appellees. 

____________________ 

Appeal from the United States District Court for the 

Northern District of Illinois, Eastern Division. 

No. 1:17-cv-06837 — Robert W. Gettleman, Judge. 

____________________ 

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2 Nos. 18-2725 & 18-3003 

SUBMITTED OCTOBER 7, 2019 — DECIDED FEBRUARY 24, 2020*

____________________ 

Before KANNE, HAMILTON, and BARRETT, Circuit Judges. 

HAMILTON, Circuit Judge. The issue in these consolidated 

appeals is whether plaintiffs in two similar cases have stated 

viable claims under Sections 1 or 2 of the Sherman Act, 15 

U.S.C. §§ 1 and 2. They have not. We affirm the judgments of 

both district courts dismissing the cases on the plaintiffs’ 

pleadings, though in one case with slight modifications. 

I. The Prime Network and the Plaintiffs

Defendant Prime Therapeutics LLC is a pharmacy benefits 

manager. Plaintiffs Sharif Pharmacy, Inc. and J&S Community Pharmacy, Inc. were both members of the Prime pharmacy network. Under Medicare, Medicaid, and private health 

insurance plans, many patients had significant financial incentives to buy their prescription drugs from pharmacies 

within the network. Prime terminated both Sharif and J&S 

from the network after audits uncovered, in Prime’s view, irregularities in invoicing for prescription drugs. Prime is 

owned in part by the insurer Blue Cross Blue Shield, and 

plaintiffs suggest that membership in the network is required 

in order for pharmacies in certain states to accept Blue Cross 

* These cases were scheduled for oral argument on September 18, 

2019. On September 12, 2019, new counsel for plaintiffs in both cases 

moved to vacate oral argument and to have the cases submitted on the 

briefs. Two defendants opposed the motion; two others took no position. 

The panel vacated the oral argument and has concluded that the briefs 

presented the cases adequately under these circumstances. See Fed. R. 

App. P. 34(a)(2)(C). 

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Nos. 18-2725 & 18-3003 3

Blue Shield, Medicare, and Medicaid prescription drug insurance plans. We assume, therefore, that termination from the 

Prime network hurt Sharif’s and J&S’s businesses.1

Sharif and J&S filed these suits alleging that their terminations from the Prime network violated the federal Sherman 

Act. Three customers joined the J&S action as plaintiffs who 

had to switch to different, less convenient pharmacies, at least 

for a time. In both cases, the plaintiffs alleged that the audits 

were pretextual and that Prime really terminated both pharmacies’ participation in its network in an attempt to get rid of 

competition with Walgreens, with whom it had entered a joint 

venture in August 2016. Prime sent letters to both pharmacies’ 

customers saying that Sharif and J&S would no longer accept 

their insurance and recommending that customers have their 

prescriptions filled at a nearby Walgreens. Prime also retained 

funds from both pharmacies as a result of the audits. 

II. The J&S Suit 

The two cases took different paths through the district 

court and on appeal, presenting different issues. We begin 

with the J&S suit, which has been affected by events while the 

appeal has been pending. First, J&S itself obtained reinstatement in the Prime network. J&S then moved to dismiss its appeal voluntarily under Federal Rule of Appellate Procedure 

42(b). We granted that motion, so J&S itself is no longer asserting any claims in the lawsuit. The reinstatement has also 

rendered moot the customer-plaintiffs’ request for injunctive 

relief restoring J&S to the Prime network. See, e.g., E.E.O.C. v. 

1 For example, J&S alleged that more than 80 percent of its prescription-drug customers are insured by Medicare, Medicaid, or Blue Cross 

Blue Shield. 

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4 Nos. 18-2725 & 18-3003 

Flambeau, Inc., 846 F.3d 941, 949–50 (7th Cir. 2017). We may 

not pass on the merits of “moot questions or abstract propositions.” Dorel Juvenile Group, Inc. v. DiMartinis, 495 F.3d 500, 

503 (7th Cir. 2007), citing Calderon v. Moore, 518 U.S. 149, 150 

(1996). 

That leaves only the customers’ claims for damages in the 

J&S lawsuit. Those claims are not moot, but they cannot be 

remedied directly in federal antitrust litigation. It has long 

been recognized that the primary purpose of the federal antitrust laws is to protect the welfare of customers. E.g., NCAA 

v. Board of Regents, 468 U.S. 85, 107 (1984), citing Reiter v. Sonotone Corp., 442 U.S. 330, 343 (1979), quoting in turn Robert H. 

Bork, The Antitrust Paradox: A Policy at War With Itself 66 (1978); 

Fishman v. Estate of Wirtz, 807 F.2d 520, 535–36 (7th Cir. 1986); 

id. at 585 (Easterbrook, J., dissenting). Perhaps ironically, 

however, it is well established under federal antitrust law’s 

Illinois Brick doctrine that customers of parties more directly 

injured by an alleged antitrust violation do not have standing 

to assert their own claims for damages. See Apple Inc. v. Pepper, 139 S. Ct. 1514, 1520–21 (2019) (applying Illinois Brick rules 

to section 2 claims for monopolization); Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977); see also Loeb Industries, Inc. v. Sumitomo Corp., 306 F.3d 469, 481–82 (7th Cir. 2002) (explaining Illinois Brick and its limits). 

The Court explained in Illinois Brick that antitrust defendants are not permitted to argue that their direct victims were 

not injured because they were able to pass along price increases to their customers. 431 U.S. at 724–26, discussing Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 

(1968). Illinois Brick extended the same principle to bar claims 

by indirect purchasers (such as customers) even if they were 

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Nos. 18-2725 & 18-3003 5

the ultimate victims of the violations. Because J&S Pharmacy 

would have been most directly affected by any alleged antitrust violation, its own customers may not bring their own 

claims for damages under the Sherman Act. 

The customer plaintiffs alleged that they depended on J&S 

Community Pharmacy because it was the only pharmacy 

within walking distance that had accepted their insurance. 

During the time when J&S was excluded from the Prime pharmacy network, the customers were injured because they 

could no longer use it to fill their prescriptions and were “too 

poor or physically or mentally weak to regularly travel to a 

distant pharmacy for their medicine,” “particularly during inclement weather.” 

We take these plaintiffs at their word, of course. We do not 

doubt that the exclusion of their familiar and most convenient 

pharmacy from their insurance coverage caused significant 

inconvenience and even hardship to them. Such harms, however, have not been treated as injury to “business or property” 

as required to recover damages under the Sherman Act, 15 

U.S.C. § 15(a). Even if we assumed for the sake of argument 

that the exclusion of J&S Pharmacy from the Prime network 

might have violated the Sherman Act (though we reject Sharif’s similar claims on the merits, below), its customers would 

not be entitled to sue for damages under that Act. 

Courts and commentators have long been concerned with 

calibrating antitrust standing doctrine in order both to capture “the full cost of an antitrust violation ... by looking to the 

injuries to all victims,” and to ensure that “the defendant 

should not be made to pay twice for the very same injury.” 

Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law: An 

Analysis of Antitrust Principles and Their Application ¶ 339a (4th 

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6 Nos. 18-2725 & 18-3003 

ed. 2019). Here, the relief sought by the customer-plaintiffs 

would duplicate any relief that J&S could have sought on its 

own behalf. Their claims are barred because they would “substantially increase[] the possibility of inconsistent adjudications [ ]and therefore of unwarranted multiple liability for the 

defendant[.]” Illinois Brick, 431 U.S. at 730.2

III. The Sharif Pharmacy Suit 

Although we affirm the dismissal of the J&S suit for reasons unrelated to the merit or lack of merit of the allegations 

of Sherman Act violations, the Sharif Pharmacy appeal presents the merits squarely. Sharif alleges in essence that Prime 

Therapeutics and Walgreens have created a joint venture that 

encourages patients insured through Prime to buy their prescription drugs at Walgreens and not at other competing retail 

pharmacies like Sharif. The allegations fail to state a viable 

claim under either Section 1 or Section 2 of the Sherman Act, 

so we affirm. 

In antitrust parlance, Sharif alleges a variant on a claim for 

exclusive dealing and/or a refusal to deal. Sharif alleges in effect that Prime prefers to deal with Walgreens rather than Sharif. Sharif has not alleged a horizontal agreement (i.e., among 

competitors) to fix prices or divide markets, so the case is not 

subject to the rule of per se illegality under Section 1 of the 

Sherman Act. Under the rule of reason for Section 1 cases, exclusive dealing or refusals to deal could violate Section 1 only 

if a defendant has monopoly or market power in a relevant 

2 Given our holdings here as to mootness and antitrust standing, we 

have considered but see no need to reach the arguments raised by the State 

of Illinois under the Eleventh Amendment and the Sherman Act state action immunity doctrine. 

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Nos. 18-2725 & 18-3003 7

market. See generally, e.g., Leegin Creative Leather Products, 

Inc. v. PSKS, Inc., 551 U.S. 877, 885–87 (2007) (summarizing 

per se illegality and rule of reason). 

Section 2 of the Sherman Act prohibits monopolization 

and attempts to monopolize, but with narrow exceptions it allows even firms with monopoly power to choose with whom 

they deal and on what terms and conditions. Even monopolists “are free to choose the parties with whom they will deal, 

as well as the prices, terms, and conditions of that dealing.” 

Pacific Bell Telephone Co. v. Linkline Communications, Inc., 555 

U.S. 438, 448 (2009), citing United States v. Colgate & Co., 250 

U.S. 300, 307 (1919). 

There are “limited circumstances” under which a monopolist’s refusal to deal with a competitor will be illegal anticompetitive conduct. Id.; see generally Verizon Communications Inc. 

v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004); Aspen 

Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985); 

Areeda & Hovenkamp, Antitrust Law ¶ 1800c5 (“Section 2 of 

the Sherman Act reaches unilateral refusals to deal when the 

refusals constitute monopolization ... .”). To begin even to try 

to fit this case into these relatively narrow exceptions, Sharif 

would need to allege that Prime and/or Walgreens either have 

or are dangerously likely to obtain monopoly power in a relevant market. 

So, in the absence of an alleged per se violation of Section 

1, Sharif’s federal claims require it to identify a relevant product and geographic market in which Prime and/or Walgreens 

have or were dangerously likely to obtain monopoly power. 

Even at the pleading stage, it is sufficiently clear that Sharif 

cannot identify an appropriate geographic market where a 

defendant had or threatened to have monopoly power. 

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8 Nos. 18-2725 & 18-3003 

A “relevant market” under the Sherman Act is comprised 

of the “commodities reasonably interchangeable by consumers for the same purposes.” United States v. E.I. Du Pont de 

Nemours & Co., 351 U.S. 377, 395 (1956). “A properly defined 

market excludes other potential suppliers (1) whose product 

is too different (product dimension) or too far away (geographic dimension) and (2) who are not likely to shift 

promptly to offer defendant’s customers a suitably proximate 

(in both product and geographic terms) alternative.” Areeda 

& Hovenkamp, Antitrust Law ¶ 530a. 

Geographic Market: Sharif has not plausibly alleged that either Prime or Walgreens has or threatens to gain monopoly 

power in a relevant geographic market. In its proposed second amended complaint, Sharif identified three areas that 

might serve as relevant geographic markets. In the section entitled “The Geographic Market,” Sharif alleges that the relevant market in this case is “nation-wide for Prime and 

Walgreens.” Sharif argues, quoting a Dow Jones wire article, 

that Prime and Walgreens were joining forces to give 

Walgreens “more muscle to compete against CVS Health’s integrated model that combines a retail pharmacy chain with a 

large PBM [pharmacy benefits manager].” The proposed 

complaint construes this news coverage as “a public admission by Defendants that through their partnership, and the 

scheme Plaintiff alleges above where Prime terminates pharmacies’ ability to sell prescription drugs, they will violate antitrust laws nation-wide to increase their market share of prescription drugs.” Elsewhere in the proposed complaint, Sharif 

asserts that “the five-block area” surrounding its pharmacy 

and “the Chicago market area” are geographic regions in 

which Prime is seeking to terminate the network participation 

of possible Walgreens competitors. 

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Nos. 18-2725 & 18-3003 9

The United States as a whole and the Chicago metropolitan area are plausible geographic markets for retail prescription drug sales, but we see no plausible allegation that Prime 

and/or Walgreens have or threaten to gain monopoly power 

in a nationwide or metropolitan Chicago market for retail prescription drug sales. Plaintiff’s assertion that the defendants 

merely sought to increase their market shares does not come 

close to satisfying the requirement of actual or threatened monopoly power. Antitrust law assumes that all competitors 

seek to increase their respective market shares, especially by 

business arrangements that will offer more attractive products and services to their customers. 

Sharif’s assertion that the five-block radius around its location is a relevant market is not plausible. The antitrust statutes require a “pragmatic” and “factual” approach to defining 

the geographic market. Brown Shoe Co. v. U.S., 370 U.S. 294, 

336 (1962). The market must “correspond to the commercial 

realities of the industry.” Id., quoted in Federal Trade Comm’n 

v. Advocate Health Care Network, 841 F.3d 460, 468 (7th Cir. 

2016) (quotations omitted). Where geographic convenience is 

important to consumers, retail markets can be small, see 

United States v. Philadelphia Nat’l Bank, 374 U.S. 321, 358 (1963), 

but not this small. It defies belief to suggest that a hypothetical 

monopolist retail pharmacy could raise its drug prices substantially without losing customers to competitors outside 

that tiny area. See also 42nd Parallel North v. E Street Denim Co., 

286 F.3d 401, 406 (7th Cir. 2002) (rejecting as “absurdly small” 

a proposed market for retail designer jeans and tee-shirts 

comprising only the “central business district” of Highland 

Park, Illinois). 

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10 Nos. 18-2725 & 18-3003 

Product Market: Though we could affirm the judgment of 

the district court solely on the basis of our geographic market 

analysis, for two reasons, we also address plaintiffs’ failure to 

plead a proper product market. First, though its discussion 

was brief, the district court did address the issue, and its analysis would have been sufficient to support its decision. Second, Prime Therapeutics has taken an aggressive position on 

appeal: that “claiming a market of all ‘prescription drugs’ is 

meaningless” and that “attempting to measure the interchangeability of countless unnamed ‘prescription drugs’ is an 

impossible task.” Sharif has not pleaded facts sufficient to 

support an inference that defendants have the requisite market power within a viable product market for retail prescription drugs. Sharif’s failure, however, does not mean that no 

future antitrust plaintiff may be able to do so. 

“The outer boundaries of a product market are determined by the reasonable interchangeability of use or the 

cross-elasticity of demand between the product itself and substitutes for it.” Brown Shoe, 370 U.S. at 325. Sharif asserts that 

the relevant product market is retail prescription drugs. Defendants contend that this product market is not plausible because more than 39,000 prescription drugs are sold in the 

United States, and of course one prescription drug may be interchangeable with only a few or perhaps no others. Contrary 

to the defense arguments, however, and subject to appropriate proof, we see no necessarily fatal flaw in treating that bundle or cluster of prescription drugs that are typically sold in 

brick-and-mortar retail pharmacies as a relevant product market. 

A cluster of products can comprise a relevant product 

market “if the cluster is itself an object of consumer demand.” 

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Nos. 18-2725 & 18-3003 11

Advocate Health Care Network, 841 F.3d at 467 (quotations omitted). As the Tenth Circuit noted in Green Country Food Market, 

Inc. v. Bottling Group, LLC, 371 F.3d 1275, 1283–85 (10th Cir. 

2004), the Supreme Court has recognized such “cluster” markets in banking, see United States v. Phillipsburg Nat’l Bank & 

Trust Co., 399 U.S. 350, 360–61 (1970); United States v. Philadelphia Nat’l Bank, 374 U.S. 321, 356–57 (1963), and central-station 

home security products, see United States v. Grinnell Corp., 384 

U.S. 563, 572–73 (1966). The Court said in Grinnell Corp. that 

“We see no barrier to combining in a single market a number 

of different products or services where that combination reflects commercial realities.” 

Health care services can be suitable subjects for such “cluster” product markets. In Advocate Health Care Network, we recognized “inpatient general acute care services—specifically, 

those services sold to commercial health plans and their members” as a product market, including those “medical services 

and procedures that require admission to a hospital, such as 

abdominal surgeries, childbirth, treatment of serious infections, and some emergency care.” 841 F.3d at 468. See also, 

e.g., Messner v. Northshore University HealthSystem, 669 F.3d 

802 (7th Cir. 2012) (recognizing bundled hospital services as 

product market); Indiana Grocery, Inc. v. Super Valu Stores, Inc., 

864 F.2d 1409, 1412 n.2 (7th Cir. 1989) (retail supermarkets defined relevant product market); see generally Grinnell Corp., 

384 U.S. at 572–73 & n.6 (commercial realities showed that 

central-station alarm companies needed to offer all or nearly 

all types of property-protection services, making cluster of 

services a relevant product market); Areeda & Hovenkamp, 

¶ 565c (recognizing that surgical services might be appropriate “cluster” product market, but criticizing other attempts to 

establish cluster product markets). 

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12 Nos. 18-2725 & 18-3003 

We close with a note about resolving these appeals on the 

pleadings, with the federal claims dismissed with prejudice. 

Since federal civil pleading standards changed so dramatically in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and 

Ashcroft v. Iqbal, 556 U.S. 662 (2009), it has been especially important for district courts to give leave freely to amend pleadings. E.g., Runnion v. Girl Scouts of Greater Chicago and Northwest Indiana, 786 F.3d 510, 519–20 (7th Cir. 2015) (collecting 

cases). Uncertainty about application of the Twombly-Iqbal

standard means that a plaintiff whose original complaint has 

been dismissed under Rule 12(b)(6) should ordinarily be 

given at least one opportunity to try to amend its complaint 

before the action itself is dismissed with prejudice. Id. In these 

cases, however, it is apparent that the federal antitrust claims 

are based on misunderstandings about foundational principles of antitrust law. It is evident from the proceedings in the 

district courts and the arguments in plaintiffs’ appellate briefs 

that the defects in these cases cannot be corrected, so that further amendment would be futile. E.g., Runnion, 786 F.3d at 

520; Airborne Beepers & Video, Inc. v. AT&T Mobility LLC, 499 

F.3d 663, 666–67 (7th Cir. 2007). The district courts thus did 

not err in dismissing these federal antitrust claims with prejudice. 

* * * * * 

The judgment of the district court in the J&S Pharmacy 

case dismissing the Sherman Act claims of J&S customers 

Scale, Thomas, and Brown with prejudice is AFFIRMED as to 

plaintiffs’ damage claims; dismissal of those plaintiffs’ claims 

for injunctive relief is AFFIRMED AS MODIFIED to dismiss 

those claims as moot; and dismissal of those plaintiffs’ statelaw claims without prejudice is also AFFIRMED. In the Sharif 

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Nos. 18-2725 & 18-3003 13

Pharmacy case, the dismissal of the Sherman Act claims with 

prejudice and dismissal of the state-law claims without prejudice are AFFIRMED. 

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