The Federal Trade Commission (FTC) is seeking to apply its success before the U.S. Supreme Court to another type of patent settlement.
The agency has asked the U.S. District Court for the District of New Jersey to accept its amicus brief in In re Effexor XR Antitrust Litigation. The Federal Trade Commission brief argues in favor of applying the precedent established in FTC v. Actavis to a settlement agreement based on a “no-authorized-generic” commitment.
The Supreme Court ruled that “pay-to-delay” agreements, under which brand name drug companies make payments to would-be competitors who make generic substitutes to keep the generic substitutes out of the market, can be subject to anti-trust scrutiny.
In the instant case, Wyeth Pharmaceutical Co. agreed not to compete with an authorized generic version of the drug Effexor XR to induce Teva Pharmaceuticals USA Inc. to abandon its patent challenge and refrain from selling its generic version of Effexor XR for two years. Brand-name drug makers manufacture authorized generic drugs as a way to ward of generic sales, particularly during the 180-day exclusivity period reserved for the first-filing generic under the Hatch-Waxman Act.
The pharmaceutical companies argue that the settlement should be immune from antitrust scrutiny because delayed entry was secured by a non-compete agreement rather than cash. Meanwhile, the Federal Trade Commission argues that “accepting the defendants’ claim of immunity whenever patentees use vehicles other than cash to share the profits from an agreement to avoid competition elevates form over substance, and it would allow drug companies to easily circumvent the ruling in Actavis, at great cost to consumers.”
It is unclear if the court will accept the amicus brief. A ruling is expected this month.
If you have any questions about this case or would like to discuss the legal issues involved, please contact me, Fred Zemel, or the Scarinci Hollenbeck attorney with whom you work.
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