24 April 2013Americas

FTC critical of pay-for-delay in annual report

The US Federal Trade Commission (FTC) has published its annual report for 2012, in which it remains critical of “pay-for-delay” patent settlements.

The report, which was published on Monday, reveals that nearly half of all enforcement actions initiated by the agency last year were against pharmaceutical and healthcare firms.

While most concerned mergers, several involved so called “pay-for-delay” deals—agreements in which brand name pharmaceutical firms pay rivals to delay the release of competing generic products.

The FTC says such agreements cost US consumers $3.5 billion each year. According to a study published in January, 40 potential pay-for-delay deals were made in 2012, up from 28 in 2011.

The question of whether these deals are lawful is now being considered by the Supreme Court, after the commission filed lawsuits questioning patent settlements over Schering Plough’s blood pressure medication K-Dur 20 and Actavis’s testosterone treatment AndroGel.

In July, the Court of Appeals for the Third Circuit agreed with the FTC in the K-Dur case that pay-for-delay settlements are presumptively unlawful.

But in June, the Court of Appeals for the Eleventh Circuit dismissed the agency’s AndroGel complaint and ruled that “absent sham litigation or fraud in obtaining the patent, a reverse payment settlement is immune from antitrust attack so long as its anticompetitive effects fall within the scope of the exclusionary potential of the patent.”

In its report, the FTC criticised the Eleventh Circuit’s decision.

“After more than a decade of challenges to these agreements in the courts, the Third Circuit in K-Dur [adopted] the FTC’s amicus position that, when compensation flows from the brand to the generic and the generic delays entry, the burden shifts to the parties to show that the compensation was not paid in exchange for that delay,” it said.

“[This] decision changed the landscape for evaluating these costly agreements, and set the stage for the Supreme Court’s review of the Commission’s AndroGel case. At issue is the validity of the Eleventh Circuit’s approach to reverse payment settlements, [which] the Commission strongly disagrees with,” it added.

Pay-for-delay deals have also come under increasing scrutiny in Europe: last week, the UK Office of Fair Trading accused pharmaceutical firm GlaxoSmithKline of abusing its market dominance and infringing UK competition law by paying rivals to delay releasing generic versions of its best-selling anti-depressant Seroxat.

A Supreme Court decision on the issue is expected in June this year.


More on this story

Americas
17 June 2013   A majority of the US Supreme Court has ruled that the US Federal Trade Commission should be able to challenge so-called ‘pay-for-delay’ patent litigation settlements on antitrust grounds.
Big Pharma
20 June 2013   The European Commission’s competition directorate has levied fines totalling €146 million ($195 million) against originator pharmaceutical company Lundbeck and several producers of generics drugs.
Americas
25 July 2013   A white paper suggests that patent case settlements between originator pharmaceutical companies and their generic competitors may be beneficial to drug consumers.

More on this story

Americas
17 June 2013   A majority of the US Supreme Court has ruled that the US Federal Trade Commission should be able to challenge so-called ‘pay-for-delay’ patent litigation settlements on antitrust grounds.
Big Pharma
20 June 2013   The European Commission’s competition directorate has levied fines totalling €146 million ($195 million) against originator pharmaceutical company Lundbeck and several producers of generics drugs.
Americas
25 July 2013   A white paper suggests that patent case settlements between originator pharmaceutical companies and their generic competitors may be beneficial to drug consumers.