FTC wades into reverse payment dispute at Federal Circuit

The US Federal Trade Commission (FTC) has waded into a competition dispute at the US Court of Appeals for the Federal Circuit centring on ‘reverse payment’ settlements.

In an amicus brief, the FTC urged the federal circuit to overturn a lower court ruling that said a plaintiff must prove it has suffered or will suffer an injury in order to establish a competition violation.

The brief is in the case In Re: Nexium (esomeprazole) Antitrust Litigation, which is on appeal from the US District Court for the District of Massachusetts.

In the case, direct and indirect purchasers of Nexium sued AstraZeneca, the drug’s manufacturer, and generic maker Ranbaxy, which had announced an intention to sell a version of the drug. Ranbaxy had previously challenged a patent covering the drug.

The plaintiffs claimed AstraZeneca entered into an unlawful reverse payment agreement whereby a branded drug maker settles a challenge to a patent by providing compensation to the challenger in exchange for the challenge being dropped and market entry being delayed.

In December 2014, the Massachusetts court found in favour of the defendants and said that the settlement did not harm competition.

The brief, filed on Friday, February 12, explained that a reverse payment can violate competition laws if it induces a generic drug maker to abandon its patent challenge and stay out of the market—regardless of whether the generic would actually have otherwise entered the market sooner.

To support its case, the FTC referenced the US Supreme Court’s 2013 decision in FTC v Actavis, which confirmed that the FTC could not be prevented from bringing competition action against reverse payments.