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23 February 2016Americas

First Circuit says Actavis pay-for-delay ruling applies to non-cash settlements

The US Court of Appeals for the First Circuit has revived claims that pay-for-delay settlements involving pharmaceutical company Warner Chilcott may be in breach of competition law, despite the deals not including cash payments.

Yesterday, February 22, the first circuit remanded the case and said that the US District Court for the District of Rhode Island incorrectly restricted its interpretation of the US Supreme Court’s decision in FTC v Actavis, which also centred on competition law.

In 2013, the American Sales Company, which supplies supermarkets with healthcare items, sued Warner over deals it had made that sought to delay the launch of a generic version of its oral contraceptive drug Loestrin 24 Fe (ethinyl estradiol, norethindrone and ferrous fumarate).

Corporate entities and healthcare providers that had bought the drug were also named as plaintiffs.

In the complaint the plaintiffs said Warner’s deals with Watson Pharmaceuticals and Lupin Pharmaceuticals breached US competition law.

The agreements, made with Watson in 2009 and Lupin in 2010, involved exclusive licensing agreements in exchange for the two companies dropping their challenges to certain patent claims and delay the launch of their products.

However, no payments were made.

In the Watson deal, Watson agreed to not start selling its proposed generic version until January 2014 and Warner agreed to not license a generic version to a commercial rival in the first six months.

In its deal with Lupin, Warner granted a non-exclusive licence for another oral contraceptive product in exchange for Lupin delaying the launch of its generic until July 22, 2014.

The district court approved both agreements after the plaintiffs challenged their legality.

In a decision handed down on September 4, 2014, the Rhode Island court said the Supreme Court’s Actavis ruling in 2013 only covered cash payments.

But, after the plaintiffs appealed against that judgment, the three-judge first circuit panel said this was a “narrow construction” of the Supreme Court’s ruling.

“The district court reasoned that the reverse payments alleged in Actavis involved only cash payments, but that is not so: in Actavis, it was alleged that the reverse payments involved side deals in which the generic manufacturers agreed to promote the brand name drug at issue in exchange for multi-million dollar payments from the brand manufacturer.

“This language acknowledges that competition scrutiny attaches not only to pure cash reverse payments, but to other forms of reverse payment that induce the generic to abandon a patent challenge, which unreasonably eliminates competition at the expense of consumers.

“Moreover, this approach is consistent with antitrust law, which has consistently prioritised substance over form,” the court concluded.

The first circuit vacated the earlier judgment and sent it back to the district court.

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More on this story

Americas
17 March 2016   The US Federal Trade Commission has urged a federal appeals court to correct errors in a judgment from a Pennsylvania court that found the plaintiff in a pay-for-delay case had failed to prove that the agreement breached US competition law.
Americas
19 December 2019   Dutch supermarket owner Ahold Delhaize has agreed to settle a series of patent infringement suits filed against pharmaceutical companies including Warner Chilcott and Watson over contraceptive pill Loestrin 24 Fe.

More on this story

Americas
17 March 2016   The US Federal Trade Commission has urged a federal appeals court to correct errors in a judgment from a Pennsylvania court that found the plaintiff in a pay-for-delay case had failed to prove that the agreement breached US competition law.
Americas
19 December 2019   Dutch supermarket owner Ahold Delhaize has agreed to settle a series of patent infringement suits filed against pharmaceutical companies including Warner Chilcott and Watson over contraceptive pill Loestrin 24 Fe.

More on this story

Americas
17 March 2016   The US Federal Trade Commission has urged a federal appeals court to correct errors in a judgment from a Pennsylvania court that found the plaintiff in a pay-for-delay case had failed to prove that the agreement breached US competition law.
Americas
19 December 2019   Dutch supermarket owner Ahold Delhaize has agreed to settle a series of patent infringement suits filed against pharmaceutical companies including Warner Chilcott and Watson over contraceptive pill Loestrin 24 Fe.