FTC weighs in on AbbVie antitrust litigation
Commission argues that a New York federal court erred in its finding that deals between an AbbVie unit and generic manufacturers were justified | US Supreme Court previously ruled that “unjustified” reverse payments can violate the antitrust laws.
The US Federal Trade Commission has waded into an antitrust case involving alleged deals between an AbbVie unit, Forest Laboratories, and six generic drug manufacturers to delay the introduction of a hypertension drug.
On June 20, the commission filed an amicus brief at the US Court of Appeals for the Second Circuit, clarifying the legal standards that apply in certain antitrust cases involving the pharmaceutical sector.
The case relates to alleged efforts to delay competition to Bystolic, (nebivolol hydrochloride) Forest’s brand-name high blood pressure drug.
Bystolic is a beta blocker that prevents heart strain by lowering the heart rate as well as blood pressure.
Actavis acquired Forest in 2014, and AbbVie subsequently bought Actavis for $63 billion in 2020.
‘Masked’ payments
Buyers of Bystolic alleged that Forest attempted to mask reverse payments to six would-be generic rivals between 2012 and 2013.
Under these deals, the generic rivals allegedly agreed to stop challenging Forest’s patents and to refrain from selling generic versions of Bystolic for at least eight years.
In the commission’s brief, the FTC urged the appeals court to reverse a New York federal court’s decision to dismiss the case and to recognise that large reverse payments made by Forest contravene antitrust law.
Reverse-payment settlements, also known as pay-for-delay, are agreements in which a drug manufacturer pays a would-be generic competitor—whether in monetary or non-monetary form—to abandon a patent challenge and refrain from offering its generic drug product for a number of years.
District court erred in justifications
The FTC argued in its brief that the US District Court for the Southern District of New York erred when it dismissed plaintiffs’ allegations that Forest’s payments were unjustified, and that it “wrongly” offered “its own hypothetical justifications for Forest’s side deals”.
Plaintiffs challenging a reverse payment settlement only need to plead market power and facts from which a court can infer a large and unjustified reverse payment was tendered, added the FTC.
The commission further pointed to a 2013 decision delivered by the US Supreme Court in Federal Trade Commission v Actavis, which held that “large” and “unjustified” reverse payments can violate antitrust laws.
Actavis, said the FTC, recognised that while some reverse payments may have legitimate business explanations, others may reflect nothing other than the settling parties’ desire to avoid competition.
Plaintiffs met SCOTUS’ standards
The Supreme Court placed the burden of justifying reverse payments principally on the defendants, contended the FTC.
In this case, the FTC insists that the plaintiffs did meet these standards, and that the district court was incorrect in dismissing their claims because the court did not place the burden principally on Forest and the other defendants to justify the reverse payments.
The district court also improperly found facts and drew inferences against the plaintiffs, unfairly faulted them for not producing evidence at the pleading stage and failed to assess the allegations of the complaint holistically, added the commission.
Unless corrected, the district court’s ruling threatens to impair the effective enforcement of antitrust laws in the pharmaceutical industry, the FTC told the Second Circuit.
The commission vote approving the filing of the amicus brief was 3-0.
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