FTC demands corrections in GSK, Teva pay-for-delay ruling
The US Federal Trade Commission (FTC) 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.
The FTC stepped into a dispute that concerned an agreement between brand owner GSK and Teva and Anchen Pharmaceuticals to restrict the entry of their generic versions of anti-depressant drug Wellbutrin XL (bupropion hydrochloride extended-release). GSK owns the intellectual property rights to the drug.
Insurance company Aetna filed a claim that the reverse settlement between breached competition law.
The deal, agreed in 2007, involved no transfer of cash, but a commitment from both Teva and Anchen not to sell the generic version until May 2008 or if a challenge to the patent covering the drug filed by Anchen was upheld at the US Court of Appeals for the Federal Circuit.
GSK had sued Anchen for patent infringement before the 2007 deal.
In exchange, GSK agreed it would not sell its own authorised generic version of the drug to compete with Teva’s and Anchen’s generics under a provision known as a ‘no-authorised generic commitment’.
Aetna’s challenge, however, was rejected before trial. The US District Court for the Eastern District of Pennsylvania granted GSK and Teva’s motion for summary judgment, arguing that Aetna failed to demonstrate the anti-competitive effects of the agreement.
Furthermore, the court cited a provision in the agreement that would void the deal if the FTC expressed concerns it was anti-competitive. The court pointed to the fact that because the underlying patent litigation continued during the agreement, it was still competitive.
Aetna appealed against the judgment to the US Court of Appeals for the Third Circuit and on March 11 the FTC filed a brief criticising the district court’s judgment.
While the FTC takes no side in the dispute, it said it was concerned about the court’s explanation to deny a trial of the case.
First, it said that the court misinterpreted the US Supreme Court’s 2013 decision in FTC v Actavis in stating that the continuing litigation was a reason to conclude that the deal remained competitive.
“Actavis teaches that a reverse payment is likely to be competitive if it shares monopoly profits to prevent risk of competition,” it said.
Second, the FTC said that the “rule of reason” standard applied under US competition law—and affirmed by the Supreme Court in Actavis—to determine breaches “requires no showing of actual delayed entry or injury to a specific party to establish an antitrust violation”.
It added that the veto in the deal concerning the FTC’s objection “has no relevance on a rule of reason inquiry” because its “sheds no light on the likely competitive effects of the alleged restraint”.
