FTC weighs in on “no-authorised-generic” antitrust case

The US Federal Trade Commission (FTC) has filed an amicus brief in an antitrust case that concerns a “no-authorised-generic” settlement between Teva and GlaxoSmithKline (GSK).

In the brief, the FTC urges the US Court of Appeals for the Third Circuit to reverse a lower court’s dismissal of the case, which it found to be based on a narrow reading of FTC v Actavis.

In FTC v Actavis, which was decided last year, the US Supreme Court found that pay-for-delay patent settlements can be challenged by the commission on antitrust grounds.

When Teva abandoned its challenge of a patent covering GSK’s anti-epileptic drug Lamictal, GSK agreed that when Teva introduced its generic version of the medicine, GSK would initially keep its authorised generic off the market and allow the company six months of generic sales.

The US District Court for the District of New Jersey ruled that these “no-authorised-generic” settlements cannot violate antitrust laws under FTC v Actavis, because they do not involve the payment of “cash”—in this case, the compensation afforded by the branded company is the valuable agreement not to compete.

However, the FTC said it believes the finding to be erroneous, and that no-authorised-generic agreements raise the same antitrust issues as Actavis.

It claimed that as a result of the agreement, customers would be denied the opportunity to buy generic Lamictal for several years. When a generic version eventually becomes available, consumers would pay more for it than if the companies had offered competing generic products, it said.

“If accepted, the district court’s narrow reading of Actavis would undermine the Supreme Court’s decision in that case and encourage parties to structure potentially anticompetitive reverse-payment settlements simply by avoiding the use of cash,” the FTC said in the brief.

The case is still pending at the US Court of Appeals for the Third Circuit.

Teva did not immediately respond to a request for comment.