US FTC settles pay-for-delay case with AbbVie
The US Federal Trade Commission (FTC) concluded a ten-year pay-for-delay suit yesterday, with AbbVie agreeing not to enter certain settlements in patent cases that delay market entry of generic drugs.
On Thursday, February 28, the FTC reached a settlement in FTC v Actavis, a 2009 case which alleged that brand-name drug company Solvay had entered into an allegedly illegal agreement with three generic makers to restrict generic competition to Solvay’s AndroGel (testosterone gel) for nine years.
The settlement covers products that Solvay may have been marketing or developing before Abbott Laboratories purchase of the company in 2010. Abbott later spun off its worldwide pharmaceutical business into AbbVie.
Pay-for-delay occurs when brand name drugmakers settle patent infringement suits by paying generic companies to postpone marketing their versions of the drugs.
“The settlement exempts licences to enter the market on a later date, compensation for saved future litigation costs up to $7 million, a continuation or renewal of a pre-existing agreement, and several other types of agreements that are unlikely to be anticompetitive,” said the FTC.
FTC v Actavis made its way up to the US’s highest court and, in June 2013, the US Supreme Court overturned the so-called scope-of-patent test, which was claimed to virtually immunise pay-for-delay settlements from scrutiny.
The court held that “reverse-payment” patent settlements were subject to antitrust scrutiny.
“Because of the Actavis decision, we are in a much stronger position to protect consumers from anti-competitive drug-patent settlements that result in higher drug costs,” said Edith Ramirez, chair of the FTC at the time.
The case was then remanded to the US District Court for the Northern District of Georgia, with the trial scheduled to begin on March 4, 2019. As a result of the settlement, the trial will not go ahead.
According to Joe Simons, current chair of the FTC, the Supreme Court decision “turned the tide on anticompetitive reverse payments” in the pharmaceutical industry.
“After the Supreme Court recognised the harmful effects that reverse-payment agreements can have on competition and ultimately on consumers, we have seen fewer of these types of agreements,” he said.
The order, if approved by the district court, will remain in effect for ten years.
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