FTC defends its tactics in Watson case

The Federal Trade Commission is fighting back against allegations that it overstepped its bounds in investigating a "pay-for-delay" deal between Cephalon (NASDAQ: CEPH) and Watson Pharmceuticals (NYSE: WPI). The agency not only denied that it shared confidential information on Watson with generic rival Apotex, it's also doubling down on its efforts to get Watson chief Paul Bisaro to respond to a subpoena.

The FTC and Bisaro have been duking it out in court over that subpoena. Bisaro is balking at responding to it and has gone on the offensive. It was Bisaro's lawyer who alleged that FTC had acted improperly, even trying to broker a deal for Apotex to obtain Watson's right to exclusively manufacture Cephalon's wakefulness drug Provigil.

A U.S. judge scolded the FTC last week, saying there was a "strong possibility" that the agency violated confidentiality rules. But the agency says that's not true. "FTC staff did not improperly reveal any confidential...information to Apotex," the agency said in a court filing. What's more, the FTC said, it didn't issue the subpoena to pressure Watson to make a deal with Apotex.

In reality, the agency claims, it was just trying to investigate the patent settlement between Cephalon and Watson, as one of the so-called  "pay-for-delay" deals that FTC has been fighting for some time. The agency asked Watson for details about the deal and Watson never gave a "straight answer," court documents allege. "The commission continues to believe that it is entitled to Mr. Bisaro's testimony in this matter."

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