Bisaro advised by judge to testify in FTC probe

A federal judge has recommended that Watson Pharmaceuticals (NYSE: WPI) CEO Paul Bisaro be forced to testify in a Federal Trade Commission probe of a patent settlement between the generic drugmaker and Cephalon (NASDAQ: CEPH) over the narcolepsy drug Provigil, Dow Jones reports.

"The facts before this Court now do not establish a direct attempt by the FTC to misuse the Court's process for it has not been shown that the subpoena itself was issued to harass Mr. Bisaro or that the investigation has been conducted for an improper purpose. Nor do the facts establish that the FTC shared confidential information about Watson with unauthorized third parties," U.S. Magistrate Judge Alan Kay says in his ruling. "While Mr. Bisaro initially made a colorable showing that the FTC shared confidential information with Apotex, he has subsequently failed to prove those allegations."

Bisaro had been fighting the FTC's subpoena seeking his testimony. And the fight truly started when Bisaro's lawyers accused FTC of trying to bully Watson into trading away its exclusivity on a generic form of Provigil. One FTC official went so far as to threaten an agency investigation if Watson didn't give its "first-to-file" rights to generics maker Apotex, court papers allege.

The ruling comes a month after Kay scolded the FTC, saying there was a "strong possibility" that the agency violated confidentiality rules. But the agency denied this charge. "FTC staff did not improperly reveal any confidential...information to Apotex," the agency said in a court filing. The FTC also asserted it didn't issue the subpoena to pressure Watson to make a deal with Apotex.

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